Hilla Heights Co-operative Housing Society Limited Vs Assistant Director of Income-Tax (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai has ruled in favor of Hilla Heights Co-operative Housing Society, allowing deduction under Section 80P(2)(d) of the Income-tax Act, 1961. The case arose after the Centralized Processing Centre (CPC), Bangalore, disallowed the society’s claim for deduction on interest income earned from cooperative banks while processing its return under Section 143(1). The society’s rectification application under Section 154 was also rejected without reasons, prompting an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the CPC’s decision.
Upon further appeal to ITAT, the Tribunal examined whether the cooperative housing society was eligible for deduction under Section 80P(2)(d) on interest income from cooperative banks. The ITAT noted that the CIT(A) had not adjudicated on the merit of the deduction claim and had instead ruled on a procedural technicality, stating that the appeal should have been made under Section 143(1) rather than Section 154. The Tribunal observed that the CPC’s disallowance lacked justification and should have been addressed substantively.
The ITAT relied on precedents such as Ashoka Palace Co-Op. Hsg. Soc. Ltd. v. ITO (ITA No. 2062/Mum/2021) and Kaliandas Udyog Bhavan Premises Co-op Society v. ITO (94 taxmann.com 15), which established that cooperative societies are entitled to deductions under Section 80P(2)(d) for interest income earned from cooperative banks. The Tribunal clarified that while Section 80P(4) excludes cooperative banks from availing the deduction, cooperative societies remain eligible to claim the benefit on interest income received from cooperative banks.
