2021 (8) TMI 1081 - AT - Income Tax

Addition being interest on part amount receivable as corpus from developers - Addition on ground that the interest u/s 12.50% is due and since the assessee is following mercantile system of accounting the said interest is chargeable to tax - HELD THAT - CIT(A) has found that no interest was due during the impugned financial year. This is duly supported by ITAT order in assessee s own case 2017 (2) TMI 1497 - ITAT MUMBAI referred by learned CIT(A). Hence we do not find any infirmity in the order of learned CIT(A) in this issue. Deduction u/s.80P(2)(c) - HELD THAT - Main reason for disallowing the claim here is by his mistaken invocation of section 80P(4) of the Act. This has been duly settled in The Mavilayi Service Cooperative Bank Ltd. 2021 (1) TMI 488 - SUPREME COURT that in the case of Cooperative societies this section cannot be invoked as they cannot be held to be cooperative bank. When they have a lease from RBI to this effect. Examining the learned CIT(A) s order on the conspectus of aforesaid decisions we do not find any infirmity in the order of learned CIT(A). Hence we uphold the same. Disallowance of deduction u/s 80P(2)(d) made by the CPC Bangalore is beyond the scope of provisions of section 143(1) - Whether as per section 143(1)(a)(ii) of the Act an incorrect claim can be disallowed if such incorrect claim is apparent from any information in the return? - HELD THAT - We do not find any infirmity in the order of learned CIT(A). We note that claim was due and proper. There was no reason that CPC would disallow the same. The date of filing of return being extended by CBDT no adverse inference can be drawn that the assessee could not be eligible for deduction and claim which are allowable if return are filed within due date. The extension of due date makes the assessee eligible for all the claims which are allowable when the return is filed within due date. Moreover as rightly noted by learned CIT(A) in any case this was not something which could be denied under section 143(1) of the Act. Hence we uphold the same.

Summary

Issues Involved:
1. Deletion of interest addition on corpus fund receivable.
2. Eligibility for deduction under section 80P(2)(d) of the Income Tax Act, 1961.
3. Validity of return filing date and related interest levies under sections 234A, 234B, and 234C.

Issue-wise Detailed Analysis:

1. Deletion of Interest Addition on Corpus Fund Receivable:
The Revenue contested the deletion of ?1,43,75,000/- being interest at 12.50% per annum on the corpus fund receivable from developers. The assessee, a Co-Operative Housing Society, had executed a development agreement with Kalpataru Properties Ltd., and the interest on the corpus fund was only due after 30.09.2013. The Assessing Officer (AO) taxed this interest on an accrual basis for AY 2012-13. However, the Commissioner of Income Tax (Appeals) [CIT(A)] and the ITAT Mumbai upheld that the interest was not due during the impugned financial year and should be taxed in AY 2014-15 when it was actually received. The ITAT Mumbai supported this view, referencing the assessee's own case for AY 2011-12, where similar interest was not taxed on an accrual basis.

2. Eligibility for Deduction under Section 80P(2)(d):
The AO disallowed the deduction of ?63,95,051/- claimed under section 80P(2)(d), arguing that a co-operative bank is a commercial bank and does not fall under the purview of a "co-operative society" referred to in section 80P(2)(d). The CIT(A) and ITAT Mumbai found this disallowance unjustified. The ITAT cited several decisions, including those of the Mumbai Tribunal, which held that co-operative societies are entitled to deductions on interest and dividends earned from investments with co-operative banks. The ITAT referenced the Supreme Court's decision in The Mavilayi Service Cooperative Bank Ltd. case, which clarified that section 80P(4) does not apply to co-operative societies, thus allowing the deduction under section 80P(2)(d).

3. Validity of Return Filing Date and Related Interest Levies:
For AY 2015-16, the AO disallowed the deduction of ?2,15,31,450/- under section 80P, claiming the return was filed late. The CIT(A) noted that the due date for filing was extended by the CBDT to 31.10.2015, and the return filed on 27.10.2015 was within this extended date. The CIT(A) held that the disallowance was beyond the scope of section 143(1) and directed the AO to allow the deduction. Additionally, the CIT(A) deleted the interest levied under section 234A, stating it should be calculated on the returned income, not the assessed income. The ITAT upheld this decision, confirming that the return was filed within the extended due date, making the assessee eligible for the claimed deductions.

Conclusion:
The ITAT Mumbai dismissed the Revenue's appeals for all assessment years involved, upholding the CIT(A)'s decisions. The Tribunal found no infirmity in the CIT(A)'s order regarding the non-accrual of interest in the impugned year, the eligibility for deduction under section 80P(2)(d), and the validity of the return filing date along with the related interest levies.