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Turf View Co-op. Hsg. Soc. Ltd. Plot No. 72B, Hornby Vellard Estate, Dr. A. B. Road, Worli, Mumbai-400 018 Vs. I.T.O. 18(1)(2), Mumbai
June, 20th 2014

       ,         ,                                    

                     ./I.T.A. No. 6309/Mum/2011
                    (   / Assessment Year: 2003-04)

Turf View Co-op. Hsg. Soc. Ltd.                    I.T.O. ­ 18(1)(2),
Plot No. 72B, Hornby Vellard Estate,      /        Mumbai
Dr. A. B. Road, Worli,                    Vs.
Mumbai-400 018
     . /  . /PAN/GIR No. AAAAT 4887 B
        ( /Appellant)                        :            (     / Respondent)

         / Appellant by                      :    Shri Nitish Gandhi

          /Respondent by                     :    Shri Maurya Pratap

                         /                   :    22.05.2014
                   Date of Hearing
                                             :    18.06.2014
           Date of Pronouncement
                                    / O R D E R
Per Sanjay Arora, A. M.:

      This is an Appeal by the Assessee agitating the Order by the Commissioner of
Income Tax (Appeals)-29, Mumbai (`CIT(A)' for short) dated 25.04.2011, dismissing the
levy of penalty u/s.271(1)(c) of the Income Tax Act, 1961 (`the Act' hereinafter) for the
assessment year (A.Y.) 2003-04 vide order dated 24.03.2009.

2.    The background facts of the case are that the assessee, a co-operative housing
society's, income and expenditure (I & E) account for the relevant year was observed to
bear a credit of Rs.4,01,476/- by way of interest on bank fixed deposit/s (FD/s). The
assessee, thus, in the view of the Assessing Officer (A.O.), had claimed regular
                                                          ITA No. 6309/Mum/2011 (A.Y. 2003-04)
                                                          Turf View Co-op. Hsg. Soc. Ltd. vs. ITO

expenditure of the society against the said income, which is impermissible in view of section 57(iii), citing the decision by the apex court in the case of CIT vs. Dr. V. P. Gopinath [2001] 248 ITR 449 (SC) in support. Further, it had also claimed deduction u/s. 80P(2)(d) there-against and, thus, claimed a double deduction in respect of the said income. Income was, accordingly, assessed at Rs.32,03,407/-, as against the returned income of Rs.7,13,561/-; the other two adjustments made by the A.O. being toward interest on, similarly, income-tax refund (at Rs.26,070/-) and maintenance charges (at Rs.20,62,300/-) received from mobile companies (for allowing them to use the terrace space of the society's building, for setting up the mobile relay station/s), by treating it as `income from other sources' as against `income from house property'. Penalty proceedings were also initiated. The assessee failing to furnish any explanation, penalty stood levied at Rs.7,81,153/-, i.e., at 100% of the tax sought to be evaded. We are presently concerned with the bank interest of Rs.4,01,476/-, on which penalty stood confirmed by the first appellate authority, so that the assessee is in second appeal. 3. We have heard the parties, and perused the material on record. We are wholly unable to appreciate the Revenue's case (PB pg. 2). The assessee's income and expenditure account shows a net surplus of Rs.7.55 lacs. As such, excluding bank interest and interest on income-tax refund, which aggregate to Rs.4.28 lacs, would still leave a positive income of Rs.3.27 lacs. How, then, we wonder could it be said that the assessee had claimed the regular society expenses against bank interest, in gross violation of section 57(iii)? As regards deduction u/s.80P(2)(d), the bank interest is only on FDRs placed with the co-operative banks, which are only co-operative societies engaged in the business of banking, so that the same is exigible to deduction u/s.80P(2)(d). Deduction there-under stands in fact allowed by the A.O. himself in assessment. What, then, is the controversy about? Rather, we observe the assessee to have claimed interest on sinking fund (at Rs.1,57,181/-) per its income and expenditure account, and which may lead to the inference of the interest income being actually less and, accordingly, an excess claim for deduction u/s.80P(2)(d). However, as afore-stated, the A.O. has himself allowed 3 ITA No. 6309/Mum/2011 (A.Y. 2003-04) Turf View Co-op. Hsg. Soc. Ltd. vs. ITO
deduction u/s.80P(2)(d) at Rs.4,01,476/-. Further, the ld. Authorized Representative (AR), with reference to the assessee's computation of income for the year (PB pg.1), would show us that the interest on sinking fund stands in fact suo motu disallowed by the assessee, resulting in effect to a lower claim and allowance of deduction u/s.80P(2)(d), i.e., to that extent. In fact, we also observe non-claim of any standard deduction on the rental income of Rs.20.62 lacs, so that the change of head of income in its respect by the A.O. also did not result in any change in income. The assessee has returned a taxable income, paying tax at Rs.2,21,621/-. The charge of claim of mutuality by the assessee, as made by the ld. CIT(A), and which forms the basis of his confirming the penalty, is thus untrue. Looked at from any angle, thus, the Revenue's case is without any merit. The levy of impugned penalty is accordingly directed for deletion. We decide accordingly. 4. In the result, the assessee's appeal is allowed. Order pronounced in the open court on June 18, 2014 Sd/- Sd/- (Amit Shukla) (Sanjay Arora) / Judicial Member / Accountant Member Mumbai; Dated : 18.06.2014 . ../Roshani, Sr. PS /Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent 3. () / The CIT(A) 4. / CIT - concerned 5. , , / DR, ITAT, Mumbai 6. / Guard File / BY ORDER, / (Dy./Asstt. Registrar) , / ITAT, Mumbai
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