ITAT Allows Deductions for Co-op Society, Rules Location Not Sole Basis

The ITAT set aside the order disallowing deductions under sections 80P(2)(d) and 80P(2)(c)(ii) for a Co-operative Housing Society in Mumbai, noting that the denial based solely on location was legally unsustainable. The appeal by the assessee was allowed, overturning the disallowance of deductions. The issue of failure to serve notice under section 250 of the Income Tax Act was not specifically addressed in the judgment. The ITAT found the order's legality challenged by the appellant to be contrary to the Act, leading to the order being set aside and deductions allowed.

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Issues:
1. Disallowance of deduction u/s 80P(2)(d) of Rs. 7,37,074 (including interest on Saving fund Rs. 3,470) received from a Co-operative Bank.
2. Disallowance of deduction u/s 80P(2)(c)(ii) of Rs. 50,000.
3. Failure to serve notice u/s 250 of the Income Tax Act, 1961 to the appellant.
4. Legality of the order passed.

Analysis:
1. The assessee, a Co-operative Housing Society, filed a return of income claiming deductions u/s 80P(2)(d) of Rs. 7,37,074 and u/s 80P(2)(c)(ii) of Rs. 50,000. The order u/s 143(1) disallowed these deductions. The National Faceless Appeal Centre noted the discrepancies in the claim. The Ld.CIT(A) confirmed the disallowance, stating that the society did not satisfy the clauses of section 80P. The ITAT observed that the denial of deduction solely based on the society being situated in Mumbai was not legally sustainable. Hence, the order disallowing the deductions was set aside, and the appeal by the assessee was allowed.

2. The Ld.CIT(A) dismissed the grounds of appeal related to the disallowance of deductions u/s 80P(2)(d) and u/s 80P(2)(c)(ii) as the appellant, a Co-operative Housing Society in Mumbai, was deemed not to meet the requirements of section 80P. However, the ITAT found this reasoning insufficient and set aside the order, allowing the deductions claimed by the assessee.

3. The issue of failure to serve notice u/s 250 of the Income Tax Act, 1961 to the appellant was raised. The ITAT did not provide detailed analysis or findings specific to this issue in the judgment.

4. The legality of the order passed was challenged by the appellant, claiming it was contrary to the provisions of the Act. The ITAT, after a thorough review, found the order disallowing deductions under section 80P to be legally unsustainable solely based on the society's location in Mumbai. Consequently, the order was set aside, and the appeal was allowed.

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