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Income Tax Appellate Tribunal, ‘B’ (SMC
Before: SHRI MAHAVIR SINGH
आदेश /O R D E R This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Appeal No.CIT(A), Coimbatore- 3/10204/2018-19 dated 30.06.2022. The assessment was framed by the Income Tax Officer, Ward 1(4), Tirupur for the assessment year 2017-18 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 21.12.2018.
This appeal by assessee is time barred by 13 days and assessee has filed condonation petition. The facts are that the order of CIT(A) dated 30.06.2022 was received by assessee on 25.09.2022 and appeal should have been filed before the Tribunal on or before 24.11.2022 but actually appeal was filed before Tribunal only on 07.12.2022 thereby there is a delay of 13 days. The assessee stated the reason in its petition that it took assessee’s 10 days time to rectify the defect which came to assessee’s knowledge when the copy of appeal filed with the Appellate Tribunal stated that the due date of filing of ITAT has expired time. The reason given in petition reads as under:- Thus providing us the 10 Days’ time to rectify the defect caused. Here we came to know that we need to send the copy of the appeal filed with the Appellate Tribunal within the due date of filing ITAT appeal after the expiry of time. That’s how we send the appeal filed Document of 1 copy. We are regretting for our mistakes. The reason for the delay was caused due to wrong trough of producing the report at the hearing with the Appellate Tribunal.”
Hence, going by the reason, I condone the delay and admit the appeal.
Today, when this appeal was called for hearing, the assessee filed adjournment petition but going through the facts of the case, I
- 3 - noticed that this case can be decided ex-parte qua assessee. Hence, appeal was taken up for hearing.
The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the AO in denying the claim of deduction u/s.80P of the Act, in regard to interest earned by assessee claimed as exempt u/s.80P(2)(a)(i) of the Act for an amount of Rs.12,81,013/-. The AO while framing assessment disallowed the claim of deduction by observing that the assessee is maintaining savings account with Coimbatore District Central Co- operative Bank and regularly investing funds not immediately required for business purpose. Accordingly, the interest earned on such investment therefore cannot fall within the meaning of expression, profits and gains of business and hence, the AO treated such interest income falling under the category of ‘income from other sources’ taxable u/s.56 of the Act. According to him, the assessee is not entitled for any deduction under Chapter VIA of the Act. Accordingly, he disallowed the claim of deduction. Another facet made by AO is that the assessee’s Members are two sets of members i.e., ‘A class and ‘B’ class Members and therefore, the assessee’s claim of deduction cannot be allowed. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) also confirmed
- 4 - the action of the AO by following the decision of the Hon’ble Supreme Court in the case of Citizen Co-operative Society Limited vs. ACIT, 397 ITR 1 (SC). Aggrieved, now assessee is in appeal before the Tribunal.
I have heard ld. Senior DR and gone through facts and circumstances of the case. Admitted facts are that assessee is a Co- operative Society registered under TamilNadu Co-operative Societies Act, 1983 providing credit facilities only to its Members based on requirement and eligibility of each and every member and not to general public. The issue of membership whether class ‘A’ or class ‘B’ has been settled by Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Limited vs. CIT, Calicut [2021] 123 Taxmann.com 161 and further by Hon’ble High Court of Madras in the case of S-1308, Ammapet Primary Agricultural Co-operative Bank Ltd., in T.C.A Nos.882 and 891 of 2018. Admittedly, the assessee has made deposit with Coimbatore District Central Co- operative Bank which is again a society registered under the TamilNadu Co-operative Societies Act, 1983 and earned interest income from invested funds not immediately required for business purposes. From the above facts, it is clear that both the issues are covered in favour of assessee and against Revenue by the decision
- 5 - of Hon’ble Supreme Court in the case of Mavilayi Service Co- operative Bank Limited, supra which was followed by this Tribunal in the case of Tamilnadu Co-operative State Agriculture and Rural Development Bank Limited in ITA Nos.31 to 33/CHNY/2021 vide order dated 29.04.2022. As the facts and circumstances are identical, respectfully following the above precedents, I allow the claim of deduction u/s.80P of the Act.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 8th March, 2023 at Chennai.