Loading judgment…
Facts
The assessee filed appeals that were beyond the period of limitation, claiming the orders were received in spam mail and went unnoticed. The delay was approximately 379 days. The assessee is a cooperative society that unintentionally filed belated appeals.
Held
The Tribunal condoned the delay in filing the appeals, subject to a cost of Rs. 5,000/- to the Maharashtra Legal Aid Cell, noting no malafide intention from the assessee. The issue of disallowance of interest earned from fixed deposits with cooperative societies/banks was then considered on merits.
Key Issues
Whether the delay in filing the appeals should be condoned and whether interest earned from fixed deposits with cooperative societies/banks is deductible under Section 80P(2)(d).
Sections Cited
80P(2)(d), 56, 22, 80P, 57, 80P(2)(a)(i)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “K(SMC
Before: SMT. BEENA PILLAI & SHRI OMKARESHWAR CHIDARA
A.Y. 2016-17 Shree Siddhnath Sahakari Pathpedi Maryadit The present appeals filed by the assessee arises out of separate orders passed by NFAC, Delhi dated 24/02/2024 for assessment years under consideration.
At the outset, the Ld.AR submitted that though the assessee represented before NFAC and filed its submissions in respect of the issue of claim u/s.80P(2)(d) of the Act, the appeals filed before this Tribunal is beyond the period of limitation. The Ld.AR submitted that, the impugned orders passed for the year under consideration, was received by the assessee in the spam mail and therefore, was went out of notice of the assessee. He submitted that inadvertently the real time SMS issued by the department if any also went unnoticed. The appeals therefore, not be filed against impugned orders for the year under consideration within period of limitation causing delay of about more than 379 days. 2.1 The Ld.AR submitted that, upon receipt of penalty notice assessee realised about the appeals being disposed off by the NFAC. The assessee immediately took necessary steps to filed present appeals along with application seeking condonation of delay. 2.2 The Ld.AR submitted that, the assessee is co-operative society and due to the above inadvertence the appeal could not be filed within the period of limitation. It is submitted that there was no malafied intention on behalf of the assessee in filing the belated appeals before this Tribunal and prayed for admitting the appeals to be adjudicated on merits. 2.3 On the contrary, the Ld.DR objected for the condonation of delay.
It is noted that, the order passed by the Ld. CIT(A) is not an ex-parte order. The assessee was compliant to all the notice issued during the appellate proceedings. However, due to unavoidable circumstances the order passed by the NFAC went unnoticed as it was received in the spam folders. The revenue has not been able to point out any malafied intention on behalf of the assessee. Considering the fact that the explanation given by the assessee is accepted, subject to payment delay is in ordinate of cost of Rs. 5,000/- to Maharashtra Legal aid cell. The assessee is directed to furnish affidavit of payment of having made to the Maharashtra Legal Aid Cell. 3.1 Accordingly, the delay in filling the present appeal before this Tribunal for all the years under consideration stands condoned.
On merits it is noted that the disallowance made is in respect of interest earned by the assessee from the fixed deposits with other co-operative society/ co-operative banks.
4.1 We note that Hon'ble Supreme Court in the case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd. reported in (2023) 154 taxmann.com 305 has in detail analysed the allowability of deduction u/s. 80P(2)(d) of the Act. Hon'ble Court observed and held as under:
"15.8 Since the words 'bank' and 'banking company' are not defined in the NABARD Act, 1981, the definition in subclause (i) of clause (a) of section 56 of the BR Act, 1949 has to be relied upon. It states that a co-operative society in the context of a co-operative bank is in relation to or as a banking company.
Thus, co-operative bank shall be construed as references to a banking company and when the definition of banking company in clause (c) of section 5 of the BR Act, 1949 is seen, it means any company which transacts the business of banking in India and as already noted banking business is defined in clause (b) of section 5 to mean the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise. Thus, it is only when a co-operative society is conducting banking business in terms of the definition referred to above that it becomes a co-operative bank and in such a case, section 22 of the BR Act, 1949 would apply wherein it would require a licence to run a co-operative bank. In other words, if a cooperative society is not conducting the business of banking as defined in clause (b) of section 5 of the BR Act, 1949, it would not be a co-operative bank and not so within the meanings of a state co-operative bank, a central cooperative bank or a primary co-operative bank in terms of section 56(c)(i)(cci). Whereas a co-operative bank is in the nature of a banking company which transacts the business of banking as defined in clause (b) of section 5 of the BR Act, 1949. But if a co-operative society does not transact the business of banking as defined in clause (b) of section 5 of the BR Act, 1949, it would not be a cooperative bank. Then the definitions under the NABARD Act, 1981 would not apply. If a co-operative society is not a co-operative bank, then such an entity would be entitled to deduction but on the other hand, if it is a co- operative bank within the meaning of section 56 of BR Act, 1949 read with the provisions of NABARD Act, 1981 then it would not be entitled to the benefit of deduction under sub-section (4) of section 80P of the Act. 15.9 section 56 of the BR Act, 1949 begins with a non-obstante clause which states that notwithstanding anything contained in any other law for the time being in force, the provisions of the said Act, shall apply to, or in relation to, co-operative societies as they apply to, or in relation to, banking companies subject to certain modifications. The object of section 56 is to provide a deeming fiction by equating a co-operative society to a banking company if it is a co-operative bank within the meaning of the said provision. This is because Chapter V of the BR Act, 1949, deals with application of the Chapter to co- operative societies which are co-operative banks within the meaning of the said chapter. For the purpose of these cases, what is relevant is that throughout the BR Act, 1949, unless the context otherwise requires, - references to a "banking company" or "the company" or "such company" shall be construed as references to a cooperative bank. Therefore, while considering the meaning of a co-operative bank inherently, such a co-operative society must be a banking company then only it would be construed as a co-operative bank requiring a licence under section 22 of BR Act, 1949 in order to function as such a bank. 15.10 Further, while considering the definition of a cooperative bank under section 56(cci) of the BR Act, 1949, to mean a state co-operative bank, a central co-operative bank and a primary co-operative bank which is defined in A.Y. 2016-17 Shree Siddhnath Sahakari Pathpedi Maryadit (ccviii) thereof, to have meanings respectively assigned to them in the NABARD Act, 1981 would imply that if a state co-operative bank is within the meaning of NABARD Act, 1981 then it would be excluded from the benefit under section 80P of the Act. Conversely, if a co-operative society is not a cooperative bank within the meaning of section 56 of the BR Act, 1949, it would be entitled to the benefit of deduction under section 80P of the Act." 4.2 We therefore, direct the A.O. to verify whether interest/ dividend is received by the assessee out of investments made with Cooperative Societies. If the assessee earns interest/ dividend income out of investments with co-operative society, as observed by Hon'ble Supreme Court in the case of Kerala State Co- operative Agricultural and Rural Development Bank Ltd. (supra), the same is entitled to deduction u/s 80P(2)(d) of the I.T. Act. 4.3 Without prejudice to the above, we make it clear that if the interest earned by assessee is found to be from the banks, the same be considered under the head "Income from other sources" and necessary relief to be granted to the assessee u/s 57 of the Act in respect of cost of funds and proportionate administrative and other expenses in accordance with law. Accordingly, the issue is restored to the file of Ld.AO for denovo consideration with the above observations.
We direct the Ld.AO to carry out necessary verification based on the evidences filed by the assessee and to compute the deduction under section 80P(2)(a)(i)/(d) in accordance with law. Needless to say the proper opportunity of being heard must be granted to the assessee Accordingly the grounds raised by the assessee for all the assessment year stands partly allowed for statistical purposes.
A.Y. 2016-17 Shree Siddhnath Sahakari Pathpedi Maryadit In the result the appeal filed by the assessee for all the assessment year stands partly allowed for statistical purposes. Order pronounced in the open court on 31/10/2025