POONAM CHAMBERS B WING COMMERCIAL PREMISES CO OPERATIVE SOCIETY LTD,MUMBAI vs. DEPUTY COMMISSIONER INCOME TAX, MUMBAI

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ITA 2542/MUM/2026Status: DisposedITAT Mumbai14 July 2026AY 2020-219 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal and decided to adjudicate the matter on merits. It also noted that the CIT(A) had erred in not considering the merits of the case due to the delay and the clerical mistake.

What were the facts?

The assessee filed an appeal against the CIT(A)'s order. The appeal was filed with a significant delay and contained a clerical error regarding the demand amount. The primary issue was the disallowance of deduction claimed under Section 80P(2)(d) on interest income from co-operative banks.

What were the issues?

Whether the delay in filing the appeal should be condoned and the appeal adjudicated on merits. Whether the interest income earned from co-operative banks is eligible for deduction under Section 80P(2)(d).

Which sections of the Income-tax Act were involved?

Section 80P,Section 56,Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH MUMBAI

Before: SHRI SAKTIJIT DEY, HONBLE & SHRI GIRISH AGRAWAL

Hearing: 07.07.2026Pronounced: 14.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY, HON'BLE VICE PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 2542/MUM/2026 Assessment Year: 2020-21 Poonam Chambers B Wing Deputy Commissioner Income Commercial Premises Co Tax -Circle 22-1, Operative Society Ltd Mumbai Poonam Chambers , B Wing, Vs. Dr A B Road, Worli, Mumbai - 400018 (PAN: AAAAP1685M) (Appellant) (Respondent) Present for: Assessee : Shri Vishnu Agarwal, CA Revenue : Shri Ajay Soneji, Sr.DR Date of Hearing : 07.07.2026 Date of Pronouncement : 14.07.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of ld. CIT(A)/ National Faceless Appeal Centre, Delhi vide No. ITBA/NFAC/S/250/2025-26/1083267805(1) dated 03.12.2025 passed against the assessment order by Assessment Unit, u/s 143(3) r.w.s. 144B of the Income-tax Act (hereinafter referred to as the “Act”), dated 20.09.2022, for the Assessment Year 2020-21.

2.

Grounds taken by the assessee are reproduced as under: 1. That the learned Commissioner of Income Tax –Appeals, erred in passing the impugned order dtd 03-12-2025 on the basis of demand of Rs. 14,32,032 instead of correct demand 35,34,743, due to caracal mistake in filling Form No. 35, by

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the Appellant, while filing the appeal, however due to an inadvertent technical or system error, the details of the main assessment demand were auto-replaced while updating the penalty particulars, resulting in the appellate order mentioning the demand of Rs. 14,32,032 instead of the correct assessment demand of Rs. 35,34,743, which mistake was purely unintentional and deserves to be rectified in the interest of justice. 2. The learned Assessing Officer erred in law and on facts in passing the assessment order under section 143-3 bearing DIN No. ITBA-AST-S-143-3-2022- 23- 1045726430-1 dated 20.09.2022 for A.Y. 2020-21, by disallowing the deduction claimed under section 80P-2-d of the Income Tax Act, 1961 amounting to Rs. 84,99,745 in respect of interest income earned from co-operative banks, by wrongly treating the same as Income from Other Sources under section 56 of the Act, thereby resulting in a tax demand of Rs. 35,34,743, which action is unjust, arbitrary and contrary to the provisions of law. 3. The Learned CIT-A erred in law and on facts in refusing to condone the delay of 904 days in filing the appeal and not adjudicating the appeal on merits, despite the Assessee entitlement to deduction under section 80P-2-d of the Income Tax Act 1961, in spite of earlier 3 AYs ie AY 2013-14, 2014-15 and 2018-19, CITA, passed order was in favor of Assessee on the same point. Delay in filing is due to the dispersal of the Management Committee and appointment of an Administrator by Registrar of Co-operative Societies, which is sufficient cause, Administrator is government officer who failed to file appeal within the prescribed time, because of this society member should not be held responsible. 4. Case law citation for condonation of delay in filing is, 1. ITA No. 88-KOL-2025 in the case of Madhya Shikarpur Charalkhali SKUS Ltd., where delay of 563- 589 days was condoned due to administrative bottlenecks under the Assistant Registrar of Co-operative Societies, District Nadia, and 2. in the case of Masoomeen Education Society, where delay of 323 days was condoned on the principle that substantial justice should prevail over technical considerations. 5. The appellant craves leaves to add, alter or amend aforesaid ground or grounds of appeal and submit the details statement of facts on or before the hearing.”

3.

Ld. Counsel for the assessee brought to the knowledge of the Bench that there is a delay of 904 days in filing the first appeal before the ld. CIT(A), for which detailed explanation were furnished seeking condonation of the delay in filing the same. Ld. CIT(A) after having considered the same, noted that the impugned assessment order is dated 20.09.2022 and the first appeal is filed on 23.04.2025, resulting in a delay of 904 days which is beyond the statutory limit prescribed

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u/s. 249(2). He noted the key reasons explained by the assessee for the said delay as reproduced below: “The delay was primarily caused due to procedural delays at the office of the registrar of co-operative society. Since July 2022 the management committee has been dissolved, due to dispute amongst the society members and the registrar of co-operative society appointed administrator for managing the daily affairs of the society. Since, the society administration was under the control of the registrar/administrator, they have not taken any action towards the outstanding statutory liabilities, and we society members were not having access to the accounts, compliance or financial transactions and also not authorized to take any action to resolve the same. Now after proper elections being conducted, the society is formed some time back only and therefore, we humbly request your esteemed office to condone the delay and allow us to submit the necessary documents and grant us the opportunity to file our case.”

3.1. However, ld. CIT(A) did not find himself convinced with the detailed explanations given by the assessee for condoning the delay and dismissed the appeal as not maintainable since assessee could not demonstrate “sufficient cause” in terms of section 249(3) of the Act.

4.

To address the issue in hand before us, we need to delve into the understanding of the expression "sufficient cause". Sub-section 3 of Section 249 contemplates that ld. CIT(A) may admit an appeal after expiry of relevant period, if he is satisfied that there was a "sufficient cause" for not presenting it within that period. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon'ble High Court as well as before the Hon'ble Supreme Court, then, Hon'ble Court were unanimous in their conclusion that this expression is to be used liberally.

4.1. We may make reference to the following observations of the Hon'ble Supreme Court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353: "1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.

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2.

Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so." 4.2. Similarly, we would like to make reference to authoritative pronouncement of Hon'ble Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under:

"Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life- span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR

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1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss." 4.3. We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon'ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice-oriented approach.

5.

We have considered the submissions made before us. Ld. CIT DR objected on the submissions made by the assessee by contending that the assessee has defaulted before the authorities below in complying with the requirements. We have perused the material placed on record and gone through the orders of the authorities below.

6.

Considering the submissions made by the assessee before the ld. CIT(A) as well as contentions raised through its grounds in the present appeal, we do take note of Hon'ble Supreme Court's repeated emphasis on the view that "substantial justice" must prevail over technical lapses, we emphasize that the merits should not be stifled due to a failure to respond, provided such failure is not mala fide.

7.

In the light of the above, if we examine the facts, then it would reveal that there is delay of 904 days in filing of first appeal. For the just

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decision of the controversy, considering the explanation furnished by the assessee, we find it appropriate to condone the delay in filing the appeal before ld. CIT(A).

8.

The issue involved in the present appeal is in respect of disallowance of deduction claimed by the assessee u/s. 80P(2)(d) on account of interest income earned from fixed deposit investments made with cooperative banks. Assessee is a cooperative housing society deriving its income from its members and interest on fixed deposits from cooperative banks. Assessee filed its return of income on 30.12.2020 reporting its income at Rs. 7,07,570/-after claiming deduction u/s 80P(2)(d) for Rs. 84,99,745/-. Ld. Assessing Officer in his order has taken note of the fact from the submissions made by the assessee that it had invested in other cooperative banks, from where it earned interest of Rs.1,76,474/- and Rs.83,23,271/- (totalling to Rs.84,99,745/-) during the year. Assessee had filed its documentary evidences to substantiate its claim of deduction u/s. 80P(2)(d). However, he after considering all the submissions disallowed the claim of the assessee u/s. 80P(2)(d) for the said interest income.

9.

The aspect of allowability u/s.80P(2)(d) is extensively dealt by the Hon'ble High Court of Karnataka in case of the PCIT vs. Totagar Cooperative Sales Society Limited [2017] 78 taxmann.com 169 (Kar). Relevant findings given in para 7 to 12 are as under: "7. However, the contention being taken by the learned counsel is untenable. For the issue that was before ITAT, was a limited one, namely whether for the purpose of Section 80P(2)(d) of the Act, a Co-operative Bank should be considered as a Co-operative Society or not? For, if a Co-operative Bank is considered to Co- operative Society, then any interest earned by the Co-operative Society from a Co- operative Bank wo necessarily be deductible under Section SOP(I) of the Act. 8. The issue whether a Co-operative Bank is considered to be a Co- operative Society is no longer res integra. For the said issue has been decided by the ITAT

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itself in different cases. Moreover, the word "Co-operative Society" are the words of a large extent, and denotes a genus, whereas the word "Co-operative Bank" is a word of limited extent, which merely demarcates and identifies a particular species of the genus Co-operative Societies. Co- Operative Society can be of different nature, and can be involved in different activities; the Cooperative Society Bank is merely a variety of the Co-operative Societies. Thus the Co- operative Bank which is a species of the genus would necessarily be covered by the word "Co-operative Society". 9. Furthermore, even according to Section 56(i)(ccv) of the Banking Regulations Act, 1949, defines a primary Co-operative Society bank as the meaning of Co- Operative Society. Therefore, a Co-operative Society Ban. would be included in the words 'Co- operative Society'. 10. Admittedly, the interest which the assessee respondent had earned was from a Co-operative Society Bank Therefore, according to Sec. 80P(2)(d) of the IT. Act, the said amount of interest earned from a Co-operative Society Bank would be deductible from the gross income of the Co-operative Society in order to assess it: total income. Therefore, the Assessing Officer was not justified in denying the said deduction to the assessee respondent. 11.The learned counsel has relied on the case of Totgars Co- operative Sale Society Ltd. v. IΠΟ (2010) 322 ITR 283/188 Taxman 282 (SC). However, the said case dealt with the interpretation, and the deduction, which would be applicable under Section 80P(2)(a)(i) of the I.T. Act. For, in the present case the interpretation that is required is of Section 80P(2)(d) of the L.T. Act and not Section 80P(2)(a)(i) of the IT. Act. Therefore, the said judgment is inapplicable to the present case. Thus, neither of the two substantial questions of la canvassed by the learned counsel for the Revenue even arise it is the present case. 12. For the reasons stated above, this Court does not find any merit in the present appeal. Hence, the appeal is dismissed.”

10.

We also find that the issue before us of whether a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) for the interest income derived from its investments held with a cooperative bank or not, is covered in favor of the assessee not only by the decision of Hon’ble High Court of Karnataka referred above but also in plethora of cases including few of the following cases:

(i) Land and Cooperative Housing Society Ltd. v. ITO (2017) 46 CCH 52 (Mum)

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(ii) C. Green Cooperative Housing and Society Ltd. v. ITO 21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017

(iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. v. ITO Range- 20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. 11. From the above, we understand that under section 80P(2)(d) assessee is entitled for the deduction in respect of interest or dividends received from investments made with any other cooperative societies. From the above extraction, we also note that Hon'ble High Court held that the word ‘cooperative society’ are the words of large extent and denotes a genus, whereas the word ‘cooperative bank’ is a word of limited extent, which merely de-markets and identifies a particular species of the genus ‘cooperative societies’. Thus, a cooperative bank is merely a variety of the cooperative societies which can be of a different nature and can be involved in different activities.

11.1. We are of the considered view that though the co-operative bank pursuant to the insertion of Sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P, however, since a co- operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of cooperative societies, therefore, the interest and dividend income derived by a cooperative society from its investments held with a co-operative bank, would be entitled for claim of deduction under Sec.80P(2)(d) of the Act.

12.

Considering the factual matrix in the present case which are akin to the judicial precedents dealt above and the judicial precedents referred, we hold that assessee is entitled to claim of deduction u/s.

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80P(2)(d). Accordingly, disallowance made by the ld. Assessing Officer is deleted.

13.

In the result, appeal filed by the assessee is allowed.

Order pronounced in the open court on 14 July, 2026.

Sd/- Sd/- (Saktijit Dey) (Girish Agrawal) Vice President Accountant Member Dated: 14 July, 2026 MP, Sr.P.S.

Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai

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