AA531 KESARIMANGALAM PRIMARY AGRL CO-OP CREDIT SOCIETY LIMITED,TIRUPUR vs. INCOME TAX OFFICER, WARD 2(1) ERODE, ERODE

01.2025 घोषणाकीतारीख /Date of Pronouncement : 05.03.2025

The main grievance of the assessee is that the First Appellate Authority has refused to condone the delay in respect of filing of appeal before him and consequently didn’t admit the appeal for adjudication.

The Ld.AR pointed out that the assessment order was passed by the AO on 24.12.2018, and that assessee had filed the appeal belatedly with a delay of 1600 days. The assessee has filed an affidavit explaining the reason for the delay; and on perusal of it, reveals that the assessee was not aware of the existence of assessment order that was passed by AO on 24.12.2018 and came to know about it only in the first week of March, 2020 and immediately thereafter assessee handed over to the Ld.AR, the relevant papers for filing appeal before the Ld.CIT(A). But, because Covid- 19 pandemic paralyzed the functioning of institutions from 20th March, 2020, therefore, the Ld.AR could not file the appeal within 30 days and therefore, he filed the appeal only on 22.05.2023. According to the Ld.AR, the Department circular itself had extended the period of “Taxation and other laws (Relaxation and Amendment of certain Provisions of the Act, 2020)” [TOLA] up to March, 2023 and since the assessee had filed within 60 days of the end of TOLA period, the delay may be condoned. AA531 Kesarimangalam Primary Agrl. Co-op. Credit Society Ltd. :: 3 ::

Per contra, the Ld.DR doesn’t want us to condone the delay considering the delay of 1575 days in filing appeal before Ld CIT(A)

Having heard both the parties on the issue of delay caused in filing appeal before the Ld.CIT(A), it is noted that the assessee society has filed an affidavit through its secretary explaining the delay. According to assessee’s secretary, he was not aware of the e-proceedings which led to the passing of the assessment order in December, 2018; and he came to know about it [i.e., passing of assessment order] only when it was pointed out by the Member of TamilNadu Accounting and Taxation Services Co- operative Society, in the first week of March, 2020. Having come to know about the assessment order, he immediately handed over the relevant documents to the Ld.AR for filing of appeal before the Ld.CIT(A), but due to Covid-19 pandemic all the institutions, including the courts were shut down from 20th March, 2020 and consequently, appeal couldn’t be filed in March, 2020, which led to filing of appeal in May, 2023. Therefore, the main plea is that the period of Covid-19 be excluded keeping in view that TOLA has extended the period of limitation from 20.03.2022 to 30.03.2023; and since the assessee had filed the appeal on 22.05.2023 i.e., within a period of 52 days, it is pleaded that delay be condoned. Considering the overall facts AA531 Kesarimangalam Primary Agrl. Co-op. Credit Society Ltd. :: 4 ::

The main grievance of the assessee is against the action of the AO denying deduction u/s.80P(2)(d) of the Income Tax Act, 1961 (hereinafter the ‘Act’) to the extent of Rs.7,06,759/-.

The brief facts are that the assessee had filed the return of income for AY 2016-17 on 08.03.2018 admitting ‘nil’ income after claiming deduction u/s.80P(2)(a)(i) of the Act. Later the case of the assessee was selected for scrutiny under CASS and the AO asked the assessee to file relevant documents for claiming deduction under Chapter VIA and pursuant to it, the AO acknowledged that assessee had filed byelaws, profit & loss account, etc., and he further noted that the assessee society has claimed deduction u/s.80P(2) of the Act amounting to Rs.15,06,083/- being income from providing credit facility to its members. The AO also noted the credit facilities were being provided by the assessee to its ‘A’ class members as AA531 Kesarimangalam Primary Agrl. Co-op. Credit Society Ltd. :: 5 ::

Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), who rejected the appeal without admitting it citing the reason of delay, supra. Aggrieved, assessee is before us.

We have heard both the parties and perused the record. We are not repeating the facts for the sake of brevity. We note that the assessee is a primary agricultural co-operative credit society registered under the AA531 Kesarimangalam Primary Agrl. Co-op. Credit Society Ltd. :: 6 ::

The assessee carried the matters on appeal to the Commissioner of Income Tax (Appeals) [hereinafter called the CIT(A)], who, by separate orders respectively dated 30.8.2016 and 31.7.2017 respectively for the assessment years 2013- 14 and 2014-15, allowed the appeals filed by the assessee. As against the same, the Revenue carried the matters on appeal to the Tribunal. However, the Tribunal, by the impugned orders, dismissed the appeals filed by the Revenue. Therefore, the Revenue is before us.

The learned Senior Standing Counsel for the Revenue submits that the decision of the Hon'ble Supreme Court in the case of Citizen Cooperative Society Limited Vs. ACIT [reported in (2017) 84 Taxmann.com 114] is in favour of the Revenue and that the review petition filed against that decision was dismissed by the Hon'ble Supreme Court in the decision reported in (2017) 88 Taxmann.com 279. He further submits that in the case of CIT, Panaji, Goa Vs. Goa Staff Cooperative Housing Finance & Federation Ltd. [reported in (2016) 73 Taxmann.com 400], the Revenue filed a special leave petition and leave has been granted by the Hon'ble Supreme Court by order dated 12.8.2016. 11. We have elaborately heard the learned Senior Standing Counsel for the Revenue.

Admittedly, the assessee – society is registered under the provisions of the TNCS Act. It defines the word 'members' under Section 2(16) to mean a person joining in the application for the registration of society and a person admitted to the membership after registration in accordance with the provisions of the Act, the Rules framed thereunder and the By-laws and includes an associate member. The expression 'associate member' is defined under Section 2(6) of the TNCS Act to mean a member, who possesses only such privileges and rights of a member and who is subject only to such liabilities of a member as may be specified in this Act, the Rules and the By-law.

Thus, the definition of the word 'members' includes an associate member and therefore, the Assessing Officer fell into an error in drawing a distinction between A Class members and B Class members. For the purpose of being entitled to a relief under Section 80P of the Act, all that is required is that the cooperative society should answer the description of a society engaged in carrying on the business of providing credit facilities to its member. Once the description is answered, then automatically, the benefit of Section 80P of the Act would stand attracted subject to the provisions contained in Sub- Section (2) of Section 80P of the Act.

Further, it is to be pointed out that in terms of Sub-Section (4) of Section 80P of the Act, which was inserted vide the Finance Act, 2006 with effect from 01.4.2007 i.e from the assessment year 2007-08, the 'primary cooperative agricultural and rural development bank' means 'a society having its area of operation confined to a taluk, the principal object of which is to provide for long term credit for agricultural and rural development activities'. What was excluded was the 'cooperative banks' and admittedly, the assessee society is a primary agricultural cooperative credit society and therefore, would be entitled to the benefit of Section 80P of the Act.

Further, for the assessment year 2014-15, the decision in the case of Citizen Cooperative Society Limited was relied upon by the Revenue before the Tribunal, which, in paragraph 6.1 of its order dated 28.2.2018 for the assessment year 2014-15, extracted the operative portion of that judgment. In that case, the Hon'ble Supreme Court found that the society carried on certain activities, which were contrary to the provisions of the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995 and that they accepted deposits from third parties, who were not members in the real sense and were using those deposits to advance gold loans. Therefore, the Hon'ble Supreme Court pointed out that such an activity of the said society was that of a finance business and could not be termed as a cooperative society and that the loans, which were disbursed, were without the approval from the