THE PUNA KUMBHARIA GROUP CO-OP FRUITS AND VEGE GROW SOCIETY LIMITED,SURAT vs. ACIT CIRCLE 3(2), SURAT

The grounds of appeal

These two appeals filed by assessee are delayed by 328 and 418 days in terms of provisions of section 253(3) of the Act. The assessee has filed affidavits of the President of the assessee-society, giving reason for delays in filing of appeals before the Tribunal. In the affidavit for AY 2017-18, it has been stated that the appeal should have been filed on or before 28.04.2024 but it was filed on 18.03.2025 after a delay of 328 days. It is submitted that the physical copy of the order passed by the CIT, NFAC was not received by him. The appellate order was sent on the e-mail Id mentioned in Form 35 belonging to the past Counsel.

On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue submitted that the Bench may decide the matter as it thinks fit.

We have heard both the parties on this preliminary issue of delay in filing appeal. In the affidavit, it is submitted that the appellant did not receive the order, which was sent in the e-mail Id of the earlier consultant. It came to knowledge of the appellant after receipt of the physical copy of the subsequent penalty proceedings. Though the appellant was not alert, the delay in filing appeal was not deliberate and intentional. Moreover, the assessee is not going to be benefitted by filling appeal belatedly. It is fairly settled that when technical consideration and cause of substantial justice are pitted against each other, the cause of substantial justice may be preferred. Hence, in the interests of justice, the delay in filing appeal is condoned subject to the payment of cost of Rs.10,000/- (Rupees Ten Thousand only) by the appellant to the credit of the 3 & 355/SRT/2025/AY 2017-18 & 2018-19 The Puna Kumbharia Group Co-op. Fruits & Vege Grow Soc. Ltd. ‘Prime Minister’s National Relief Fund’ within 3 weeks from receipt of this order.

Aggrieved by the order of AO, the assessee filed the appeal before the CIT(A). The appellant raised a ground regarding disallowance of claim of Rs.30,05,803/- u/s 80P(2)(d) of the Act in respect of interest received by the appellant from co-operative bank. The CIT(A) reproduced the submission of the appellant at pages 3 to 14 of the appellate order. The finding of the CIT(A) is at pages 14 to 18 of the appellate order. The CIT(A) observed that the appellant society had earned interest income of Rs.30,05,803/- from Surat District Co-op. Bank. Ltd. The assessee claimed that income as deduction u/s 80P(2)(d) of the Act by considering the co-operative bank as co-operative society. The CIT(A) referred to the decisions in cases of SBI vs. CIT, (2016) 72 taxmann.com 64 (Guj.) and CIT vs. The Totagars Co-op. Sales Society (supra) and held that the income by way of interest earned by the assessee co-operative society during the AY 2017-18 on the investments made in the co-operative bank, i.e., The Surat District Co-operative Bank Ltd., is not eligible for deductions u/s 80P(2)(d) of the Act. After considering the various decisions, he upheld the disallowance of the deduction of Rs.30,05,803/- u/s 80P(2)(d) of the Act. Accordingly, the appeal was dismissed by the CIT(A). 5 & 355/SRT/2025/AY 2017-18 & 2018-19 The Puna Kumbharia Group Co-op. Fruits & Vege Grow Soc. Ltd.

Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee filed a paper book and relied on the decisions in cases of (i) PCIT vs. Ashwinkumar Arban Co-operative Society Ltd., (2024) 168 taxmann.com 314 (Guj.), (ii) PCIT vs. Lodhika Sahakari Kharid Vechan Sangh Ltd., (2025) 176 taxmann.com 71 (Guj.), (ii) PCIT vs. Shree Aradhana Urban Co-op. Credit Society Ltd., (2025) 172 taxmann.com 537 (Guj.), (iv) Bardoli Vibhag Gram Vikas Co-op. Credit Society Ltd vs. PCIT, 189 ITD 601 (Surat – Trib.) and (v) Surat Vankar Sahakari Sangh Ltd. vs. ACIT, (2016) 72 taxmann.com 169 (Guj.). He submitted that the Hon’ble Gujarat High Court in case of Ashwanikumar Arban Co-operative Society Ltd. (supra) has considered and distinguished the order passed by the Hon’ble Supreme Court in case of Totagars Co-operative Sales Society Ltd. (supra) and held that deduction u/s 80P(2)(d) is available to Co-operative Societies on income earned as interest on investment made with co-operative bank, which in turn is a co-operative society itself.

On the other hand, the learned Senior Departmental Representative (ld. CIT-DR) relied on the orders of the lower authorities and the decision of Hon’ble Supreme Court in case of Totagars Co-operative Sale Society Ltd. (supra).

We have heard both the parties and perused the material available on record. We have also deliberated upon the decisions relied upon by both sides. The ground raised

In view of the above dictum of law as well as the provisions of the Act which are considered we are of the opinion that the provisions of section 80P(2)(d) would be applicable in the facts of the case and the PCIT was not justified in invoking revisional powers under section 263 of the Act which is rightly reversed by the Tribunal holding that the cooperative bank is a cooperative society registered under the Gujarat State Cooperative Societies Act and in view of the various decisions of the Court, the Tribunal after following the same has come to the conclusion that the assessment was not erroneous allowing deduction of section 80P(2)(d) of the Act which is in consonance with the various decisions of the Court as a twin condition invoking section 263 as to the assessment being erroneous and prejudicial to the interest of the revenue are not being fulfilled.”

In the subsequent decision in case of Rajkot Lodhika Sahakari Kharid Vechan Sangh Ltd. (supra), the Hon’ble jurisdictional High Court followed the above decision in case of Ashwinikumar Arban Co-operative Society Ltd. (supra) & 355/SRT/2025/AY 2017-18 & 2018-19 The Puna Kumbharia Group Co-op. Fruits & Vege Grow Soc. Ltd. and held that where assessee society earned interest income on fixed deposit kept with co-operative bank, assessee was eligible for deduction u/s 80P(2)(d) on the said interest income. The facts of the instant case are similar to the facts of the case discussed above. Hence, respectfully following the decisions cited supra, the grounds raised by the assessee are allowed.