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Facts
The assessee, Ambika Co-operative Housing Society Limited, filed an appeal before the Ld.CIT(A) with a delay of 1080 days. The appeal arose from an order passed by NFAC, Delhi. The primary issue was the disallowance of a claim for deduction under Section 80P(2)(d) of the Income Tax Act, 1961, related to interest earned on fixed deposits.
Held
The Tribunal held that the delay in filing the appeal before the Ld.CIT(A) could not be entirely attributed to the assessee as they were pursuing an alternative remedy under Section 154. The issue regarding the deduction under Section 80P(2)(d) was remitted back to the AO for fresh consideration in light of the Hon'ble Supreme Court's decision in Kerala State Cooperative Agricultural and Rural Development Bank vs. AO.
Key Issues
Whether the delay in filing the appeal before the Ld.CIT(A) should be condoned? Whether the assessee is eligible for deduction under Section 80P(2)(d) on interest income from fixed deposits?
Sections Cited
80P(2)(d), 234B, 234C, 143(1)(a), 154, 57, VI-A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SMT. BEENA PILLAI
Per Smt. Beena Pillai, JM: Present appeal filed by assessee arises out of order dated 02/07/2025 passed by NFAC, Delhi [hereinafter “the Ld.CIT(A)”], for Assessment Year 2020-21, on the following grounds of appeal:-
1. 1. 1. 1. 1. 1. “1. The learned ADDL/JIT (A)-1 GUWAHATI, hereinafter referred to as, The CIT(A)' erred in dismissing the appeal by not condoning the delay in filing the appeal.
The learned ADDL/JIT (A)-1 GUWAHATI, hereinafter referred to as, CIT(A)' erred in not allowing deduction of Rs.3,82,160.00 u/s.80P(2)(d) of the Income Tax Act, 1961 on account of interest received from Co-operative Bank on Fixed deposits.
3. The CIT(A) erred in levying the interest u/s.234B of Rs.22,059.00 and u/s.234C of Rs.5,862.00. The appellant carves leave to add, amend, alter or delete any of the ground of appeal
in the course of hearing of appeal or before the hearing of appeal.”
2. At the outset, the Ld. AR submitted that there was a delay of 1080 days in filing the appeal before Ld.CIT(A) which was not condoned. He submitted that the assessee was disallowed the claim of deduction u/s 80P by CPC vide intimation dated 25/11/2021 passed u/s 143(1)(a) of the Act. The Ld. AR submitted that upon receipt of the same, the assessee proceeded to file a rectification petition u/s 154 of the Act, which was disposed of by order dated 03/03/2022. The Ld. AR submitted that, in the meantime, the managing committee of the assessee underwent a change and it was only when the assessee received the demand notice that it came to its knowledge about the order having passed by the Ld. First Appellate Authority.
2.1. The Ld. AR further submitted that the delay of 1080 days cannot entirely be attributed to the assessee, as the assessee was pursuing an alternative remedy u/s 154 of the Act, thereby causing the delay. He submitted that the order passed u/s 154 of the Act was also not received by the assessee through e-mail and that the assessee subsequently collected it upon being informed by the department, after which immediately the appeal was filed before the Ld.CIT(A). He thus submitted that the assessee may be granted one more opportunity of being heard, as the assessee is a co-operative society working on the principle of mutuality and its entire income is claimed to be exempt under Chapter VI-A of the Act.
2.2. On the contrary, the Ld. DR placed reliance on the orders passed by the authorities below and submitted that sufficient case has not been made out by the assessee for the delay in filing the appeal before the Ld.CIT(A).
It is noted that, the only claim raised by the assessee in its return of income relates to deduction u/s 80P(2)(d) of the Act, which was disallowed by CPC. The view of the Tribunal on this issue is by and large settled in light of the decision of the Hon’ble Supreme Court in the case of Kerala State Cooperative Agricultural and Rural Development Bank vs. AO reported in (2023) 154 taxmann.com 305 (SC).
3.1. In the interest of justice, the issue is remitted back to the file of the Ld. AO to consider the claim of the assessee in accordance with the ratio laid down in the aforesaid decision, wherein the claim of interest on fixed deposits has to be considered u/s 80P(2)(d) of the Act. It may be noted that, if such interest is earned from co- operative banks, not holding a licence to function as a bank under the RBI, the deduction is to be allowed. On the contrary, if any portion of such interest cannot be considered u/s 80P(2)(d) in view of the observations of the Hon’ble Supreme Court in the aforesaid decision, the same shall be assessed as income from other sources after allowing deduction of expenditure u/s 57 of the Act. The assessee is directed to furnish all relevant documents to assist the Ld.AO to verify its claim. Needless to say that proper opportunity of being heard must be granted to assessee.
Accordingly, the grounds raised by the assessee are partly allowed for statistical purposes.