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Facts
The assessee, a primary agricultural credit society, faced two disallowances by the A.O. for AY 2017-18: Rs. 1,68,101/- under section 80P(2)(a)(iv) for income from PDS items, and interest income earned from a State Co-operative Bank under section 80P(2)(d). The appeal against the CIT(A)'s order was filed with a delay of 97 days.
Held
The tribunal condoned the 97-day delay in filing the appeal, adopting a liberal approach. It remanded the issue of PDS income to the A.O. for re-evaluation, instructing to consider expenses against gross receipts to determine the net taxable value. For the interest income from the co-operative bank, the tribunal held that it is eligible for deduction under section 80P(2)(d) of the Income Tax Act, citing judicial precedents.
Key Issues
1. Whether a 97-day delay in filing the appeal should be condoned. 2. Whether income from PDS items is eligible for deduction under section 80P(2)(a)(iv) and how expenses should be treated. 3. Whether interest income from investments with a State Co-operative Bank qualifies for deduction under section 80P(2)(d).
Sections Cited
Income Tax Act, Section 142(1), Section 250, Section 80P(2)(a)(iv), Section 80P(2)(d), Section 80P(2)(c), Section 80P(4), Section 2(19), Limitation Act, Co-operative Societies Act
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM
The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 13.03.2025 for the assessment year 2017-18 as per the grounds of appeal on record.
At the very outset, the Ld. Counsel for the assessee submitted that the present appeal is time barred by 97 days. Elaborating the reasons leading to the said delay, the Ld. Counsel has filed condonation petition a/w. affidavit dated 17.09.2025. For the sake of completeness, the contents of the condonation application are culled out as follows:
On a perusal of the condonation application a/w. affidavit in respect of the captioned appeal, I am of the considered view that the reasons for delay involved in the captioned appeal is purely circumstantial and there is no malafide or deliberate conduct on the part of the assessee. Further, the revenue has failed to bring on record any evidence which suggest that there was any lackadaisical approach on the part of the assessee. That at the same time in the issue of delay a liberal and judicious approach must be adopted also as has been held by the Hon’ble Apex Court in a recent judgement. The Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal Vs. ITO, Ward-2, Ambikapur, Civil Appeal Nos…………/2025 [Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31.01.2025, had observed that a justice oriented and liberal approach ought to be adopted while considering the aspect of condoning the delay involved in filing of the appeal. Also, the Hon’ble High Court of Chhattisgarh in the case of Jagdish Prasad Singhania Vs. Additional Commissioner of Income Tax (TDS), Raipur (C.G.), TAX Case No.17/2025, dated 24.02.2025, after relying on the judgment of the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal Vs. ITO, Ward-2, Ambikapur (supra) had held that a justice oriented and liberal approach be adopted while considering the application filed by the assessee for condonation of delay.
That in the recent judgment of the Hon’ble Supreme Court in the 3. case of Inder Singh Vs. the State of Madhya Pradesh, Civil Appeal No…………/2025, Special Leave Petition (Civil) No.6145 of 2024, dated 21st March, 2025, the Hon’ble Apex Court while interpreting Section 5 of the Limitation Act, 1963 regarding the condonation of delay in respect of case of land acquisition has observed and held on the aspect of delay that although the delay cannot be condoned without sufficient cause, the merits of the case could not be discarded solely on the ground of delay. A liberal approach, therefore, should be taken in condoning the delay when limitation ground undermines the merits of the case and obstructs the substantial justice. In other words, the objective of the court should be to deliver substantial justice coupled with liberal and judicious approach while deciding the issue of limitation and whenever it is found that the case has merits which needs to be addressed substantially, in such case, the delay should be condoned. Accordingly, the said delay of 97 days involved in the captioned appeal is condoned.
The relevant facts in this case are that the assessee is a primary agriculture credit society and is providing loan facility to its members. It is also providing PDS and fertilizer items to its members. The first disallowance was made by the A.O u/s.80P(2)(a)(iv) of the Income Tax Act, 1961 (for short ‘the Act’) of Rs.1,68,101/-. It was observed by the A.O in the assessment order that the assessee is providing PDS and fertilizer at government rate to its member. That as per Section 80P(2)(a)(iv) of the Act, income earned by the assessee by way of purchasing agricultural seeds, livestocks and other articles intended for agriculture for the purpose of supplying to its members is qualified for deduction as per the said provisions. However, income from PDS item will fall outside the purview of this provision and hence, the said income was treated as regular income beyond the scope of deduction u/s.80P(2)(a)(iv) of the Act and added to the income of the assessee. The same was confirmed by the Ld. CIT(Appeals)/NFAC.
Having heard the submissions of the parties herein and considering the entire documents on record, I am of the view that admittedly the assessee is also procuring fertilizers and agriculture products to be given to its members and to that extent, there is compliance as per Section 80P(2)(a)(iv) of the Act. However, with regard to the addition on account of PDS items, it has been contended by the Ld. Counsel for the assessee that the department could not add the entire gross receipts and the expenses needs to be deducted therefrom and the net resultant amount can only be subject to tax.
The Ld. Sr. DR submitted that in such case, the matter should be examined by the A.O to the extent of expenses that have been incurred as against gross receipts in respect of PDS items.
Considering the aforesaid facts and circumstances and as per submissions of the parties herein, this issue is remanded to the file of the A.O for identifying the expenses as against gross receipt from PDS items and after determining the same, the net resultant value shall be addressed for the purpose of taxation. Hence, the ground pertaining to this issue stands allowed for statistical purposes.
The other addition made by the A.O is with regard to interest income earned from State Co-operative Bank which has been disallowed u/s.80P(2)(d) of the Act. The A.O held that as per Section 80P(2)(d) of the Act, a Co-operative Credit society is qualified for deduction with regard to any income earned by way of interest derived from investments with any other Co-operative societies. However, interest income earned from any other Co-operative bank shall not qualify for deduction u/s.80P(2)(d) of the Act.
Coming to the issue of deduction u/s. 80P(2)(d) of the Act, it is crystal clear from the aforesaid provision that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not deny the otherwise eligibility u/s.80P(2)(d) of the Act of a co- operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co- operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessee is also a Cooperative society registered, hence, qualify for grant of deduction u/s. 80P(2)(d) of the Act. The aforesaid view has been held by the Co-ordinate Bench of the Tribunal, Pune in the case of Marathawada Krishi Vidyapeeth Karmachari Sahakari Patsanstha Ltd. & Anr. Vs. Pr.
Commissioner of Inocme Tax & Anr., (2022) 66 CCH 0402. Similar view has been taken by the ITAT, “SMC” Bench, Panaji in the case of the Sesa Goa Employees Coop. Credit Society Ltd. Vs. ACIT, Circle-2(1), Panaji, dated 16.11.2022.
Further, in the case of the Bhandari Co-op. Credit Society Ltd. Vs. ITO, Ward-1(5), Panaji, & 102/PAN/2023, dated 20.09.2023, the issue was with regard to deduction claimed u/s. 80P(2)(a)(i) as well as under the provisions of section 80P(2)(d) of the Act for interest income earned from investment with Co-operative banks. The Tribunal had referred to the case of Lokmangal Nagri Sahakari Path Sanstha Maryadit Vs. PCIT in for A.Y. 2017- 18, order dated 29.11.2022 a/w. other judicial pronouncements which supports the assessee’s claim. The Tribunal in the aforesaid case held that the interest income earned by the Co-operative society from the Co- operative banks qualifies for deduction u/s.80(P)(2)(d) of the Act. Respectfully following the aforesaid decisions, on the same parity of reasoning, this ground of appeal stands allowed.
In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in open court on 9th day of October, 2025.