BIANCA CO OPERATIVE HOUSING SOCIETY LIMITED,MUMBAI vs. INCOME TAX OFFICER - 24(1)(1), MUMBAI

All the grounds raised in the present appeal are directed against the order of CIT(A) dismissing the appeal and thereby, confirming the disallowance of INR 27,27,524/- made by the Assessing Officer in respect of deduction claimed by the Appellant in the return of income under Section 80(P)(2)(d) of the Act for the interest income received from co-operative banks.

We have considered the rival submission and perused the material on record.

Both sides agreed that, on merits, identical issue stands decided in favour of the Appellant vide order, dated 13/04/2023, passed by the Co-ordinate Bench of the Tribunal in appeal preferred by the Appellant for the Assessment Year 2018-19 [ITA No. 339/Mum/2023]. In the aforesaid decision, the Tribunal held that the Appellant was entitled to claim deduction under Section 80P(2)(d) of the Act in respect of interest income received from a co-operative bank. The relevant extract of the aforesaid decision of the Tribunal reads as under:

Thus, from a perusal of the aforesaid Sec. 80P(2)(d) it can safely be gathered that income by way of interest income derived by an assessee co- operative society from its Investments held with any other cooperative society, shall be deducted in computing the total income of the assessee. We may herein observe, that what is relevant for claim of deduction under Sec. SOP(2)(d) is that the interest income should have been derived from the investments made by the assessee co-operative society with any other cooperative society. We though are in agreement with the observations of the lower authorities that with the insertion of Sub- section (4) of Sec. 80P, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, but however, are unable to subscribe to their view that the same shall also jeopardise the claim of deduction of a co- operative society under Sec. 80P(2)(d) in respect of the interest income on their investments parked with a co-operative bank. We have given a thoughtful consideration to the issue before us and are of the considered view that as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other co- operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We may herein observe that the term 'co-operative society' had been defined under Sec. 2(19) of the Act, as under:- '(19) "Co-operative society" means a cooperative 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 co-operative societies;' 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 of the Act, but however, as 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 enforced in any state for the registration of co-operative societies, therefore, the interest income derived by a co- operative 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.”

Therefore, in view of the above and respectfully following the decision of the coordinate bench, we uphold the plea of the assessee and direct the AO to grant deduction under section 80P(2)(d) of the Act to the assessee in respect of interest income earned from investment with co-operative banks. Accordingly, we set aside the impugned order passed by the learned CIT(A). In view of our aforesaid findings, ground No. 1 raised by the assessee is allowed for statistical purposes."

Thus, in view of above decision, the Appellant is entitled to claim deduction under Section 80P(2)(d) of the Act in respect of the interest received from co-operative banks. However, we note that the CIT(A) had dismissed the appeal as being barred by limitation. During the course of hearing Counsel for the Appellant submitted that the delay in filing appeal before the CIT(A) was caused on account of bonafide reasons. We note that in the Statement of Facts filed before the CIT(A) along with the appeal memo in Form 35, it was stated as under: "CONDONATION OF THE DELAY IN FILING THE ABOVE APPEAL AND THE GROUNDS OF APPEAL Assessee being a co. op. housing society & the day to day operations of the same were managed by the designated manager who had the exclusive access to all the society emails & communications. Unfortunately during the tenure when the assessment order dated 19-09-2022 for ay 2020- 21 was passed the manager was on a long leave & the email communications were left unattended. During that period also no hard copies of the assessments orders were also received by the society M.C. as a back up mechanism. The matter came to light only on the manger resuming duties on receiving the show cause notice U/S 270A dated 23-01-2023 by email & then the matter came to disclosure & so cognizance of the earlier connected relevant orders U/S 143(3) was taken on immediate priority. Hence in view of the above unforeseen facts and considering the un- intentional delay, the fault or lapse on assesse part of assesse, the delay in filing the appeal may please be condoned & hence allowing the opportunity of providing the natural justice it is our humble request to admit the appeal filed hereby and oblige".

The Learned Counsel for the Appellant also placed reliance on the affidavit, dated 05/07/2024, sworn by the secretary of the Appellant/Co-operative Society in support of the above explanation offered before the CIT(A).

We note that for identical reasons the appeal filed by the Appellant before the Tribunal for the Assessment Year 2018-19 was delayed by 141 days. Accepting the explanation furnished by the Appellant, the Tribunal, vide order dated 14/04/2023 passed in ITA No. 339/Mum/2023, condoned the delay in filing the appeal holding as under:

In view of the above, the assessee has requested to condone the delay as the same is unintentional and due to circumstances beyond the control of the assessee. On the other hand, the learned Departmental Representative ("learned DR") did not raise any serious objection against the application seeking condonation of delay. Having perused the affidavit, we find that the Impugned order dated 20/07/2022, was received by the assessee on the same date. Thus, as per the provisions of section 253(3) of the Act, the assessee was required to file the appeal within 60 days from the date of receipt of the order. However, the assessee filed the appeal, for the year under consideration, on 06/02/2023. The reasons stated by the assessee for seeking condonation of delay fall within the parameters for grant of condonation laid down by the Hon'ble Supreme Court in the case of Collector Land Acquisition, Anantnag Vs. MST Katiji and others: 1987 SCR (2) 387. It is well established that rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial Justice deserves to be preferred. In the present case, the assessee did not stand to benefit by late filing of the appeal. In view of the above and having perused the affidavit, we are of the considered view that there exists sufficient cause for not filing the present appeal within the limitation period and therefore, we condone the delay in filing the appeal by the assessee and we proceed to decide the appeal on merits.”

We are also of the view that the Appellant had sufficient cause for not filing appeal before the CIT(A) within the prescribed time. In the facts and circumstances of the present case it cannot be said that there was excessive or inordinate delay in filing the appeal and that the reason stated by the Appellant show a reasonable cause not filing appeal within limitation. In our view the delay deserves to be condoned. Accordingly, in view of the explanation provided by the Appellant we condone the delay of 103 days in filing the appeal before CIT(A) is condoned. Further, on merits the issue raised stands decided in favour of the Appellant by the decision of the Tribunal in the case of the Appellant for the Assessment Year 2018-19 [ITA No. 339/Mum/2023, dated 13/04/2023], and therefore, remanding the issue back to the file of the CIT(A) for adjudication on merits would amount to empty formality. Therefore, respectfully following the aforesaid decision of the Tribunal in the case of the Appellant for the Assessment Year 2018-19, we overturn the decision of the CIT(A) and delete the disallowance of INR 27,27,524/- made by the Assessing Officer with the direction to allow deduction for the same under Section 80(P)(2)(d) of the Act.

In view of the above, Ground No. 2 raised by the Appellant is allowed; Ground No. 4 raised by the Appellant is disposed off as being consequential; and all the other grounds raised by the Appellant are disposed off as being infructuous.

In result, the present appeal preferred by the Assessee is allowed. Order pronounced on 19.07.2024. (Narendra Kumar Billaiya) Accountant Member मुंबई Mumbai; दिनांक Dated : 19.07.2024 Poonam Mirashi Stenographer (Rahul Chaudhary) Judicial Member