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Assessee represented by Shri Unmesh Dalal, AR Department represented by Shri Vinod Kumar, Sr. DR Date of institution of appeal 10/03/2023 Date of hearing 27/03/2023 Date of pronouncement 27/03/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned National Faceless Appeal Centre, Delhi (NFAC)/Commissioner of Income Tax (Appeals), (in short, the ld. CIT(A)) dated 06/08/2022 for the Assessment year (AY) 2015-16 wherein the assessee has raised following grounds of appeal: “1. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) has erred in not granting deduction u/s 80P of Rs. 2906100/- as per rectification and restricted to Rs. 1420206/-
2. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) has erred in not allowing deduction of interest and dividend as claimed in the return of income us/s 80P of the Income Tax Act.
3. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) has erred in disallowing Rs. 1 lakh from salary.
Shree Salabatpura Urban Co. Op. Credit Society Vs DCIT 4. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) has erred in not granting deduction in respect of interest and dividend received from Co.Op Bank.
On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) has erred in raising tax of Rs. 519097/- as against Rs. 29059/- claimed in the rectification.
On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) has erred in not appreciating that there are various decision in favour of the appellant.
The appellant reserves right to add, alter, vary any or all grounds of appeal
.”
2. Perusal of record shows that the impugned order was passed by the ld. CIT(A)/NFAC on 06/08/2022, however, the present appeal is filed on 10/03/2023, thus, there is delay of about 152 days in fling the appeal before the Tribunal. The assessee has filed application for condonation of delay alongwith affidavit of secretary of assessee society. In the application, the assessee stated that the Secretary of assessee society Shri Shashikant Harilal Waghela was looking after the financial and taxation affair of assessee society. His father was seriously sick and ultimately died on 21/01/2023. Death certificate and medical certificate issued by the Doctor is filed on record. The learned Authorised Representative (ld. AR) of the assessee submits that the assessee society is a small cooperative credit society, Shri Shashikant Harilal Waghela is the only person who is well-versed with day to day affair and to take legal action. His father was seriously ill in the month of October, November and December, 2022 and ultimately died on 21/01/2023. Copy of death certificate is already placed on record. The ld. AR of the assessee submits that non-filing of appeal within time was neither Shree Salabatpura Urban Co. Op. Credit Society Vs DCIT intentional nor deliberate but due to the reasons beyond control of secretary of society. There was no malafide intention of the assessee, rather delay was for the reasons explained above. The ld. AR submits that the assessee has good case on merit and will suffer prejudice if delay in filing of appeal is not condoned.
On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue opposed the plea of condonation of delay. The ld. Sr. DR submits that the application for condonation of delay does not disclose the proper reason for condoning such delay. The delay is very long and may not be condoned.
I have considered the submissions both the parties and perused the record carefully. There is no dispute that the impugned order was passed by the ld. CIT(A)/NFAC on 06/08/2022.The ld. AR of the assessee fairly accepted that the impugned order was received on 08/08/2022. The ld AR for the assessee explained that father of secretory of assess-society was seriously ill in the month of September to December, 2022 and ultimately died on 21/01/2023. Copy of death certificate is already placed on record. Considering the facts and circumstances of the case and the cause of delay explained by the ld. AR of the assessee, I find that the assessee has shown reasonable cause for condonation of delay. Even otherwise, it is settled position under law of limitation that when technical consideration and cause of substantial Shree Salabatpura Urban Co. Op. Credit Society Vs DCIT justice are pitted against each other, the cause of substantial justice must be prevailed. Keeping in view such principle, the delay in filing appeal is condoned. Now adverting to the various grounds of appeal
raised by the assessee.
5. At the outset of hearing, the ld. AR of the assessee submits that he is not pressing grounds No. 1,2,4 and 6 of the appeal and the same may be dismissed being not pressed. The ld. Sr. DR has raised no objection if these grounds of appeal is dismissed as not pressed. Considering the submissions of both the parties, grounds No. 1,2,4 and 6 of the appeal are dismissed being not pressed.
6. Ground No. 5 of the appeal relates to demand of tax of Rs. 5.19 lacs against the tax of Rs. 29,059/- as claimed in the rectification application. The ld. AR of the assessee submits that the Assessing Officer has not worked out the tax as per the tax rate applicable on cooperative society, against which the assessee has already filed an application for rectification, which is pending before assessing officer. The ld. AR of the assessee confronted with the fact that this ground of appeal is not emanating from the impugned order of ld CIT(A). On confronting such fact, the ld. AR fairly accepted his application is still pending before the Assessing Officer. Considering the fact that the application of assessee for rectification of tax demand is still pending before the Assessing Shree Salabatpura Urban Co. Op. Credit Society Vs DCIT Officer and this ground of appeal is not emanating from the order of ld. CIT(A), therefore, dismissed as premature.
7. Ground No. 3 of the appeal relates to disallowance of Rs. 1.00 lacs from salary expenses.
8. Brief facts of the case qua this ground of appeal are that the assessee is a cooperative society engaged in providing credit facility to its Members. The assessee filed its return of income declaring NIL income after claiming deduction of Rs. 26,12,407/- under Section 80P of the Income Tax Act, 1961 (in short, the Act). The case of assessee was selected for limited scrutiny. During the assessment, the Assessing Officer noted that the assessee has debited major expenses against commission income is on account of salary expenses of Rs. 4,33,700/-. The total salary expenses debited is Rs. 5,33,000/-. The assessee was issued show cause whether the assessee society has employed separate employee for daily collection charges. The assessee explained that staff is common for both the activities. The staff of collection charges are mostly engaged in the business of collection. The reply of assessee was not accepted by the Assessing Officer by taking a view that considering the volume of business activities of providing credit facility, it is difficult to believe that staff for the business of providing credit facility are very few. The commission income does not fall in the business activities. The assessee gets only Rs. 50,000/- deduction from business under Section Shree Salabatpura Urban Co. Op. Credit Society Vs DCIT 80P(2)(c) of the Act. Thus, the explanation of assessee was not considered satisfactory and additional salary expenses of Rs. 1.00 lacs was disallowed and added to the total income of assessee.
9. Aggrieved by the disallowance of salary expenses of Rs. 1.00 lac, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee made similar submissions as made before the Assessing Officer. The ld. CIT(A) after considering the submissions of assessee, concur with the action of Assessing Officer by holding that he is in agreement with the findings of Assessing Officer. Further aggrieved, the assessee has filed the present appeal before this Tribunal.
I have heard the submissions of the ld. AR of the assessee and the ld. Sr. DR for the Revenue and have gone through the orders of the lower authorities carefully. The ld. AR of the assessee submits that the expenses of Rs. 1.00 lacs was incurred for the employee engaged for daily collection. The expenses were incurred wholly and exclusively for the purpose of its business. The lower authorities has not disputed the activities of the assessee.
On the other hand, the ld. Sr. DR for the revenue supported the orders of lower authorities.
I have considered the submissions of both the parties and perused the record carefully. I find that the Assessing Officer disallowed the expenses of Rs. 1.00 lacs by taking a view that considering the volume Shree Salabatpura Urban Co. Op. Credit Society Vs DCIT of business activities of providing credit facility, the staff is sufficient and disallowed the salary of employee engaged for collection charges. In my view, the assessee is the best person to assess its requirement for smooth functioning of its affairs. The existence of person to whom such salary was paid is not doubted by the assessing officer, rather held that there is sufficient staff with the assessee. Considering the facts and circumstances of the case, I am of the view that the action of Assessing Officer was not justified to assess the justification of number of employees or their expenses, therefore, I direct the Assessing Officer to allow the salary expenses of Rs. 1.00 lac to the assessee.
In the result, this appeal of the assessee is allowed. Order pronounced in the open court on 27th March, 2023.