Appeal allowed for delay in filing, case restored for decision on merit.

The tribunal allowed the appeal for statistical purposes, condoning the delay in filing the e-appeal and restoring the matter to the CIT(A) for a decision on merit. The CIT(A) is directed to decide the issues on merit after providing a reasonable opportunity of being heard to both sides. The tribunal did not adjudicate on the merits of the case at this stage.

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Issues Involved:
1. Condonation of delay in filing the e-appeal.
2. Disallowance of deduction under Section 80P.
3. Classification of interest income under the head "Income from Other Sources."

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the E-Appeal:

The assessee filed an appeal on 26th April 2016 in paper format against the assessment order dated 31st March 2016. The CIT(A) dismissed the appeal on the grounds that the condonation of delay was not granted for the e-appeal filed on 14th October 2017. The tribunal noted that the requirement for e-filing was effective from 1st March 2016, and the assessee filed the paper appeal within the stipulated time. The tribunal also considered the CBDT Circular No. 20/16 dated 26th May 2016, which acknowledged the taxpayers' difficulties in e-filing due to technical issues and extended the time limit for e-filing up to 15th June 2016. Given these circumstances, the tribunal condoned the delay of 570 days in filing the e-appeal and restored the matter to the CIT(A) for a decision on merit.

2. Disallowance of Deduction under Section 80P:

The assessee contested the disallowance of deduction under Section 80P, arguing that it is a co-operative society providing credit facilities to its members and not a co-operative bank. The tribunal referred to the Karnataka High Court's decision in the case of Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, which distinguished between a co-operative society and a co-operative bank, holding that deduction under Section 80P is allowable to a co-operative society. The tribunal also noted that the assessee is registered under the Karnataka Co-operative Society Act, 1959, and not under the Karnataka Souharda Sahakari Act, 1997. The tribunal emphasized the importance of reading Section 80P liberally to promote the growth of the co-operative sector, as highlighted by the Supreme Court in the case of Citizen Cooperative Society Limited.

3. Classification of Interest Income Under the Head "Income from Other Sources":

The assessee argued that the interest income earned was from the deposit of Statutory Reserve Fund and other specific funds, not from idle and surplus funds. The tribunal noted that the society is mandated to transfer 25% of its profits to the Statutory Reserve Fund, which must be deposited in co-operative banks and cannot be utilized without the Registrar's permission. The interest earned on these funds must also be transferred to the Reserve Fund. The tribunal found that treating this interest income as earned from idle and surplus funds was incorrect and that the interest should be considered as business income in the course of co-operative business.

Conclusion:

The tribunal allowed the appeal for statistical purposes, condoning the delay in filing the e-appeal and restoring the matter to the CIT(A) for a decision on merit. The CIT(A) is directed to decide the issues on merit after providing reasonable opportunity of being heard to both sides. The tribunal did not adjudicate on the merits of the case at this stage.

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