Cooperative society gets Section 80P deduction for member credit facilities despite 105-day filing delay

ITAT Kolkata allowed the appeal of a cooperative society after condoning a 105-day delay in filing, citing the society's remote location and officers' irregular email checking habits as bonafide circumstances. The tribunal held that the Primary Agricultural Credit Society was entitled to deduction under Section 80P(2)(i) for income from credit facilities provided to members, following the Mavilayi Services Cooperative Bank SC precedent. However, the society failed to establish that all credit recipients were members, so the matter was remanded to AO for verification and proper determination of eligible deduction amounts.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Eligibility for deduction u/s 80P of the Income Tax Act.

Summary:

Issue 1: Condonation of Delay in Filing the Appeal

The appeal by the assessee was delayed by 105 days. The assessee's manager submitted a notarised affidavit explaining that the delay was due to oversight of the appellate order received via email, which was not regularly checked. The Department objected, stating that the appellant was aware of the faceless regime and should have checked the IT portal regularly. The Tribunal referred to the Hon'ble Supreme Court's decision in N Balakrishnan vs. M. Krishnamurthy, emphasizing that condonation of delay is at the court's discretion and should be granted if the explanation is satisfactory and not malafide. The Tribunal found the assessee's explanation bonafide and condoned the delay, admitting the appeal for decision on merits.

Issue 2: Eligibility for Deduction u/s 80P of the Income Tax Act

The assessee, a Primary Agricultural Credit Society (PACS), claimed a deduction of Rs. 31,31,032/- u/s 80P. The AO denied the deduction, stating the assessee provided credit facilities to non-members and failed to establish its primary object of providing financial assistance for agricultural purposes. The CIT(A) upheld this decision without addressing the assessee's submissions. The Tribunal examined the provisions of section 80P, which allows deductions for co-operative societies engaged in providing credit facilities to members. The Tribunal also referred to the Hon'ble Supreme Court's judgment in The Mavilayi Service Cooperative Bank Ltd. & Ors. Vs. CIT, which clarified that PACS are entitled to deductions even if credit facilities are provided for non-agricultural purposes to members. The Tribunal concluded that the assessee is eligible for the deduction u/s 80P(2)(i) but only for income earned from members. The assessee was directed to provide necessary details to the AO to verify that credit facilities were extended to members only.

In conclusion, the appeal was allowed for statistical purposes, and the order was pronounced on 15th April, 2024.

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