TaxTMI 
TaxTMI 
2025 (12) TMI 1859
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....ct Memo stating that the Appeal is barred by 282 days. The Assessee has filed an application for condoning the delay. The main reason shown by the Assessee is that Assessee on the receipt of the original order was advised not to challenge the same as per its practitioners. The Assessee was pressed with the demand and therefore when the demand notice came, the Assessee approached the present counsel during the first week of July 2025 and also informed that their earlier counsel has advised not to challenge the above said order. The present counsel on verification of the order found that the case of the Assessee has a good case on the merits and as well as on the allowances of expenditure u/s. 57 of the Act and therefore he must prefer an Appeal. Soon, he went to the Assessee and immediately filed the Appeal. He was also advised to deposit the adequate fees for filing of the Appeal. The Assessee deposited a challan of Rs. 10,000/- on 03.07.2025 and thereafter filed appeal on 08.07.2025. Therefore, the delay is because of the sufficient cause being the wrong advice given by the erstwhile consultant and as soon as the Assessee received the correct advice it diligently filed the Appeal.....
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....ct against condoning delay which is attributable to the applicant. Although the actual period of delay might be instructive, it is the explanation for the delay which would be the decisive factor. 8. Hon'ble supreme court as relied by the ld DR in Pathapati Subba Reddy (Died) by L. Rs. v. Special Deputy Collector (LA), reported in MANU/SC/0285/2024 : 2024:INSC:286, summarized the principles governing the exceptions imagined under "sufficient cause" vis-à-vis substantive justice as under:- "26. On a harmonious consideration of the provisions of the law, as aforesaid, and the law laid down by this Court, it is evident that: (i) Law of limitation is based upon public policy that there should be an end to litigation by forfeiting the right to remedy rather than the right itself; (ii) A right or the remedy that has not been exercised or availed of for a long time must come to an end or cease to exist after a fixed period of time; (iii) The provisions of the Limitation Act have to be construed differently, such as Section 3 has to be construed in a strict sense whereas Section 5 has to be construed liberally; (iv) In order to advance....
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....t itself a loose panacea for the ill of pressing negligent and stale claims. The expression is to be construed with justice-oriented flexibility so as not to punish innocent litigants for circumstances beyond their control. 126. Courts must not condone gross negligence, deliberate inaction, or casual indifference, for to do so would undermine the maxim interest reipublicae ut sit finis litium and destabilize the certainty that limitation law seeks to secure. 127. The expression "sufficient cause" must be construed in a manner that advances substantial justice while preserving the discipline of limitation. The courts are not to be swayed by sympathy or technical rigidity, but rather by a judicious appraisal of whether the applicant acted with reasonable diligence in pursuing the remedy. Where explanation is bona fide, plausible, and consistent with ordinary human conduct, courts have leaned towards condonation. Where negligence, want of good faith, or a casual approach is discernible, condonation has been refused. i. Length of the delay may be instructive but not determinative. 128. When it comes to condonation of delay, the length of delay is imm....
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....ative of doing justice in deserving cases. 134. Thus, in exercising discretion Under Section 5 of the Limitation Act the courts should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former case the consideration of prejudice to the other side will be a relevant factor so the case calls for a more cautious approach but in the latter case, no such consideration may arise and such a case deserves a liberal approach. No hard-and-fast Rule can be laid down in this regard. The court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause", the principle of advancing substantial justice is of prime importance. ii. Technical Considerations vis-a-vis Substantive Justice. 135. In construing "sufficient cause" it must be borne in mind that Rules of procedure are handmaids of justice. Procedural rigidity should not become an instrument of injustice. In the context of Section 5 of the Limitation Act, this balance assumes special significance. Courts have repeatedly underscored that while l....
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....ing, and "sufficient cause" must be shown in substance, not in empty form. This ensures that the balance between justice and certainty is not skewed in favour of unmerited litigants. 140. However, at the same time, the courts must be mindful that strong case on merits is no ground for condonation of delay. When an application for condonation of delay is placed before the court, the inquiry is confined to whether "sufficient cause" has been demonstrated for not filing the appeal or proceeding within the prescribed period of limitation. The merits of the underlying case are wholly extraneous to this inquiry. If courts were to look into the merits of the matter at this stage, it would blur the boundaries between preliminary procedural questions and substantive adjudication, thereby conflating two distinct stages of judicial scrutiny. The purpose of Section 5 of the Limitation Act is not to determine whether the claim is legally or factually strong, but only whether the applicant had a reasonable justification for the delay. 141. Test of "sufficient cause" cannot be substituted by an examination of the merits of the case. Condonation of delay is a matter of discretion....
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....s and lending/borrowing from members. It has earned interest income of Rs. 1,06,99,450/- on its deposits with the Co-operative banks. After setting of the expenditure on the losses, it has claimed deduction u/s. 80P(2)(a)(i) of Rs. 69,41,759/-. The Assessee was asked that why the deduction claimedby the Assessee should not be deleted in view of the decision of the Hon'ble Karnataka High Court in case of Principal Commissioner of Income Tax v/s. Totgars Co-operative Sale Society (2017) 395 ITR 611 wherein the deduction u/s. 80P(2)(d) is denied. The Assessee submitted that Assessee is entitled to deduction. However, the Ld. Assessing Officer denied the deduction to the Assessee applying provisions of section 80P(2)(d) relying on the decision of the Hon'ble Karnataka High Court. The deduction was denied of Rs. 69,41,759/-. The Assessee preferred an Appeal before the Ld. CIT(A) wherein the Appeal of the Assessee was decided by upholding the action of the Ld. Assessing Officer. Therefore, the Assessee is in appeal before us. 13. The assessee has given a submission stating that jurisdictional High Court order in case of Tumkur merchants and state bank of India state cooperative credit....
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.... of the Act. The Ld. Assessing Officer has disallowed the above claim treating it as income from other sources. He is of the view that the interest income earned by the Assessee is income from other sources. The claim of the Assessee is that it is chargeable to tax as business income and deduction is allowable u/s. 80P(2)(a)(i) of the Act. 16. We find that the decision of the honourable Karnataka High Court in case of Tumkur Merchants Souharda Credit Cooperative Ltd. vs. Income-tax officer Word-V, Tumkur [2015] 55 taxmann.com 447 (Karnataka)/[2015] 230 Taxman 309 (Karnataka)[28-10-2014] has categorically discussed this issue and held that assessee is eligible for deduction under section 80P(2) (a) (i) of the act as under:- 6. From the aforesaid facts and rival contentions, the undisputed facts which emerges is, the sum of Rs. 1,77,305/- represents the interest earned from short-term deposits and from savings bank account. The assessee is a Cooperative Society providing credit facilities to its members. It is not carrying on any other business. The interest income earned by the assessee by providing credit facilities to its members is deposited in the banks for a short d....
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....gested by the learned Solicitor-General, it has used the expression ''derived from", as, for instance, in section-80J. In our view, since the expression of wider import, namely, "attributable to'', has been used, the legislature intended to cover receipts from sources other than the actual conduct of the business of generation and distribution of electricity.' 8. Therefore, the word "attributable to" is certainly wider in import than the expression "derived from". Whenever the legislature wanted to give a restricted meaning, they have used the expression "derived from". The expression "attributable to" being of wider import, the said expression is used by the legislature whenever they intended to gather receipts from sources other than the actual conduct of the business. A Cooperative Society which is carrying on the business of providing credit facilities to its members, earns profits and gains of business by providing credit facilities to its members. The interest income so derived or the capital, if not immediately required to be lent to the members, they cannot keep the said amount idle. If they deposit this amount in bank so as to earn interest, th....
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....of the Act. In fact similar view is taken by the Andhra Pradesh High Court in the case of CIT v. Andhra Pradesh State co-operative Bank Ltd., [2011] 200 Taxman 220/12 taxmann.com 66 . In that view of the matter, the order passed by the appellate authorities denying the benefit of deduction of the aforesaid amount is unsustainable in law. Accordingly it is hereby set aside. The substantial question of law is answered in favour of the assessee and against the revenue. Hence, we pass the following order: 17. In the above decision it is held that if the interest income is attributable to the business of the assessee cooperative societies, deduction u/s 80P(2) (a) (i) of The Act cannot be denied to the assessee. Further the decision of the honourable supreme court was also considered in paragraph no 9 of the decision. 18. In Principal Commissioner of Income-tax, Hubli vs. Totagars Co-operative Sale Society [2017] 78 taxmann.com 169 (Karnataka)/ [2017] 392 ITR 74 (Karnataka) [05-01-2017] it is held that: 7. However, the contention being taken by the learned counsel is untenable. For the issue that was before the ITAT, was a limited one, namely whether for the purpose of Se....
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....l for the Revenue even arise in the present case. 12. For the reasons stated above, this Court does not find any merit in the present appeal. Hence, the appeal is dismissed. 19. Further in Principal Commissioner of Income-tax, Hubballi vs. Totagars Co-operative Sale Society [2017] 83 taxmann.com 140 (Karnataka)/ [2017] 395 ITR 611 (Karnataka)/ [2017] 297 CTR 158 (Karnataka) [16-06-2017] the honourable High court was also drawn attention to both the above decisions and in Para no 19 it held as under: - "19. In our opinion, it would not make a difference, whether the interest income is earned from investments/deposits made in a Scheduled Bank or in a Co-operative Bank. Therefore, the said decision of the Co-ordinate Bench is distinguishable and cannot be applied in the present appeals, in view of the binding precedent from the Hon'ble Supreme Court." 20. Thus, all the three decisions of the Hon'ble Karnataka High court considered the decision of Hon'ble supreme court in Totgars, Co-operative Sale Society Ltd. vs. Income-tax Officer, Karnataka [2010] 188 Taxman 282 (SC)/[2010] 322 ITR 283 (SC)/[2010] 229 CTR 209 (SC) [08-02-2010]. All the above three decisi....