TaxTMI 
TaxTMI 
2025 (3) TMI 2027
X X X X Extracts X X X X
X X X X Extracts X X X X
....s under: "This is to certify that we have no formal Board of Directors since 14/03/2018. At present the Co-operative Society has neither any Board of Director nor Special officer to take any higher decision. So we were confused that whether to file an Appeal in the Hon'ble Income Tax Appellate Tribunal or not. In the meantime, as per guidance of our Tax consultant, we filed a 'Rectification of orders passed by CIT' (Rectification Reference Number: 344103570020723) as on 2nd July, 2023 and was waiting for reply from respective Authority. But no reply has been received till date. Therefore it is very difficult for us to take any decision to file an appeal before The Hon'ble Income Tax Appellate Tribunal, Kolkata. Finally in discussion with our Ex-Board of Directors, we decided to file an appeal before The Hon'ble Income Tax Appellate Tribunal, Kolkata. Hence there is 160 days delay in filing the appeal which may be condoned." 2.1. Considering the application for condonation of delay and the reasons stated therein, we are satisfied that the assessee was prevented by reasonable and sufficient cause from filing the instant appeals within statutory ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....duction on enhanced profits, is quoted hereunder The issue of the claim of higher deduction on the enhanced profits has been a contentious one. However, the courts have generally held that if the expenditure disallowed is related to the business activity against which the Chapter VIA deduction has been claimed, the deduction needs to be allowed on the enhanced profits. 6. The hearing notice under section 250 has been served thru email on 01 06 2023 was not received by the appellant. Because it was communicated to very old email id which is not at their profile as primary email id. The primary email id is different. Even the appeal order has been served again to the wrong email id, The appellant found the Appeal order only after logged in to their income tax portal Therefore there was no communication to appellant email id. Therefore, the appeal order is invalid without given any opportunity of being heard. 7. That in exercise of the power to grant deductions under aforementioned sub- sections of Section 80P of the Income Tax Act, 1961, the learned Commissioner of Income tax (Appeals) should have applied his judicial mind and examine the records of the case and cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0% profit u/s 80P(2) under Chapter VI-A. The relevant portion of the Circular No. 37 2016 dated 02 11 2016 issued by the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, relating to the subject Chapter VIA deduction on enhanced profits, is quoted hereunder. The issue of the claim of higher deduction on the enhanced profits has been a contentious one. However, the courts have generally held that if the expenditure disallowed is related to the business activity against which the Chapter VIA deduction has been claimed, the deduction needs to be allowed on the enhanced profits. 6. The hearing notice under section 250 has been served thru email on 01.06.2023 was not received by the appellant. Because it was communicated to very old email id which is not at their profile as primary email id. The primary email id is different. Therefore there was no communication to appellant. Even the appeal order has been served again to the wrong email id, The appellant found the Appeal order only after logged in to their income tax portal. Therefore the appeal order is invalid without given any opportunity of being heard. 7. Tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o members only and non-members were also customers. The assessee disputed the applicability of the decision in the case of Citizen Co-Op Society Ltd. vs. ACIT, Circle-9(1), Hyderabad as they have multi-states banking business. A reference was also made to the clarification made by the CBDT vide Circular No. 133 of 2007 dated 9th May, 2007 wherein it was stated that sub-section (4) of section 80P of the Act will not apply to an assessee which is not a cooperative bank. The assessee also relied upon Circular No. 18 of 2015 dated 2nd November, 2015 with the subject 'Interest from non-SLR securities of banks' which was not found to be relevant by the Ld. AO. The Ld. AO noted that in the Bye-laws of the Society it was stated that the Society would provide credit facility to the members i.e. the facility should be confined to the members only. But the Society was engaged in the activities of accepting deposits under various schemes and giving loans against such deposits to non-members also. In reality, such activity of the Society was that of finance business and could not be termed as a cooperative Society which is meant only for its members and providing credit facility to its members.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....given without any reference to any restriction or limitation cannot be restricted or limited by implication, as is sought to be done by the Revenue in the present case by adding the word agriculture into Section 80P(2)(a)(i) when it is not there. Further, section 80P(4) is to be read as a proviso, which proviso now specifically excludes co-operative banks which are co-operative societies engaged in banking business i.e. engaged in lending money to members of the public, which have a licence in this behalf from the RBI. Judged by this touchstone, it is clear that the impugned Full Bench judgment is wholly incorrect in its reading of Citizen Cooperative Society Ltd. (supra). Clearly, therefore, once section 80P(4) is out of harm's way, all the assesses in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i) notwithstanding that they may also be giving loans to their members which are not related to agriculture. Also, in case it is found that there are instances of loans being given to non-member profits attributable to such loans obviously cannot be deducted. 46. It must also be mentioned here that unlike the Andhra Act that Cit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....deposit. (3) Granting of loans to members or to non-members under sub-section (2) and recovery thereof shall be in the manner as may be specified by the Registrar. Thus, the giving of loans by a primary agricultural credit society to non-members is not illegal, unlike the facts in Citizen Cooperative Society Ltd (supra). 7.3 Considering the above, the AO is directed to verify and examine the West Bengal State Co-operative Societies Act, under which the assessee is registered, and find out whether extending credit facilities to non-members are also one of the activity of the assessee, which is duly approved and registered by the West Bengal State Co-operative Societies Act, then the assessee will be entitled to avail deduction in terms of section 80P(2)(a) (i)/80P(4) of IT Actin light of the judgement of Hon'ble Supreme Court in the case of The Mavilayi Service Co-op Bank Ltd. (Supra). As a result, Ground of appeal are partly allowed. 8. Ground No.2 of the appeal is in respect of disallowance of Rs. 3,00,000/- which was claimed by the assessee on account of "Provision for Gratuity Payable" in their profit and loss account. The AO disallowed the same un....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act to the Ld. AO. It was submitted that the appellant is a Primary Agriculture Cooperative Society registered under West Bengal Cooperative Society Act, 2006. In the statements of fact filed along with the memo of the appeal the assessee has submitted as under: "The Appellant is a Primary Agricultural Co-operative Society (PACS) has been registered under West Bengal Co-operative Society Act, 2006, carrying on business of fertilizer, pesticides, seeds and other agricultural implements, providing KCC, SHG loans and carrying on the business of banking to its farmer member and local areas village people. The case was selected for Scrutiny Assessment u/s.143(2) of the Income Tax Act, 1961, for the Assessment Year: 2015-16 and the Authorized Representative of the assessee appeared before the Assistant Commissioner of Income Tax Office time to time and submitted all relevant papers and documents. In the assessment order, the learned Assessing Officer simply disallowed all the Net Profit. He also added back expenditure made on gratuity provisions without giving any deduction under section 80P(2)(a)(i) and 80P(2)(a)(iv) of the Income Tax Act 1961. As the assessee banking....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ads as under: "Deduction in respect of income of co-operative societies. 80P. [Deduction in respect of income of co-operative societies. [Inserted by Act 20 of 1967, Section 33 and Schedule III (w.e.f. 1.4.1968).] (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely:- (a) in the case of a co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or [(iii the marketing of the agricultural produce of its members, or] (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther co-operative society, the whole of such income; (e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income; (f) in the case of a co-operative society, not being a housing society or an urban consumers' society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on securities or any income from house property chargeable under section 22. Explanation. - For the purposes of this section an "urban consumers' co-operative society" means a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area or cantonment. (3) In a case where the assessee is entitled also to the deduction undersection 80HH or section 80HHA or section 80HHB or section 80HHC or section 80HHD or section 80I or section 80IA or section 80J....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to be done by the Revenue in the present case by adding the word "agriculture" into Section 80P(2)(a)(i) when it is not there. Further, section 80P(4) is to be read as a proviso, which proviso now specifically excludes co-operative banks which are cooperative societies engaged in banking business i.e. engaged in lending money to members of the public, which have a licence in this behalf from the RBI. Judged by this touchstone, it is clear that the impugned Full Bench judgment is wholly incorrect in its reading of Citizen Cooperative Society Ltd. (supra). Clearly, therefore, once section 80P(4) is out of harm's way, all the assessees in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i), notwithstanding that they may also be giving loans to their members which are not related to agriculture. Also, in case it is found that there are instances of loans being given to non-members, profits attributable to such loans obviously cannot be deducted." 15. In view of the facts of the case also by respectfully following the judgement of Hon'ble Apex court in the case of Mavilayi Services Coperative bank ltd. (supra) where the hon'ble court....