TaxTMI 
TaxTMI 
2024 (5) TMI 1722
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....rary to CBDT Circular No. 37/2016 dated 02-11-2016 which gives the relief in respect of any disallowance of business expenditure by way of deduction under Chapter -VI A of the Act to the extent profits so enhanced by such disallowance; and 3. Both the authorities below passed the impugned Orders contrary to established principles laid down by the Hon'ble Supreme Court and High Court." 2. At the outset, the Ld.AR submitted that there is delay of 59 days in filing the present appeal. 2.1 The assessee has filed condonation petition vide affidavit dated 08.03.2024 seeking the delay to be condoned. 2.2 The assessee has submitted as under: 2.3 In view of the above, the assessee could not file the appeal before this Tribunal well in time and by the time the appeal papers were prepared for filing, there arose delay of about 59 days in filing the present appeal before this Tribunal. The reason for the delay in filing the present appeal was due to reason beyond the control of the assessee. He thus prayed for the delay to be condoned. 2.4 The Ld.DR though objected however could not controvert the reasoning given by the Ld.AR for the delay that was caused in fili....
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....he provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period." 2.9 Considering the submissions by both sides and respectfully following the observation by Hon'ble Supreme Court, we find it fit to condone the delay caused in filing the present appeal as it is not attributable to the assessee. Accordingly, the delay in filing the present appeal stands condoned. 3. Brief facts of the case are as under: 3.1 The assessee society had filed its return of income for the A.Y. 2016-17 On 04.10.2016 declaring total income of Rs. NIL after claiming deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 of Rs. 32,85,687/-. The then assessing officer completed the assessment u/s 143(3) of the I.T.Act on 17-12- 2018 after disallowing the deductions claimed by the assessee and determined the income at Rs. 32,85,687/-. 3.2 Subsequently, it was noticed by the Principal Commissioner of Income Tax, Panji that the assessee has debited expenses amounting to Rs. 7,80,650/- on a....
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.... tax plus interest of Rs. 20,55,815/- vide Order dated 03-03-2022. 3.7 Aggrieved by the order of the Ld.AO, assessee preferred appeal before the Ld.CIT(A). 3.8 Before the Ld.CIT(A), assessee submitted that assessee is eligible for deduction u/s. 80P(2)(d) on the interest / dividend earned from investments made in other co-operative societies / co-operative banks. In support of the claim, assessee relied on the decision of this Tribunal. The Ld.CIT(A) however relying on the decision of Hon'ble Supreme Court in case of Citizen Cooperative Society Ltd. vs. ACIT reported in (2017) 84 taxmann.com 114 and the decision of Hon'ble Karnataka High Court in case of Totagars Co-operative Sales Society vs. ACIT reported in (2017) 395 ITR 611 disallowed the claim of assessee u/s. 80P(2)(d) of the act for the year under consideration. 3.9 Aggrieved by the orders of the Ld.CIT(A), assessee is in appeal before this Tribunal. 4. The Ld.AR submitted that assessee being a primary agricultural credit co-operative society is engaged in the business of providing credit facilities to its members agriculturists. He submitted that assessee claims 80P(2)(a)(i) in respect of the interest incom....
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....ers, profits attributable to such loans obviously cannot be deducted. 46. It must also be mentioned here that unlike the Andhra Act that Citizen Cooperative Society Ltd. (supra) considered, 'nominal members' are 'members' as defined under the Kerala Act. This Court in U.P. Cooperative Cane Unions' Federation Ltd. v. CIT [1997] 11 SCC 287 referred to section 80P of the IT Act and then held: "8. The expression "members" is not defined in the Act. Since a cooperative society has to be established under the provisions of the law made by the State Legislature in that regard, the expression "members" in Section 80- P(2)(a)(i) must, therefore, be construed in the context of the provisions of the law enacted by the State Legislature under which the cooperative society claiming exemption has been formed. It is, therefore, necessary to construe the expression "members" in Section 80- P(2)(a)(i) of the Act in the light of the definition of that expression as contained in Section 2(n) of the Cooperative Societies Act. The said provision reads as under: "2. (n) 'Member' means a person who joined in the application for registration of a soci....
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..... ITO in ITA No. 1038/Bang/2023 vide order dated 22.03.2024 7. On the contrary, the Ld.DR vehemently opposed the arguments of the assessee by submitting that principle of mutuality is not satisfied as assessee extends credit facilities to nominal / associate members who do not have any right in the assessee society. In respect of 80P(2)(d) deduction, the Ld.DR submitted that interest / dividend income earned by assessee by making investments which has been simply accrued falls out the ambit of 80P and therefore the Ld.AO has rightly treated the entire interest as income from other sources. He thus vehemently supported the orders passed by the authorities below on both these accounts for the years under consideration. We have perused the submissions advanced by both sides in the light of records placed before us. 7.1 Based on the observations by Hon'ble Supreme Court in case of Mavilayi Service Co-operative Bank Ltd. v. CIT (supra), we note that, Karnataka Co-operative Societies Act, 1959 defines Members to include nominal / associate members u/s. 2(f). Considering the definition of "Member" under the Karnataka Cooperative Societies Act, the present assessee qualifies for d....
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....e Supreme Court analysed applicability of section 80P(2)(d) deduction to an assessee in great detail. 7.3 At the outset, assessee invested in SCDCC Bank to meet the statutory requirement as provided u/s. 58 of the Karnataka Co-operative Societies Act, 1959 as it is imperative to carry on the business of providing banking or credit facilities to the members. It is submitted that, the investments are made out of Reserve funds of the society. It was thus submitted that the case law relied on by the Ld.CIT(A) is M/s. Totgars Co-operative Sales Society reported in 322 ITR 283 (SC) which are distinguishable on facts being: ● It is primarily engaged in the business of providing credit facilities to its members and marketing their agricultural produce. ● At the time of marketing the produce, the sale proceeds are retained, and as the funds are not immediately required, the same was deposited and interest is earned. The funds used for investment are out of amount payables to the members retained by them ● As interest was earned on money due to the members, that was deposited with the Bank, the same was held to be taxed as 'IFOS' u/s 56 of the ....
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....nd 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, the society cannot keep the said amount idle. If they deposit this amount in bank so as to earn interest, the said interest income is attributable to the profits and gains of the business of providing credit facilities to its members only. The society is not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attributable to the activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under Section 80P of the Act. 7.6 In this context when we look at the decision of Hon'ble Supreme Court in case of Totgars Co-operative Sale Society's case reported in (2010) 188 Taxman 282, relied by the Ld.DR. Hon'ble Supreme Court was dealing with a case where the assessee therein, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The s....
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.... of banking company in clause (c) of section 5 of the BR Act, 1949 is seen, it means any company which transacts the business of banking in India and as already noted banking business is defined in clause (b) of section 5 to mean the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise. Thus, it is only when a co-operative society is conducting banking business in terms of the definition referred to above that it becomes a co-operative bank and in such a case, section 22 of the BR Act, 1949 would apply wherein it would require a licence to run a co-operative bank. In other words, if a cooperative society is not conducting the business of banking as defined in clause (b) of section 5 of the BR Act, 1949, it would not be a co-operative bank and not so within the meanings of a state co-operative bank, a central cooperative bank or a primary co-operative bank in terms of section 56(c)(i)(cci). Whereas a co-operative bank is in the nature of a banking company which transacts the business of banking as defined in clause (b) of section 5 of the BR Act, 1949. But if a....