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TMI Blog2014 (10) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... und that the Sr. Advocate was not available and the assessee was able to get the appeal papers prepared by the Sr. Advocate only on 29th of May. Hence, there was delay of 21 days in filing the appeal. According to the assessee, the delay occurred due to reasons beyond assessee's control and there was no willful latches or omissions or neglect on the part of the assessee in filing the appeal within the due date. The assessee pleaded that if the delay was not condoned and the appeal not admitted, it would cause serious and irreparable hardship and monetary loss to the assessee. 3. The Ld. DR has not raised any serious objection for condonation of delay in filing the appeal by the assessee. 4. We have heard both the parties and perused the record. We find that there exists reasonable cause for not filing the appeal in time and the reasons advanced by the assessee for the delay are bona fide. Being so, we condone the delay in filing the appeal by the assessee and admit the appeal for adjudication. 5. The solitary issue raised in this appeal is with regard to denial of exemption claimed u/s. 80P(2)(a)(i) of the I.T. Act. 6. The brief facts of the case are that the assessee is a Co-o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also carries on the business of lending money to its members and such activity is covered u/s. 80P(2)(a) of the Act. According to the Ld. AR the object of the aforesaid amendment was not to exclude the benefit extended u/s. 80P(1) to such Society. 9. In this connection, the Ld. AR relied on the judgment of the Karnataka High Court, Dharwad Bench in I.T.A. No. 5006 of 2013 dated 05- 02-2014. He further relied on the following judgments/orders: (i) CIT vs. Jafari Momin Apex Co-operative Societies Ltd. in I.T. A. Nos. 442,443 and 863 of 2013 dated 05-02-2014. 10. The Ld. AR submitted that in the above judgment, the clarificatory Circular issued by CBDT vide No. 133/2007 dated 09-05-2007 was relied on to explain the object and purport of the amendment effected by Finance Act, 2006 wherein it clarified the object of the amendment and admissibility of the deduction u/s. 80P of the Act. It was also clarified that if the cooperative society does not fall within the meaning of "Co-operative Bank", sub-section (4) of sec. 80P will not apply. Thus, according to the Ld. AR, the Assessing officer is bound to follow the above Circular. 11. The Ld. AR also relied on the following Tribunal ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the above judgment was affirmed by the Division Bench of the High Court in W.A. No. 2207 of 1998 dated 18-07- 2003 reported in 264 ITR 36. 15. On the other hand, the Ld. DR relied on the decision of the Tribunal in the case of Pinarayi Service Co-operative Bank Ltd. and others vs. ITO in I.T.A. No. 123/Coch/2012 & others vide order dated 31/07/2014 as well as the judgment of the Kerala High Court in the case of Thathamangalam Service Co-operative Bank Ltd. in WP(C) No. 14226 of 2012(C) dated 14th September, 2012. 16. We have heard both the parties and perused the record. We find that a similar issue came up for consideration before the Tribunal on a earlier occasion in the case of Kunnamangalam Co-operative Bank Ltd. in I.T.A. No. 156/Coch/2014 vide order dated 25/07/2014 wherein this issue was decided against the assessee . The relevant portion of the said order is as follows: "8.10 We have gone through the decision of the Hyderabad bench of this Tribunal in the case of The Citizen Cooperative Society vs. Addl. CIT, 41 305 (Hyd). We notice that this decision is applicable to the facts of the case before us. In that decision, under para 23 the Tribunal has given a finding tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its members, they borrow money from the financing agencies and repay the same. Merely because the petitioners the co-operative societies in question-are required to advance loans to their members, they do not cease to be cooperative societies governed by the Act nor can they be treated as banking companies. It is also not possible to hold that these activities of the petitioners amount to "banking" as contemplated under the Banking Regulation Act, 1949, inasmuch as these co-operative societies are not established for the purpose of doing "banking" as defined in section 5(b) of the Banking Regulation Act, 1949." This decision, in our opinion, is not applicable to the case before us because the provisions of Sec. 80P(2)(a)(i), as we have already held in the preceding paragraphs, are applicable to a co-operative society which is engaged in carrying on banking business facilities to its members if it is not a co-operative bank. We have also gone through the decision of this Bench in the case of DCIT vs. Jayalakshmi Mahila Vividodeshagala Souharda Sahakari Ltd. in ITA No. 1 to 3/PNJ/2012 dt. 30.3.2012 (supra). While discussing this issue, after analysing the aims and objects of the co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, limited by shares. Indeed, the position of the assessee is no different from an ordinary bank except that it lends money and receives dividend from its shareholders which does not by itself make its income any the less income from business. The same judgment was followed in the case of CIT vs. Arcot Dhanasekhara Nidhi Ltd., 59 ITR 480 (Mad.), CIT vs. Dharmavaram Mutual Benefit Permanent Fund Ltd., 67 ITR 673 (AP) and CIT vs. Bhavnagar Trust Corporation (P) Ltd., 69 ITR 278. Further, the Hon'ble Kerala High Court in the case of Kottayam Cooperative Land Mortgage Bank Ltd. vs. CIT, 172 ITR 443(Ker.) where it was held as under: "The Income-tax Officer held the view that the assessee is not entitled to claim any further exemption under clause (c) as the assessee is entitled to exemption u/s. clause (a) in respect of the banking activities. The Appellate Assistant Commissioner, in allowing the assessee's appeal, held that exemption under clause (c) is in addition to the exemption allowable under clauses (a) and (b) and directed the Income tax Officer to allow a deduction of Rs. 20,000 separately, taking into consideration the property income earned by the assessee. The Revenue carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The expression "attributable to" is much wider than the expression "derived from" and it covers receipts from sources other than the actual conduct of the business of the assessee. In this view of the matter, interest earned by a cooperative society, which was carrying on the business of supplying surgarcane on statutory investment in Government securities, was held profit attributable to the carrying on of the activity of supplying sugarcane (CIT vs. Cooperative Cane Development Union Ltd. (1979) 118 ITR 770 (All.). The profits and gains from such investments were connected with or incidental to the carrying on of the actual business. Where, however, the assessee as owner of certain property lets out that property and receives rental income, the income thus received cannot partake of the character of profits and gains attributable to an activity carried on by the society. The building let out is not a commercial asset or the rent received is not profit or gain arising from the exploitation of a business asset. The word "activity" is wider than the word "business". It connotes a specified form of supervised action or 0field of action. Read in the context of the profit earning ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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