TMI Blog2024 (3) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... [Ld. CIT(A)-NFAC] in DIN Order No. ITBA/NFAC/S/250/2023-24/1056669263(1), dated 29/9/2023 arising out of the order passed u/s. 143(3) of the Income Tax Act, 1961 [the Act] for the AY 2020-21. 2. Briefly stated the facts of the case are that the assessee company e-filed its return of income for the AY 2020-21 on 31/12/2020 declaring total income at Rs. NIL after claiming deduction u/s. 80P of Rs. 28,22,258/-. It is the claim of the assessee that the assessee is a Primary Agricultural Cooperative Society registered under the Andhra Pradesh Cooperative Act and the main object of the assessee society is to carry on its business of banking and providing credit facilities to its members and also engaged in purchase of articles intended for agricultural needs of the members. The case was selected for scrutiny under CASS for the reason of High Creditors Liability, Investment/Advances/Loans and deduction from total income under Chapter-VIA. Thereafter, the Ld. AO issued notices u/s. 143(2) and 142(1) of the Act on various dates as mentioned in the assessment order and served on the assessee. Since no response was received from the assessee, the Ld. AO issued show cause notices dated 18/8/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seeking condonation of delay and explained the reasons that prevented the assessee to file the appeal beyond the prescribed time limit. On perusal of the submissions made by the assessee with respect to condonation of delay, the Ld. CIT(A)-NFAC did not convince with the reasons advanced by the assessee and observed that since the assessee failed to furnish any plausible explanation for the delay in filing the appeal, the assessee s case is not a fit case for condonation of delay and therefore did not condone the delay and dismissed the appeal. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal: 1. Both in law and in Facts of the case, the order made by HON BLE CIT(A) NATIONAL FACELESS APPEAL CENTER, DELHI is bad in law, arbitrary, contrary to the provisions of law and against the principles of natural justice. 2. HON BLE CIT(A) NATIONAL FACELESS APPEAL CENTER, DELHI is unjust in dismissing the appeal without condoning the delay in filing the appeal though the delay was due to the circumstances beyond the control and with no comments on the grounds of appeal. The Andhra Pradesh high court held in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t craves leave to add, to alter, modify, amend, substitute, delete and/or rescind all or any of the grounds of appeal on or before the final hearing, if necessary so arises. In the light of above, the assessee hereby requests Honourable Commissioner of National Faceless Appeal Centre to delete the addition of Rs. 27,00,393/- made by The Assessment Unit, Income Tax Department. 3. At the outset, on the date of hearing of the appeal none-appeared on behalf of the assessee but filed an adjournment letter. However, considering the nature of issue involved in the appeal, I hereby reject the assessee s application for adjournment and proceed to adjudicate the appeal on merits with the help of the Ld. Departmental Representative. 4. Before me, the Ld. Departmental Representative submitted that as per the provisions of section 80P(2)(d) of the Act, any income by way of interest or dividends derived the Co-operative Society from its investments with any other cooperative society is eligible for deduction. The Ld. DR further submitted that in the present case, assessee derived interest from the funds parked with Krishna Cooperative Central Bank Limited and not from a Cooperative Society and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an admitted fact that the assessee has claimed deduction u/s. 80P(2)(a)(i) of the Act on the interest accrued and received by the assessee u/s. 80P(2)(a)(i) of the Act. The contention of the Ld. AO is that as per section 80P(2)(d), the assessee is eligible to claim deduction u/s. 80P(2)(a)(i) of the Act only when it is invested with any other cooperative society. The Ld. AO also placed heavy reliance in the case of M/s. Totgars Cooperative Sale Society Ltd (supra) while disallowing the claim made by the assessee u/s. 80P(2)(a)(i) of the Act. We have perused the ratio laid down by the Hon ble Apex Court in the case of M/s. Totgars Cooperative Sale Society Ltd (supra) and found that in that case the society is engaged in marketing of the agricultural produce by its members as per section 80P(2)(a)(iii) while carrying on the business of banking or providing credit facilities to its members u/s. 80P(2)(a)(i) of the Act. In that case, the Society retained the sale proceeds which was otherwise payable to its members from whom the produce was bought which was invested in short term deposits / securities. It is also found that the amount payable to its members realized from sale procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80P(2)(d) and 80P(2)(e) of the Act also allows similar deductions. It is clear that the deductions available under clauses (a) to (e) of section 80P(2) are activity based whereas clauses (d) and (e) are investment based. The distinction between clauses (a) and clauses (d) (e) on the other hand is that the benefit under clause (a) is restricted to only into those activities of a cooperative society enlisted in sub-clause (a) whereas the benefit of clauses (d) (e) are available to all cooperative societies without any restriction on the activities carried on by them. In simple terms, the benefit under clause (a) will be limited only to the profits gains of the business attributable to any one or more of such activities. But in case, if the cooperative society has an income not attributable to any one or more of such activities listed in sub-clauses (i) to (vii) of clause-(a), the same may go out of the purview of clause (a) but still the cooperative society may claim the benefit of clause (d) or (e) as per the conditions laid down therein. In the instant case, the original source of investments made by the assessee in Nationalized Banks is admittedly the income of the assessee d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(a)(i) of the Act on the interest income received from investment in banks. The Hon ble High Court in paras 35 to 37 of its judgment held as under: 35. But, as rightly contended by the learned senior counsel for the petitioners, the investment made by the petitioners in fixed deposits in nationalized banks, were of their own monies. If the petitioners had invested those amounts in fixed deposits in other co-operative societies or in the construction of godowns and warehouses, the respondents would have granted the benefit of deduction under clause (d) or (e), as the case may be. 36. The original source of the investments made by the petitioners in nationalised banks is admittedly the income that the petitioners derived from the activities listed in sub-clauses (i) to (vii) of clause (a). The character of such income may not be lost, especially when the statute uses the expression attributable to and not any one of the two expressions, namely, derived from or directly attributable to . 37. Therefore, we are of the considered view that the petitioners are entitled to succeed. Hence, the writ petitions are allowed, and the order of the Assessing Officer, in so far as it relates to tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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