2024 (4) TMI 978 - AT - Income Tax

Delay in filling an appeal before ITAT - delay of 105 days - as a fact NFAC has delivered the order through online system and that appellant Society is working in remote area and its office bearers are not in the habit of checking their mails on regular basis - HELD THAT - In view of N Balakrishnan vs. M. Krishnamurthy 1998 (9) TMI 602 - SUPREME COURT we find that the intention of the assessee is not malafide and the circumstances stated appears to be bonafide which cannot be ignored in order to impart justice. In view of the above facts, circumstances of the case and the judgment of Hon ble Supreme Court (supra), the delay in filing appeal by the appellant Society is condoned and appeal is admitted for the decision on merits. Deduction u/s 80P on income earned from providing credit facilities to its members and profit from trading activity of fertilizers sale and income from other related activities - assessee is a Society registered under the West Bengal Co-Operative Societies Act, 2006 and is a Primary Agricultural Credit Society ( PACS in short) and engaged in providing financial assistance to its members for agricultural activities - HELD THAT - Section 80P(2)(i) of the Act, provides that where co-operative Society is engaged in providing credit facilities to its members, the whole of the amount is entitled for the deduction u/s 80P. In the present case though the assessee has provided the list of persons to whom the credit facilities were provided but failed to establish to the satisfaction of the ld. AO that all such persons are its members. Further from the perusal of the financial statements also it appears that appellant Society has income from trading activity and some other income also. In view of the facts of the case also by respectfully following the judgement of Mavilayi Services Coperative bank ltd. 2021 (1) TMI 488 - SUPREME COURT where the hon ble court opined that even if the credit facilities were provided for non-agricultural purposes to its members, the Society is entitled for the benefit us/ 80P(2)(i) of the Act. Accordingly, we are of the view that the appellant Society is eligible for deduction u/s 80P(2)(i) of the Act but to the extent of the income which has been earned from the facilities extended to its members only. As the appellant Society has failed to satisfy the lower authorities whether those credit facilities were provided to its members only and not to non-members, therefore, assessee is directed to file the necessary details to the AO and the AO is directed to allow deduction u/s 80P(2)(i) to the assessee for the income earned through/from its members as per the directions given hereinabove but needless to mention that assessee should be provided reasonable and proper opportunity of being heard. Assessee appeal is allowed for statistical purposes.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Eligibility for deduction u/s 80P of the Income Tax Act.

Summary:

Issue 1: Condonation of Delay in Filing the Appeal

The appeal by the assessee was delayed by 105 days. The assessee's manager submitted a notarised affidavit explaining that the delay was due to oversight of the appellate order received via email, which was not regularly checked. The Department objected, stating that the appellant was aware of the faceless regime and should have checked the IT portal regularly. The Tribunal referred to the Hon'ble Supreme Court's decision in N Balakrishnan vs. M. Krishnamurthy, emphasizing that condonation of delay is at the court's discretion and should be granted if the explanation is satisfactory and not malafide. The Tribunal found the assessee's explanation bonafide and condoned the delay, admitting the appeal for decision on merits.

Issue 2: Eligibility for Deduction u/s 80P of the Income Tax Act

The assessee, a Primary Agricultural Credit Society (PACS), claimed a deduction of Rs. 31,31,032/- u/s 80P. The AO denied the deduction, stating the assessee provided credit facilities to non-members and failed to establish its primary object of providing financial assistance for agricultural purposes. The CIT(A) upheld this decision without addressing the assessee's submissions. The Tribunal examined the provisions of section 80P, which allows deductions for co-operative societies engaged in providing credit facilities to members. The Tribunal also referred to the Hon'ble Supreme Court's judgment in The Mavilayi Service Cooperative Bank Ltd. & Ors. Vs. CIT, which clarified that PACS are entitled to deductions even if credit facilities are provided for non-agricultural purposes to members. The Tribunal concluded that the assessee is eligible for the deduction u/s 80P(2)(i) but only for income earned from members. The assessee was directed to provide necessary details to the AO to verify that credit facilities were extended to members only.

In conclusion, the appeal was allowed for statistical purposes, and the order was pronounced on 15th April, 2024.