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2021 (3) TMI 1108 - AT - Income TaxCondonation of delay of 606 days in filing of the appeal against revision u/s 263 - HELD THAT - Assessee has claimed that on misconception and/or non-guidance of earlier counsel, the Assessee did not file appeal against the order passed by the Pr.CIT u/sec. 263 of the Act, however, on guidance of the present counsel, the Assessee immediately filed the instant appeal. The reasons stated by the Assessee do not inspire any confidence and seems to be an afterthought concocted story cultivated upon the observations of the ld. CIT(A) in the appellate order against the assessment framed u/sec. 143(3) r.w.s. 263 of the Act and therefore, in order to fill up the gap and/or to get adjudicate the issue which has been left by the ld. CIT(A), filed the instant appeal before us with a delay of 606 days. In our considered opinion, act of the Assessee was not diligent in availing the remedy of appeal. The delay in filing the appeal is occurred due to Assessee s in-activeness hence in our considered opinion, in any sense, the averments made, the reasons stated and demonstrated by the Assessee failed to qualify the test of sufficient cause and also do not show any acceptable cause much less sufficient cause to exercise Court s discretion in its favour. Hence considering the peculiar facts and circumstances collectively, we are not inclined to admit the appeal by condoning the delay of 606 days in filing of the appeal, consequently the application for condonation of delay stands dismissed. Revision u/s 263 - Disallowance of deduction claimed u/sec. 80P(2)(d) - HELD THAT - No hesitation to follow the decision of Hon ble Karnataka High Court rendered in the case of Pr.CIT Vs. Totagars Co-operative Sale Society 2017 (7) TMI 1049 - KARNATAKA HIGH COURT wherein clearly held that the issue whether a Co-operative Bank is considered to be a Co-operative Society is no longer res integra. The Co- operative Bank which is a species of the genus would necessarily be covered by the word Co-operative Society . Even according to Section 56(i)(ccv) of the Banking Regulations Act, 1949, defines a primary Co-Operative Society bank as the meaning of Co- Operative Society. Therefore, a Co-operative Society Bank would be included in the words 'Co-operative Societies'. Admittedly, the interest which the Assessee respondent had earned was from a Co-operative Society Bank. Therefore, according to Sec. 80P(2)(d) of the I.T. Act, the said amount of interest earned from a Co-operative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its total income. Section 80P(2)(d) exempt the income by way of interest or dividend derived by the co-operative society from its investment with any other co-operative society which includes Co-operative bank which would be included in the words Co-operative Societies as held by the Hon ble Karnataka high Court in Totgars s case 2017 (1) TMI 1100 - KARNATAKA HIGH COURT . In the instant case, the Assessee has earned interest income from Krishna District Co-operative Central Bank (KDCCB) and it is not the case of the Revenue Department that KDCCB is not a co-operative society. Therefore on the aforesaid consideration and analyzations, the decision of the ld. CIT(A) qua issue in hand is set aside and the AO is directed to allow the deduction claimed u/sec. 80P(2)(d) of the Act by the Assessee .
Issues Involved:
1. Condonation of delay in filing the appeal under Section 263 of the Income Tax Act, 1961. 2. Treatment of grants-in-aid received by the assessee as capital or revenue receipt. 3. Disallowance of deduction claimed under Section 80P(2)(d) of the Income Tax Act, 1961. Detailed Analysis: 1. Condonation of Delay: The first issue pertains to the condonation of a 606-day delay in filing the appeal under Section 263 of the Income Tax Act, 1961. The Tribunal observed that the law is well settled by higher courts that while dealing with applications for condonation of delay, the court must consider the conduct of the party and plausible reasoning for the delay. The primary function of a court is to adjudicate disputes and advance substantial justice. The Tribunal cited several Supreme Court judgments, including Collector, Land Acquisition, Anantnag v. Mst. Katiji, which emphasized a liberal approach towards condonation of delay to serve the ends of justice. However, in this case, the Tribunal found that the reasons provided by the assessee for the delay did not inspire confidence and appeared to be an afterthought. The assessee claimed that they did not initially file an appeal against the order passed under Section 263 due to a misconception and non-guidance from their earlier counsel. The Tribunal noted that the assessee's act was not diligent and the delay was due to the assessee's inactiveness. Consequently, the Tribunal dismissed the application for condonation of delay and the appeal (ITA No.43/VIZ/2020) was dismissed in limine. 2. Treatment of Grants-in-Aid: The second issue relates to the treatment of grants-in-aid received by the assessee from the government. The Assessing Officer (AO) treated the grants-in-aid as revenue receipts based on the directions of the Principal Commissioner of Income Tax (Pr.CIT) under Section 263. The CIT(A) upheld this treatment, stating that the Pr.CIT had recorded a clear finding that the grants-in-aid were revenue in nature and the AO was bound by this direction. The Tribunal, however, observed that the Pr.CIT's order did not provide specific directions to treat the grants-in-aid as revenue receipts but directed the AO to redo the assessment after giving the assessee a reasonable opportunity of being heard. The Tribunal found that the CIT(A) had misconstrued the directions of the Pr.CIT and noted that the AO had the authority to analyze the facts and determine the issue afresh. Consequently, the Tribunal set aside the CIT(A)'s conclusion and remanded the issue back to the CIT(A) for a fresh decision in accordance with the law, without being influenced by the Pr.CIT's observations. 3. Disallowance of Deduction under Section 80P(2)(d): The third issue concerns the disallowance of a deduction claimed by the assessee under Section 80P(2)(d) of the Income Tax Act, 1961. The AO disallowed the deduction of ?97,88,434/- claimed by the assessee on the interest earned from investments in fixed deposits with the Krishna District Co-operative Central Bank (KDCCB), citing the decision of the Karnataka High Court in Pr.CIT Vs. Totgars Co-operative Society, which held that interest earned from deposits with a co-operative bank is not eligible for deduction under Section 80P(2)(d). The Tribunal, however, noted that subsequent judgments, including those from the Karnataka High Court and other High Courts, had clarified that a co-operative bank is considered a co-operative society for the purposes of Section 80P(2)(d). The Tribunal referred to the Karnataka High Court's decision in Pr.CIT Vs. Totagars Co-operative Sale Society (2017) 392 ITR 74, which held that interest earned from a co-operative bank is eligible for deduction under Section 80P(2)(d). The Tribunal also cited the Supreme Court's principle that when two reasonable constructions of a taxing provision are possible, the one favoring the assessee must be adopted. Based on these observations, the Tribunal set aside the CIT(A)'s decision and directed the AO to allow the deduction claimed by the assessee under Section 80P(2)(d). Conclusion: - The appeal (ITA No.43/VIZ/2020) was dismissed in limine due to the failure to condone the 606-day delay. - The issue of grants-in-aid was remanded back to the CIT(A) for a fresh decision. - The disallowance of the deduction under Section 80P(2)(d) was set aside, and the AO was directed to allow the deduction.
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