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TMI Blog2020 (1) TMI 1378X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) by e-appeal was extended up to 15.06.2016. Hence it is seen that this claim of the assessee is correct that when the assessee filed the appeal in paper format, the facility of e-filing of appeal was not operational. We feel it proper to condone the delay of 570 days in filing the e-appeal before the CIT(A) and restore the entire matter back to the CIT(A) for a decision on merit. - Appeal of the assessee is allowed for statistical purposes. - ITA No. 2347/Bang/2018 - - - Dated:- 14-1-2020 - A. K. Garodia, Member (A) For the Appellant : M. Nagaraju, Advocate For the Respondents : Ganesh R. Ghale, Standing Counsel ORDER A.K. Garodia, Member (A) 1. This appeal is filed by the assessee and the same is directed against the order of CIT(A)-7, Bengaluru, dated 05.06.2018 for Assessment Year 2013-14. The grounds raised by the assessee are as under: The Learned CIT(A) -7 was not justified in dismissing the appeal on the grounds that the condonation of delay is not granted. 1. The order under section 143(3) was passed on 31st March 2016 and communicated to the appellant on lst April 2016. 2. The Appellant filed an appeal on 26th April 2016, well wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the co-operative society that prevents the society from accepting deposit from public. 2. The membership of the co-operative society is open and not restricted by any classification or covenant. 3. The nominal members do not carry any right in the society vis- -vis permanent members who alone have the power to participate in election and voting. And 4. The interest income earned by the society is on deposit of idle and surplus funds. The appellant is registered under Karnataka Co-operative Society Act 1959 and the provisions of the Karnataka Souharda Sahakari Act, 1997 is not applicable. Ground - 1. The Appellant is carrying on the activity of providing credit facilities to its members only which is covered under latter part of the section 80P (2)(a)(i) of the Act. The Society is not carrying on the activity of the Banking and also not registered as a Bank under the Banking Regulation Act. Carrying on the Banking business without obtaining registration under the Banking Regulation Act is an offence and attracts penal and prosecution provisions of the Banking Regulation Act. Explanation to section 80P (4) clearly mentioned that for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government. Therefore, such a provision has to be read liberally, reasonably and in favour of the assessee (See - Bajaj Tempo Limited, Bombay v. Commissioner of Income Tax, Bombay City-III. Bombay (1992) 3 SCC 78). It is also trite that such a provision has to be construed as to effectuate the object of the Legislature and not to defeat it (See - Commissioner of Income Tax, Bombay Ors. v. Mahindra and Mahindra Limited Ors. (1983) 4 SCC 392). Therefore, it hardly needs to be emphasised that all those co-operative societies which fall within the purview of Section 80P of the Act are entitled to deduction in respect of any income referred to in sub-section (2) thereof Clause (a) of sub-section (2) gives exemption of whole of the amount of profits and gains of business attributable to anyone or more of such activities which are mentioned in sub-section (2). (it) Since we are concerned here with sub-section (i) of clause (a) of sub-section (2), it recognises two kinds of co-operative societies, namely: (i) those carrying on the business of banking and; (ii) those providing credit facilities to its members. 3 (1992) 3 SCC 78 4 : (1983) 4 SCC 392 17 20) In the case of Keral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g credit facilities to its members are two different types of activities which are covered under this sub-clause, xx xx xx 13. So, in our view, if the income of a society is falling within any one head of exemption, it has to be exempted from tax notwithstanding that the condition of other heads of exemption are not satisfied. A reading of the provisions of section 80P of the Act would indicate the manner in which the exemption under the said provisions is sought to be extended. Whenever the Legislature wanted to restrict the exemption to a primary co-operative society, it was so made clear as is evident from clause (f) with reference to a milk co-operative society that a primary society engaged in supplying milk is entitled to such exemption while denying the same to a federal milk co-operative society. (iv) The aforesaid judgment of the High Court correctly analyses the provisions of Section 80P of the Act and it is in tune with the judgment of this Court in Kerala State Cooperative Marketing Federation Limited (supra). (v) With the insertion of sub-section (4) by the Finance Act, 2006, which is in the nature of a proviso to the aforesaid provision, it is made cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perative society. It is also found that the appellant is engaged in the activity of granting loans to general public as well. All this is done without any approval from the Registrar of the Societies. With indulgence in such kind of activity by the appellant, it is remarked by the Assessing Officer that the activity of the appellant is in violation of the Co-operative Societies Act. Moreover, it is a co-operative credit society which is not entitled to deduction under Section 80P(2)(a)(i) of the Act (viii) It is in this background, a specific finding is also rendered that the principle of mutuality is missing in the instant case. Though there is a detailed discussion in this behalf in the order of the Assessing Officer, our purpose would be served by taking note of the following portion of the discussion: ''''As various courts have observed that the following three conditions must exist before an activity could be brought under the concept of mutuality; that no person can earn from hint; that there a profit motivation; and that there is no sharing of profit. It is noticed that the fund invested with bank which are not member of association welfare fund, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r construction of the building. Hence treating the interest earned on the deposits as interest earned on idle and surplus fund is not correct and the appellant has rightly treated the same as business in the course of co-operative business 2. In the course of hearing, it was submitted by learned AR of the assessee that the appeal was filed by the assessee before learned CIT(A) on 26.04.2016 against the order of assessment dated 31.03.2016 but such filing of appeal was in paper format and e-appeal was filed by the assessee on 14.10.2017. He drew my attention to para No. 4 of the order of CIT(A) and pointed out that in this para, it was noted by learned CIT(A) that a letter was sent to the assessee by speed post on 06.09.2017 in which this was pointed out by learned CIT(A) that w.e.f. 01.03.2016, the assessee was required to file the appeal electronically and the assessee was requested to file reply on this matter in 15 days from the date of receipt of this letter. He further submitted that in para No. 5 of his order, learned CIT(A) has noted that the assessee filed a reply on 28.09.2017 in which the assessee requested the learned CIT(A) to treat the appeal filed in paper as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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