EXCELSIOR THEATRE AND OFFICE PREMISES COOPERATIVE SOCIETY LIMITED,MUMBAI vs. WARD 17(3)(1), MUMBAI, MUMBAI

The brief facts of the case are that the assessee is a cooperative society. The assessee filed the belated return u/s 139(4) of the Act by declaring total income of Rs. 7,84,220/-. The belated return was duly processed u/s 143(1) of the Act, and the interest from investment in co-operative bank was claimed by the assessee u/s 80P(2)(d) and claim of deduction u/s 80P(2)(c) are duly rejected and re-computed the total income accordingly. The aggrieved assessee filed a rectification petition u/s 154 of the Act before the CPC, which was rejected. The aggrieved assessee filed an appeal before the Ld. CIT(A) by challenging the rectification order. The Ld. CIT(A) rejected the assessee's appeal on the ground that the assessee had filed the belated return, and, therefore, the entire claim u/s 80P was not allowable, considering the provisions of section 80AC of the Act. Being aggrieved, the assessee filed an appeal before us.

The Ld. AR contended that the assessee had filed its return of income belatedly. The return was processed under section 143(1)(a)(ii) of the Act. It was submitted that the CPC was not empowered to invoke the provisions of section 143(1)(a)(ii) of the Act for disallowing the assessee’s claim of deduction under section 80P read with section 80AC of the Act.

The Ld. AR further advanced an alternative argument with reference to the impugned appellate order. It was contended that section 143(1)(a)(ii) of the Act is not applicable for making a disallowance of deduction claimed under section 80P of the Act. Alternatively, the appropriate provision governing such disallowance would be section 143(1)(a)(v) of the Act, which deals with disallowance of deductions specified therein, including deductions under Chapter VI-A.

The Ld. AR contended that the identical issue was duly considered and adjudicated by the Coordinate Bench of ITAT, Mumbai in the case of Premium Cooperative Group Society Limited vs. ITO, ITA number 2605/Mum/2024, the date of pronouncement 20.08.2024. The relevant paragraph numbers 7 and 8 are reproduced as below: “7. In the given case the applicable clauses for making the disallowance u/s.80P is either 143(1)(a)(ii) or 143(1)(a)(v). An amendment is brought into section 143(1)(1)(v) w.e.f. 01.04.2021 to provide that disallowance of deduction claimed under any of the provisions of Chapter VI-A under the heading "C.—Deductions in respect of certain incomes" (which includes deduction under section 80P of the Act), can be made if the return is furnished beyond the due date specified under sub-section (1) of section 139. Prior to the amendment the deduction could be denied only for sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80- IE. The year under consideration is AY 2019- 20 and therefore the section prior to the amendment is what is applicable to assessee, that does not cover the deduction u/s.80P. The amended clause is not applicable to assessee’s case since the same is effective only from 01.04.2021.

The Ld. DR argued and stands in favour of the orders of the revenue authorities. The Ld. DR was unable to bring any contrary fact against the submission made by the Ld. AR. The Ld. DR drawn our attention in relevant paragraph of the impugned appellate order which is reproduced as below:- “5. Decision:- 5.1 The facts of the case have been examined and it is ascertained that the return of the relevant AY was uploaded beyond the due date u/s. 139(1). The return of income was filed on 31.01.2020 while the time limit u/s. 139(1) for the AY 2019-20 was 31.08.2019 and hence having failed to comply with the provisions of S.80AC, deduction u/s. 80P was denied. It is apprised to the appellant that the undersigned isempowered to condone the delay in filing of appeal and not the delay in filing the ITR. 5.2 However, an avenue for relief is available by seeking condonation in filing the ITR expressing the special circumstances which was beyond the control of the appellant, through a separate petition u/s.119(2)(b) before the competent authority as specified respect of AYs 2018-19 to 2022-23. The appellant is requested to seek condonation in the Circular No. 13/2023 of CBDT in F.No. 173/21/2023-ITA-1 dated 26.07.2023 in appropriate application u/s. 119(2)(b) for the AY 2019-20 of delay before the CCIT/DGIT having jurisdiction over the case through an appropriate application u/s. 119(2)(b) for the AY 2019-20. 5.3 However at present, since the provisions of S.80AC gets attracted. till the condonation of delay by the appropriate authority, the adjustment made by CPC denying the claim of deduction u/s.80P is thus found to be in order and hence the adjustment made is upheld. The Jurisdictional Assessing Officer is directed to treat the appellant as not in default of taxes till the petition for condonation u/s.119(2)(b) is disposed by the competent authority. In result, the grounds of appeal of the appellant are therefore DISMISSED.”

We have heard the rival submissions and perused the material available on record. The assessee is a co-operative society and had filed its return of income belatedly under section 139(4) of the Act for AY2019–20. While processing the return under section 143(1) of the Act, the CPC disallowed the deductions claimed under sections 80P(2)(d) and 80P(2)(c) on account of the belated filing of the return. The Ld. CIT(A) upheld the said adjustment by invoking section 80AC of the Act. We find that the Coordinate Bench of the ITAT, Mumbai, in Premium Cooperative Group Society Limited (supra) has considered an identical issue for AY 2019–20. As reproduced hereinabove, the Coordinate Bench held that the amendment to section 143(1)(a)(v), enlarging its scope to cover deductions under Chapter VI-A under the heading “C.—Deductions in respect of certain incomes”, was brought into effect from 01.04.2021. Prior to the said amendment, section 143(1)(a)(v) did not encompass a claim for deduction under section 80P of the Act. The Coordinate Bench further held that denial of deduction under section 80P merely because the return was filed beyond the time prescribed under section 139(1) also did not fall within the scope of an “incorrect claim apparent from any information in the return” contemplated under section 143(1)(a)(ii) of the Act.

The impugned assessment year before us is also AY 2019–20. The Ld. DR was unable to distinguish the aforesaid decision on facts or to demonstrate that the amendment to section 143(1)(a)(v), effective from 01.04.2021, operates retrospectively. Respectfully following the decision of the Coordinate Bench in Premium Cooperative Group Society Limited (supra), we hold that, for the assessment year under consideration, the deductions claimed under sections 80P(2)(d) and 80P(2)(c) could not have been disallowed by way of prima facie adjustment under section 143(1)(a)(ii) or section 143(1)(a)(v) merely on the ground that the return of income was filed belatedly. Accordingly, the finding of the Ld. CIT(A) sustaining such adjustment cannot be upheld.

However, we find that the eligibility of the interest income for deduction under section 80P(2)(d) has not been examined on merits with reference to the nature and status of the entity from which such interest income was earned. We, therefore, restore this limited issue to the file of the Ld. AO solely for verification of the assessee’s claim under section 80P(2)(d), including verification as to whether the relevant investment was made with a co- operative society or a co-operative bank, and to decide the claim in accordance with law.

So far as the deduction under section 80P(2)(c) is concerned, the Ld. AO is directed to examine and allow the assessee’s claim of Rs. 50,000/- in accordance with the conditions prescribed under the said provision. The scope of the set-aside proceedings shall remain confined to the aforesaid verification only on limited issue. Needless to say, the assessee shall be afforded a reasonable opportunity of being heard and shall furnish the requisite documents and details before the Ld. AO.

In the result, the appeal of the assessee bearing ITA No. 6452/Mum/2026 is allowed for statistical purposes. Order pronounced in the open court on 17th day of September 2026. Sd/- Sd/-