THE CHATRAI PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LIMITED,KRISHNA DIST vs. INCOME TAX OFFICER, WARD-3(5), VIJAYAWADA

In the above cited appeal, the assessee is aggrieved with the assessment order passed u/s 144 of the Act and rejection of appellant’s claim for deduction u/s 80P(2)(a)(i). The appellant’s claim is that the benefit u/s 80P(2)(a)(i), being an incentive provision should be interpreted liberally and granted even though return of income was not filed u/s 139(1) of the Act. From the assessment order, it is noticed that the assessee cooperative society did not file the return of income and hence, section 80A(5) is clearly applicable and since the assessee failed to make the claim of deduction u/s 80P(2)(a)(i), the net profit shown by the assessee in the Profit & Loss account was brought to tax as income from business for the A.Y.2017-18. Accordingly, no deduction u/s 80P was granted to the assessee society and the Ld.AO made an addition of Rs.24.94 lakh by treating the same as profit earned out of its business activities. Thus, the proceedings have culminated into assessment u/s 144(1)(b) as there was no response from the assessee with regard to filing of return in response to notice issued u/s 142(1) of the Act. In other words, the entire profit as admitted by the assessee society was brought to tax and no deduction u/s 80P(2) was given as there was no return of income nor there is any response to notice issued u/s 142(1) of the Act.

Aggrieved by this order of the Ld.AO, an appeal was filed before Ld.CIT(A). Before Ld.CIT(A), the appellant has stated that a return of income was filed after claiming deduction of Rs.26.07 lakhs. From the record, it is observed that the assessment was completed on 25.12.2019, whereas, the appellant society claims that it has filed return of income on 26.12.2019 in pursuance of notice issued u/s 142(1) of the Act. Before the Ld.CIT(A), the appellant claimed deduction u/s 80P of the Act on its entire profit earned to the extent of Rs.26.07 lakh in the return of income which was filed after completion of assessment. But the Ld.AO disallowed the claim of the appellant u/s 80P, stating that there is neither return of income nor a claim u/s 80P by the appellant and hence section 80A(5) is applicable. In view of the same, the Ld.AO brought the entire profit into tax net and completed the assessment. After considering the submission of the appellant, the Ld.CIT(A) held that for claiming deduction u/s 80P of the Act, the appellant shall file a return of income either u/s 139(1) / 139(4) / 142(1) / 148 to avail deduction u/s 80(P) of the Act even for the assessment years prior to the A.Y.2018-19. In this case, the assessee has filed the return of income only after completion of assessment and hence, the Ld.CIT(A) held that the Ld.AO has correctly assessed the income under the head “Business/Profession” without granting deduction u/s 80P of the Act.

As the appeal of the appellant was dismissed by the First Appellate Authority, the assessee filed an appeal before the ITAT. The Ld.AR of the appellant argued that the provisions of section 80P are beneficial in nature and hence, the same should be interpreted in a liberal manner and deduction u/s 80P should be granted, even though no return of income was filed and section 80AC is not applicable to their case.

The Ld.DR relied on the following decisions : a) Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahaskarana Sangham vs. CIT (2023) 459 ITR 730/152 taxmann.com 347/333 CTR 655 (Ker)/HC. b) Maruthi Primary Agricultural Cooperative Credit Society Ltd. Vs. ITO in ITA No.151/VIZ/2022 for the A.Y.2017-18. c) Narasimha Rao Palem Primary Agricultural Credit Society Ltd. Vs.ITO in ITA No.211/VIZ/2023 for the A.Y.2017-18.

Heard both the sides. The main argument of the Ld.AR of the appellant is that the deduction u/s 80P should be given to the assessee even though no return of income was filed before the completion of the assessment. This argument of the assessee was held to be incorrect, in view of the decision of coordinate Bench relied on by the Ld.DR in the case of Chinnampeta Primary Agricultural Cooperative Credit Society Limited, in ITA No.247/Viz/2025. The Bench has already taken a decision that it is mandatory to file return of income to claim any deduction including deduction u/s 80P of the Act. In this case, it is an admitted fact that there was no return of income filed before completion of assessment and hence the denial of deduction u/s 80P of the Act by the Revenue is hereby held as valid. Respectfully following the decisions relied on by the Ld.DR and Orders passed by the Co-ordinate Bench in this regard, the appeal of the assessee is dismissed.

In the result, the appeal filed by the Assessee is dismissed.