MALAYALAPATTI LAMP CO-OP CREDIT SOCIETY LTD.,NAMAKKAL vs. ITO, WARD-2,, NAMAKKAL

आदेश / O R D E R

PER MANU KUMAR GIRI, JM:

The captioned appeal filed by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, [CIT(A)] dated 23.01.2026 for Assessment Year 2017-18. 2. The assessee had not filed his return of income for the year under consideration. However, information available with the Department revealed that the assessee had made cash deposits

ITA No 621/Chny/2026 (AY 2017-18) M Lamp Coop Credit Society Ltd Vs ITO W-2 :: 2 :: aggregating to Rs.27,98,500/- in his bank account maintained with The Salem District Co-operative Bank Limited and had also withdrawn a sum of Rs.45,00,000/- from the said account. Consequently, proceedings under section 148 of the Income-tax Act, 1961 were initiated. In response to the notice issued under section 148, the assessee filed his return of income and claimed deduction under section 80P of the Act. The Assessing Officer, however, disallowed the deduction claimed under section 80P amounting to Rs.5,20,100/-. 3. Aggrieved by the assessment order, the assessee preferred an appeal before the learned Commissioner of Income Tax (Appeals) [Ld. CIT(A)]. The Ld. CIT(A), vide order dated 23.01.2026, dismissed the appeal and confirmed the disallowance made by the Assessing Officer. 4. Still aggrieved, the assessee has preferred the present appeal before this Tribunal. The learned Authorised Representative (Ld. AR) submitted that the order passed by the Ld. CIT(A) is erroneous, contrary to law and facts of the case. It was contended that the authorities below were not justified in denying the deduction claimed under section 80P of the Act. The Ld. AR further submitted that the provisions of section 80AC, which mandate filing of the return of income within the prescribed due date for availing certain deductions, are applicable only from Assessment Year 2018-19 onwards and, therefore, could not be invoked to deny the assessee's claim for the year under consideration. 5. Per contra, the learned Departmental Representative (Ld. DR) strongly supported the orders of the Assessing Officer and the Ld. CIT(A). It was submitted that the assessee had failed to file the return of income within the prescribed time and had claimed

ITA No 621/Chny/2026 (AY 2017-18) M Lamp Coop Credit Society Ltd Vs ITO W-2 :: 3 :: deduction under section 80P only after initiation of reassessment proceedings under section 148 of the Act. Accordingly, the Ld. DR prayed that in the light of section 80AC, the order of the Ld. CIT(A) be upheld and the appeal filed by the assessee be dismissed. 7. We have considered the rival submissions and perused the orders of the lower authorities. We find that both the Assessing Officer as well as the learned CIT(A) denied the deduction claimed by the assessee under section 80P of the Act on the ground that the return of income was not filed within the time prescribed under section 80AC of the Act. However, we find that the issue is squarely covered in favour of the assessee by the decision of the Co-ordinate Bench of this Tribunal in the case of DCIT v. M/s. DAE Employees Co- operative Thrift & Credit Society Ltd. in ITA Nos. 592, 593 & 594/Chny/2023 and C.O. Nos. 23, 24 & 25/Chny/2023, order dated 28.06.2023, wherein it was held that an assessee is entitled to claim deduction under section 80P of the Act even where the return of income has been filed beyond the period prescribed under sections 139(1), 139(4), 142(1) or 148 of the Act. The relevant findings of the Tribunal are reproduced hereunder: “9. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that an identical issue has been considered by the Tribunal in appellant’s own case for assessment year 2013-14 in ITA No 3047/Chny/2019 dated 10.11.2020, where under identical set of facts, the Tribunal held that the assessee is entitled for deduction u/s. 80P of the Act, towards income derived from its business activities including interest income earned from fixed deposits with other cooperative banks. The relevant findings of the tribunal are as under: “8. We have heard both the parties, perused the materials available on record and gone through the orders of authorities below along with various case laws cited by both the parties. There is no dispute with regard to the fact that the assessee is a credit co-operative society registered under the TamilNadu Co-operative Societies Act, 1983. It is also not in dispute that the assessee is engaged in the business of providing credit facilities to its members. The AO has disallowed deduction claimed u/s.80P(2)(a)(i) of the Act primarily on two grounds. The first objection of the AO is with regard to claim of deduction in the light of provisions of Section 80A(5) of the Act

ITA No 621/Chny/2026 (AY 2017-18) M Lamp Coop Credit Society Ltd Vs ITO W-2 :: 4 :: which restricts the deduction unless such deduction is claimed in the return of income. We have gone through the provisions of Section 80P read with Section 80A(5) of the Act and found that nowhere in Section 80P or in Section 80A(5) of the Act it is mentioned that the assessee is required to file its return of income within the prescribed time provided u/s.139(1) or 139(4) of the Act. But, what is required to be seen is whether the assessee has made a claim in the return of income filed for the relevant year or not, even though such return is not filed within due date. In this case, the assessee although not filed its return of income for the impugned assessment year u/s.139 of the Act but such return of income has been filed in response to the notice issued u/s.148 of the Act and in the said return of income the assessee has made a claim for deduction u/s.80P(2)(a)(i) of the Act. Therefore, we are of the considered view there is no merit in the arguments taken by the ld.DR that the assessee is not entitled for deduction u/s.80P unless such deduction is claimed by filing return of income within the prescribed time allowed u/s.139(1) or 139(4) of the Act. This view is fortified by the decision of the Hon’ble Kerala High Court in the case of Chirakkal Service Co operative Bank Ltd., vs. CIT (2016) 384 ITR 490 (Ker), where the Hon’ble Kerala High Court held that “a return filed by the assessee beyond the period stipulated u/s.139(1) or 139(4) or 142(1) or 148 of the Act can also be accepted and acted upon provided further proceedings in relation to such assessments are pending in the statutory hierarchy of adjudication in terms of the provisions of the IT Act. In all such situations, it cannot be treated that a return filed at any stage of such proceedings could be treated as non est in law and invalid for the purpose of deciding exemption under Section 80P of the Act.” 9. Coming back to the issue of interest income earned from fixed deposits and claimed deduction u/s.80P(2)(d) of the Act. The AO has denied deduction claimed u/s.80P(2)(d) of the Act in respect of interest income earned from a co-operative bank on the ground that as per the said provisions, interest earned from any other co-operative society is only eligible for deduction u/s.80P(2)(a)(i) of the Act. The AO has taken support from the decision of the Hon’ble Supreme Court in the case of M/s. Totagars Co-operative Sales Society Ltd., supra. We have gone through the findings recorded by the AO in the light of the decision of the Hon’ble Supreme Court in the said case and find that the fact of the case before the Hon’ble Supreme Court is entirely different from the facts of the present case. In the case before the Hon’ble Supreme Court, the assessee was a co-operative sales society which is engaged in the business of trading in agricultural produce for its members and during the course of its business it has parked surplus funds in other co-operative banks / nationalized banks and earned interest. In those facts, the Hon’ble Supreme Court came to the conclusion that the assessee is not entitled for deduction towards interest income u/s.80P(2)(d) of the Act, because such interest is not earned from its business activity. In this case, the assessee is primarily engaged in the business of providing credit facilities to its members and in the course of its business it has parked funds collected from its members in other co- operative banks / nationalized banks as per the statutory requirements of the co-operative societies Act. The assessee has treated interest earned

ITA No 621/Chny/2026 (AY 2017-18) M Lamp Coop Credit Society Ltd Vs ITO W-2 :: 5 :: from other co-operative banks as part of its business activity. Once the assessee has earned interest income as part of its business activity and such interest income is earned out of the funds belonging to its members, then the assessee is entitled for deduction u/s.80P(2)(d) of the Act in respect of such interest income. Therefore, we are of the considered view that the case laws relied upon by the ld.AO in the case of Totogars Co- operative Sales Society Ltd., is not applicable to the present facts. We further noted that an identical issue was considered by the Hon’ble Madras High Court in the case of CIT vs. Veerakeralam Primary Agricultural Co- operative Credit Society (2016) 388 ITR 492 (Mad), where the Hon’ble High Court after referring to the decision of the Hon’ble Supreme Court in the case of Totagars Co-operative Sales Society Ltd., held that the benefit of deduction u/s.80P of the Act is excluded for co-operative banks but credit co-operative societies are entitled to claim deduction u/s.80P of the Act in respect of interest income earned from deposits kept in other co-operative banks. 10. In this view of the matter and considering facts and circumstances of the case, we are of the considered view that the ld.CIT(A) was right in allowing the benefit of deduction claimed u/s.80P of the Act in respect of income derived from the activity including interest income earned from fixed deposits. We do not find any error or infirmity in the order of the CIT(A). Hence, we are inclined to uphold the order of the CIT(A) and dismiss the appeal filed by the Revenue.” 10. In this view of the matter and consistent with view taken by the coordinate bench in appellant’s own case, we are of the considered view that the assessee is entitled for deduction u/s. 80P(2)(a)(i) of the Act, in respect of income derived from its business activity including interest income earned from fixed deposits with other cooperative banks/societies. The ld. CIT(A), after considering relevant facts has rightly directed the Assessing Officer to delete additions made towards disallowance of deduction claimed u/s. 80P(2)(a)(i) of the Act and thus, we are inclined to uphold the findings of the ld. CIT(A) and dismiss appeals filed by the revenue for assessment years 2012-13, 2014-15 & 2017-18.

ITA No 621/Chny/2026 (AY 2017-18) M Lamp Coop Credit Society Ltd Vs ITO W-2 :: 6 :: decisions, we are of the view that the assessee is entitled for deduction u/s.80P of the Act and hence, we set aside the order of the ld.CIT(A) and direct the AO to consider the return of income filed by the assessee as valid for the A.Y. 2017-18 and allow the deduction claimed u/s.80P of the Act. We noticed that the provisions of section 80AC which bars claiming of deduction if the return of income was not filed before the due date specified under section 139(1) of the Act, was made applicable to the deduction under the heading “C – Deductions in respect of certain incomes” under Chapter VIA of the Act w.e.f. 1st day of April, 2018. Hence, for the year under consideration, provisions of section 80AC are also not applicable to the assessee, since the present year is prior to assessment year 2018-19. We order accordingly by allowing the grounds of appeal raised by the assessee. 10. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on the 01st day of June, 2026, in Chennai.

Sd/- Sd/- (इंतूरी रामा राव) (मनु कुमार िग�र) (INTURI RAMA RAO) (MANU KUMAR GIRI) लेखा सद*य/ACCOUNTANT MEMBER �या�यक सद*य/JUDICIAL MEMBER

चे�नई/Chennai, +दनांक/Dated: 01st June, 2026. SNDP, Sr. PS आदेश क! ��त,ल-प अ.े-षत/Copy to:

ITA No 621/Chny/2026 (AY 2017-18) M Lamp Coop Credit Society Ltd Vs ITO W-2 :: 7 :: 1. अपीलाथ�/Appellant/Assessee 2. ��थ�/Respondent/Department 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF