THE VARDHMAN NAGRIK CO-OP CREDIT SOCIETY LTD.,DAHOD vs. THE ITO, WARD-1, DAHOD

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ITA 2086/AHD/2025Status: DisposedITAT Ahmedabad22 April 2026AY 2015-166 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the amendment to Section 80AC, making timely filing mandatory for Chapter VI-A deductions, was prospective and applicable from AY 2018-19 onwards. Therefore, for AY 2015-16, late filing was not a bar to claiming Section 80P deduction.

What were the facts?

The assessee, a co-operative credit society, claimed deduction under Section 80P for AY 2015-16. The return was filed after the due date, leading to the disallowance of the deduction by the CPC under Section 143(1) and confirmed by the CIT(A).

What were the issues?

Whether the disallowance of Section 80P deduction under Section 143(1) for late filing of the return is valid for AY 2015-16, considering the prospective nature of Section 80AC amendment.

Which sections of the Income-tax Act were involved?

Section 80P,Section 143(1),Section 139(1),Section 80AC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL

For Appellant: Shri M K Patel, Advocate
For Respondent: Shri Girish Parihar, Sr. DR
Hearing: 26.03.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.2086/Ahd/2025 (Assessment Year: 2015-16) The Vardhaman Nagrik Co. Op. Vs. Income Tax Officer, Credit Society Ltd., Ward-1, Sanjeli, Dahod-389175 Dahod [PAN No.AADAT5987B] (Appellant) .. (Respondent) Appellant by : Shri M K Patel, Advocate Respondent by: Shri Girish Parihar, Sr. DR Date of Hearing 26.03.2026 22.04.2026 Date of Pronouncement O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), ADDL/JCIT(A)-1, Nashik vide order dated 08.09.2025 passed for A.Y. 2015-16.

2.

The assessee has raised the following grounds of appeal:

“1. The Learned Commissioner of Income Tax (Appeals) erred in computing the disallowance of deduction u/s SOP since according to him the Return was not filed in time though the provisions of Section 80AC applicable with effect from Assessment Year 2019-20 was also applicable to the current Assessment Year. 2. The Learned Commissioner of Income Tax (Appeals) erred in disregarding the submission made during the course of appellate proceedings u/s 154 and further erred in holding that the deduction u/s SOP could be disallowed even in the proceedings u/s 143(l)(a) of the Act. 3. The Learned Commissioner of Income Tax (Appeals) erred in confirming the disallowance of Rs.14,04,716/- u/s 80P(2)(d) of the Act. 4. The appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal.”

ITA No. 2086/Ahd/2025 The Vardhaman Nagrik Co. Op. Credit Society Ltd. vs. ITO Asst.Year –2015-16 - 2– 3. The brief facts of the case are that the assessee is a co-operative credit society engaged in providing credit facilities to its members and had filed its return of income for A.Y. 2015–16 declaring total income of ₹14,04,716/- and claiming deduction under section 80P(2)(a)(i) of the Income-tax Act (“the Act”). The return was processed by CPC, Bengaluru under section 143(1) of the Act and subsequently rectified under section 154 dated 09.10.2020, wherein the deduction claimed under section 80P of the Act was disallowed, resulting in enhancement of taxable income and consequent tax demand.

4.

During the assessment/processing stage, the CPC primarily relied on the fact that the return of income was filed beyond the due date prescribed under section 139(1) of the Act. It was observed that the assessee had filed the return on 05.10.2015, whereas the due date (as extended) was 07.09.2015. On this basis, the deduction under section 80P of the Act was denied. The processing under section 143(1) of the Act, which is limited to prima facie adjustments, resulted in disallowance of the entire deduction claimed under Chapter VI-A. Subsequently, in rectification proceedings under section 154 of the Act, the same disallowance was reiterated, thereby confirming the adjustment initially made u/s 143(1) of the Act.

5.

Aggrieved by such action, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). Before the CIT(Appeals), the assessee submitted that it is a co-operative society engaged in providing credit facilities to its members and that the entire income earned was from members, thereby fully qualifying for deduction under section 80P(2)(a)(i). The assessee contended that the CPC had wrongly disallowed the deduction without assigning proper reasons and that such

ITA No. 2086/Ahd/2025 The Vardhaman Nagrik Co. Op. Credit Society Ltd. vs. ITO Asst.Year –2015-16 - 3– disallowance could not be made under section 143(1) of the Act as it does not fall within the scope of prima facie adjustments. The assessee further submitted that its claim was not an “incorrect claim apparent from the return” and hence could not be disallowed at the processing stage. The assessee also relied on the statutory provisions of section 80P of the Act and submitted audited accounts and computation to substantiate that the income was eligible for deduction.

6.

However, the CIT(Appeals) did not accept the submissions of the assessee. The CIT(Appeals) primarily focused on the legal requirement of filing the return of income within the due date for claiming deduction under Chapter VI-A. The CIT(Appeals) observed that the assessee had filed the return beyond the due date prescribed under section 139(1) of the Act, and therefore, in view of section 80AC of the Act, the deduction under section 80P of the Act was not admissible. The CIT(Appeals) interpreted section 80AC to mean that timely filing of return is a mandatory condition for claiming deduction and held that this requirement applied even for A.Y. 2015–16.

7.

Further, the CIT(Appeals) also examined the issue of audit and noted that although the assessee was not liable for tax audit under section 44AB of the Act due to lower turnover, it was required to undergo statutory audit under the Co-operative Societies Act. The CIT(Appeals) observed that the assessee had failed to furnish such audit report and had also not provided satisfactory explanation for delay in filing the return. The CIT(Appeals) thus held that both conditions viz. timely filing of return and compliance with statutory audit were not fulfilled by the assessee.

ITA No. 2086/Ahd/2025 The Vardhaman Nagrik Co. Op. Credit Society Ltd. vs. ITO Asst.Year –2015-16 - 4– 8. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

9.

We have heard the rival contentions and perused the material on record. The short issue involved in the present case is whether deduction under section 80P of the Act can be denied to the assessee by way of prima facie adjustment under section 143(1) of the Act on the ground that the return of income was filed beyond the due date prescribed under section 139(1) for A.Y. 2015–16.

10.

On careful consideration, we find that the issue is no longer res integra and stands covered in favour of the assessee by the decisions of the jurisdictional Tribunal and also the decision of the ITAT Rajkot Bench in the case of Shri Navaniya Seva Sahakari Mandali in ITA No. 317/Rjt/2022 and the decision of the ITAT Ahmedabad Bench in the case of Shree Anjana Co-op Credit Society Ltd. in ITA No. 630/Ahd/2025. In these decisions, it has been categorically held that the amendment brought to section 80AC of the Act by the Finance Act, 2018, which made filing of return within due date mandatory for claiming deduction under Chapter VI-A including section 80P of the Act, is prospective in nature and applicable from A.Y. 2018–19 onwards.

11.

In the case of Shri Navaniya Seva Sahakari Mandali (ITA No. 317/Rjt/2022), the ITAT observed as under:

“On going through the statutory provisions, we observe that section 80AC provides that no such deduction under section 80P shall be allowed to an assessee unless he furnishes a return of his income on or before the due date specified under section 139(1) with effect from assessment year 2018-19 onwards. However, section 143(1)(a)(v) provides 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), can be made if the return is furnished beyond the due date specified under sub-section (1) of section

ITA No. 2086/Ahd/2025 The Vardhaman Nagrik Co. Op. Credit Society Ltd. vs. ITO Asst.Year –2015-16 - 5– 139. This amendment has been introduced with effect from 1-4-2021. Accordingly, the above amendment would not apply to the impugned assessment year.” “Accordingly, denial of claim under section 80P would not come within the purview of prima facie adjustment under section 143(1)(a)(v), for the simple reason that the section was not in force during the period under consideration.” “Further, the case of the assessee would also not fall within the purview of prima facie adjustment under section 143(1)(a)(ii)… Therefore, the case of the assessee would also not fall within the purview of prima facie adjustment under section 143(1)(a)(ii).” “It was held that since return of income was filed within due date permissible under section 139(4), in which claim for deduction under section 80P was made, therefore, deduction under section 80P could not be denied to assessee only on basis that assessee did not file its return of income within due date prescribed under section 139(1) by way of adjustment under section 143(1).” 12. In the case of Shree Anjana Co-op. Credit Society Ltd. (ITA No. 630/Ahd/2025), the Ahmedabad ITAT observed as under:

“The learned AR has pressed before us that section 80AC as it stood prior to its amendment by the Finance Act, 2018 applied only to deductions under sections 80- IA to 80-IE and did not cover section 80P…..the enlarged provision of section 80AC, covering the entire Chapter VI-A including section 80P, has been made operative only with effect from 01.04.2018, i.e., from assessment year 2018–19 onwards…..“For A.Y. 2017–18, therefore, belated filing of return was not fatal to the claim of deduction under section 80P….“The legislative intent is thus clear that up to assessment year 2017–18, the condition of filing return within the time prescribed under section 139(1) was not a bar for claiming deduction under section 80P.” ….. “To apply section 80A(5) in isolation, without reference to the contemporaneous scope of section 80AC, would render the 2018 amendment otiose and lead to unintended denial of substantive relief.” “The denial of deduction in limine on the ground of belated filing cannot be sustained.” 13. As noted above, at the relevant point of time, there was no enabling provision under section 143(1) of the Act which permitted disallowance of deduction under section 80P of the Act on account of late filing of return. The scope of adjustments under section 143(1) of the Act was limited and such debatable issue could not have been decided at the stage of processing of return.

ITA No. 2086/Ahd/2025 The Vardhaman Nagrik Co. Op. Credit Society Ltd. vs. ITO Asst.Year –2015-16 - 6–

14.

In view of the above, the action of the CPC in disallowing deduction under section 80P of the Act and the confirmation thereof by the CIT(Appeals) is not sustainable in law. Respectfully following the judicial precedents cited above, we hold that the assessee is entitled to deduction under section 80P of the Act as claimed.

15.

Accordingly, the disallowance made under section 143(1) of the Act and sustained by the CIT(Appeals) is hereby deleted and the appeal of the assessee is allowed.

16.

In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 22/04/2026

Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 22/04/2026 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 20.04.2026 (Dictated over dragon software) 2. Date on which the typed draft is placed before the Dictating Member 20.04.2026 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 21.04.2026 5. Date on which the fair order is placed before the Dictating Member for pronouncement 22.04.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S 22.04.2026 7. Date on which the file goes to the Bench Clerk 22.04.2026 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order……………………………………

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