MONARCH CO-OP CREDIT SOCIETY LIMITED,ANDHERI vs. INCOME TAX OFFICER, WARD 41(4)(2), MUMBAI, BANDRA

ITA 5594/MUM/2026Status: DisposedITAT Mumbai30 September 2026AY 2017-184 pages
AI SummaryAllowed

What were the facts?

The assessee, Monarch Co-Op Credit Society Limited, is an appellant before the Income Tax Appellate Tribunal (ITAT) challenging an order of the CIT(A)/NFAC, Delhi, for Assessment Year (AY) 2017-18. The assessee, a cooperative credit society engaged in accepting deposits and providing credit facilities to its members, had its case reopened due to non-filing of a return of income. The assessment was completed under Section 144 of the Income Tax Act, 1961. The assessee claimed business profit of Rs. 28,33,870/- as exempt under Section 80P(2)(a)(i). The Assessing Officer disallowed this exemption, and the CIT(A) confirmed the disallowance, citing the non-compliance with Section 80AC, which mandates filing a return of income for claiming deductions under Chapter VI-A.

What did the Tribunal hold?

The Tribunal held that the assessee's appeal should be allowed. The core issue revolved around the applicability of Section 80AC, which mandates the filing of a return of income for claiming deductions under Chapter VI-A. While the lower authorities disallowed the deduction under Section 80P(2)(a)(i) solely on the ground that no return of income was filed, the Tribunal noted that the amendment to Section 80AC, making the filing of a return under Section 139(1) mandatory, was effective from AY 2018-19. The Tribunal found that for AY 2017-18, this condition was not mandatory. The Tribunal relied on the decision in Mount Mary Nagari Cooperative Credit Society Ltd. vs. ITO, which held that the mandatory requirement of filing a return for claiming Chapter VI-A deductions was introduced from AY 2018-19. This ratio was followed in subsequent decisions cited by the assessee. Consequently, the Tribunal directed the Jurisdictional Assessing Officer to verify the computation of income and allow the deduction under Section 80P(2)(a)(i) to the assessee.

What were the issues?

1. Whether the disallowance of deduction under Section 80P(2)(a)(i) by the lower authorities is justified on the ground that the assessee failed to file a return of income, thereby contravening Section 80AC? Assessee's contentions: The assessee argued that the requirement of making a claim in the return of income under Section 80AC is directory, not mandatory. Furthermore, the assessee contended that the condition making the filing of a return of income mandatory for claiming deductions under Chapter VI-A was not applicable for AY 2017-18, as it was made mandatory only from AY 2018-19. The assessee relied on decisions in Mount Mary Nagari Co-op Credit Society Ltd. vs ITO, Randheja Dudh Utpadak Sahakari Mandli Ltd. vs ITO, Wankas Vividh Karyakari Seva Sahkari Mandali Ltd. vs ITO, Krishi Vibhag Karmachari Vrund Sahakari Pat Sanstha Maryadit vs ITO, and Prathamika Krishi Pattina, Sahakara Sangha Ltd. vs ITO. Revenue's contentions: The Revenue supported the orders of the lower authorities, arguing that filing of the return of income is a condition precedent for seeking deduction/exemption under Chapter VI-A, and admittedly, no return of income was filed by the assessee.

Which sections of the Income-tax Act were involved?

Section 80P,Section 80P(2)(a)(i),Section 80AC,Section 139(1),Section 254(1),Section 144

AI-generated summary — verify with the full judgment below

IN THE INCOME TAX APPELLATE TRIBUNAL “J(SMC)” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER (PhysicalHearing) Monarch Co-Op Credit Society ITO, Ward – 41(4)(2), Mumbai K Singh Marg, Andheri (E), Mumbai – Bhavan, G Block BKC, Bandra 400709. (East), Mumbai – 400051. [PAN: AAICM3254F] Appellant / Assessee Respondent / Revenue Assessee by Ms. Dinkle Hariya, Advocate Revenue by Ms. Jayshree Thakur, Sr. DR Date of Institution 07.05.2026 Date of hearing 06.08.2026 Date of pronouncement 30.09.2026 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER;

1.

This appeal by assessee is directed against the order of ld. CIT(A)/NFAC, Delhidated 27.03.2026 for Assessment Year (AY) 2017-18. The assessee has raised following grounds of appeal:

“1. The Ld. CIT(A), NFAC has erred in affirming with the Ld. Assessing Officer in disallowing deduction u/s 80P(2)(a)(i).

2.

Your appellant further reserves the rights to add, amend or alter the aforesaid grounds of appeal as they may think fit by themselves or by their representatives.”

2.

Rival submissions of both the parti

The order continues below.

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