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Facts
The assessee filed a return declaring NIL income. The case was processed under section 143(1), and an addition of Rs. 5,52,690 was made by disallowing the claim for deduction under section 80P(2)(d) without prior intimation. The CIT(A) upheld this action.
Held
The Tribunal held that the adjustment made by the CPC under section 143(1) was beyond the scope of permissible adjustments and was made without giving the assessee an opportunity. On merits, the issue of deduction under section 80P(2)(d) has been decided in favour of cooperative housing societies by coordinate benches.
Key Issues
Whether the adjustment made by CPC under section 143(1) without opportunity was permissible, and whether deduction under section 80P(2)(d) is allowable to cooperative housing societies.
Sections Cited
250, 1961, 143(1), 80P(2)(d), 143(1)(a)(v), 139(1)
AI-generated summary — verify with the full judgment below
Before: SHRI. AMIT SHUKLA & SMT. RENU JAUHRI
आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the ADDL/JCIT (A)-1 Kolkata [hereinafter referred to as “CIT(A)”] dated 19/03/2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2021-22.
The assessee has raised the following grounds of appeal:
1. AY 2021-22 Bay View Co-operative Housing Soceity Limited “1. The Commissioner of Income-tax (Appeal), Addl/JCIT (A) 1, Kolkata ["the CIT(A)"] erred in upholding the action of the Assistant Director of Income-tax. CPC - Bengaluru ("the AO") in denying the Appellant's claim for deduction of Rs. 5.52,690 under section 80(P)(2)(d) of the Act. The Appellant prays that the AO be directed to grant to the Appellant a deduction of Rs. 5,52,690 under section 80P(2)(d) of the Act.
2. The CIT(A) erred in upholding the correctness of the intimation dated 19- 10-2022 issued under section 143(1) of the Act though the same suffered from jurisdictional defects. The Appellant prays that the Intimation dated 19-10- 2022 be held to be bad in law and therefore be quashed.
The Appellant craves leave to add, to alter and/or amend the above ground of appeal
.”
3. Brief facts are that the assessee filed return declaring NIL income for AY 2021-22 on 11.03.2022. The case was processed u/s. 143(1) and income was determined at Rs. 5,52,690/-, after disallowing the assessee’s claim for deduction u/s. 80P(2)(d) of the Act. Aggrieved with the intimation dated 19.10.2022, the assessee preferred an appeal before Ld. CIT(A), raising legal ground regarding making of impermissible adjustment that too without giving prior intimation opportunity. On merits also the assessee raised the ground regarding allowability of deduction 80P(2)(d) in the case of cooperative housing societies. Ld. CIT(A) however, dismissed the assessee’s appeal vide order dated 19.03.2025. The assessee is now in appeal before the Tribunal and has raised legal issues as well as the issue on merits regarding allowability of deduction u/s. 80P(2)(d) of the Act.
4.1. Before us, Ld. AR argued that no adjustment could be made on a debatable issue, by the CPC, more so, without giving an opportunity to the assessee. Ld. AR has also filed written submissions to clarify that for AY 2021- 22, pursuant to the amendment u/s. 143 (1) (a) (v) of the Act, an adjustment in AY 2021-22 Bay View Co-operative Housing Soceity Limited respect of Chapter VI-A deductions is permissible only if the return is filed beyond the due date specified u/s. 139(1) of the Act. It has been further submitted that the extended due date for filing return for AY 2021-22 was 15.03.2022 and assessee had filed its return of income on 11.03.2022. Accordingly, the prima facia adjustment could not have been made even for AY 2021-22 as the return had been filed before the due date.
4.2. Even on merits, the issue regarding allowability of deduction u/s. 80P(2)(d) stands decided in favour of the co-operative housing societies in numerous decisions of the coordinate benches. Ld. AR has specifically relied on the decision in in the case of M/s. Premium Tower Co-operative Housing Society Limited vs. CIT(A), Mumbai, wherein it has been held, after considering judgements of various Hon’ble High Courts on the issue, that the assessee is eligible for deduction of interest income earned from a cooperative bank u/s. 80P(2)(d) of the Act.
4.3. On the other hand, Ld. DR has relied on the order of Ld. CIT(A) and has argued that the interest earned from cooperative bank is not covered u/s. 80P(2)(d) of the Act.
5.1. We have heard the rival submissions and perused the material placed before us. On the legal issue regarding the scope of adjustment u/s. 143(1) of the Act, the impugned adjustment is clearly beyond the scope of permissible adjustments. Moreover, the assessee has not been given the opportunity mandated by law before making such an adjustment. Accordingly, on the legal AY 2021-22 Bay View Co-operative Housing Soceity Limited ground, the adjustment made by the CPC being beyond the scope of adjustment u/s. 143(1) deserves to be deleted.
5.2. On merits, the decision of the coordinate bench in the case of Ashna Enclave Co-operative Housing Society Limited and in has also been cited by the Ld. AR, wherein under similar facts and circumstances, the issue has been decided in favour of the assessee. Thus, on merits also the issue is covered in favour of the assessee by various decisions of the coordinate benches wherein, it has been held that interest income of a cooperative housing society earned on deposits made with co- operative banks is eligible for deduction u/s. 80P(2)(d) of the Act.
In view of the above, the addition of Rs. 5,52,690/- made by the CPC on account of disallowance of u/s. 80P(2)(d) is hereby deleted.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 30.07.2025.