MEGHANA APARTMENT CO.OP HSG. SOC LTD,MUMBAI vs. ITO WD 25(3) (1) , MUMBAI

In all these appeals, the assessee is aggrieved by the decision of learned CIT(A) in confirming the disallowance of deduction claimed by the assessee under section 80P of the I.T. Act.

The assessee is a cooperative housing society. In all the three years under consideration, the returns of income have been filed by the assessee belatedly i.e. beyond the due date prescribed under section 139(1) of the Act, details of which are given below :-

The Learned AR submitted that the provisions of section 80A(5) barring claim of deduction under the heading “C – Deductions in respect of certain incomes” under Chapter VIA shall apply only in cases where assessee fails to make a claim in his return of income, i.e., the said provision will not be applicable to the assessee herein because the assessee has made a claim for deduction under section 80P of the Act in the returns of income filed by it. When learned DR pointed out that the provisions of section 80AC shall be applicable to the facts of the present case, the learned AR invited our attention to the provisions of section 80AC and submitted that deduction under the heading “C – Deductions in respect of certain incomes” under Chapter VIA has been made applicable in section 80AC w.e.f. 1st day of April, 2018, meaning thereby, provisions of section 80AC shall apply to the assessee only w.e.f. assessment year 2018-19. Accordingly, he submitted that neither the provisions of section 80A(5) nor provisions of section 80AC are applicable to the assessee herein and hence, learned CIT(A) was not right in law in confirming the disallowance of deduction claimed under section 80P of the Act.

The Learned AR further submitted that impugned adjustment made by way of disallowance of claim u/s 80P of the Act is beyond the powers of the Assessing Officer during the years under consideration. The Ld A.R invited our attention to the provisions of sec.143(1)(a) of the Act and submitted that the power to disallow claimed under section 80P has been given to the Assessing Officer only w.e.f. 1.4.2021 by the Finance Act, 2021. Prior thereto, the Assessing Officer could disallow deductions claimed under section 10AA, 80IA, 80IAB, 80IB, 80IC, 80ID & 80IE only. Accordingly, learned AR submitted that the Assessing Officer was not empowered to disallow claim under section 80P of the Act for the years under consideration, while processing returns under section 143(1) of the Act.

On the contrary, learned DR supported the orders passed by learned CIT(A).

I have heard rival contentions and perused the record. Provisions of section 80A(5) reads as udder :- “80A(5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading "C.— Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder.”

I also 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 all the three years under consideration, provisions of section 80AC are also not applicable to the assessee, since all these three years prior to assessment year 2018-19.

The Learned AR also brought to my notice that the power to make disallowance of deduction under the heading “C – Deductions in respect of certain incomes” under Chapter VIA, while processing return under section 143(1) of the Act has been given to the Assessing Officer only by the Finance Act 2021 w.e.f. 1.4.2021. Prior to that, there was no power available with the AO to disallow the claim made under the heading “C – Deductions in respect of certain incomes” under Chapter VIA.

Hence, for all reasoning mentioned above, I am of the view that the Assessing Officer could not have disallowed the deduction claimed by the assessee under section 80P of the Act in all the three years under consideration, while processing the returns of income u/s 143(1) of the Act. Accordingly, I set aside the orders passed by Ld CIT(A) on this issue in all the three years under consideration and direct the AO to delete the disallowance of claim for deduction made u/s 80P of the Act.

In the result, all the three appeals filed by the assessee are allowed.