Loading judgment…
Facts
The assessee's appeal was filed with a delay of 450 days. The core issue is the disallowance of deduction under Section 80P by the AO and CPC on the grounds that the return of income was filed beyond the due date.
Held
The Tribunal held that the enabling provisions for making adjustments related to Section 80P under Section 143(1)(a) were brought into effect only from April 1, 2021. Therefore, no such adjustment could have been made by the CPC for Assessment Year 2019-20, even if the return was filed late.
Key Issues
Whether the disallowance of deduction under Section 80P by the CPC is valid when the return was filed beyond the due date, considering the effective date of the relevant amendment.
Sections Cited
80P, 143(1)(a), 139(1), 80AC, 119(2)(b), 143(1)(a)(iv), 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, 80-IE, 143(1)(a)(v), 139(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S.R. RAGHUNATHA
PER MANU KUMAR GIRI (Judicial Member): This appeal by the assessee is directed against order of the Ld. Commissioner of Income-tax (Appeals), ADDL/JCIT(A)-5 Delhi [in short 'the Ld. CIT(A)'] dated 06.02.2025 for assessment year 2019-20.
There is a delay of 450 days in filing this appeal. The assessee has filed petition along with affidavit for condonation of delay stating therein the reasons for belated filing of the appeal. On perusal of the aforesaid reasons in the condonation application, we are of the view that there is sufficient cause for belated filing of this appeal. Hence, we condone the FT 92 – The Vilupuram. :- 2 -: delay in filing this appeal and proceed to dispose of the appeals on merits.
Briefly stated facts of the case are that the assessee has challenged the disallowance of deduction u/s 80P by the AO, CPC, Bengaluru on the following grounds:
(i) The Return of Income was not filed within the due date.
(ii) The disallowance u/s 80(P) was outside the scope and ambit of section 143(1)(a)(iv) for A.Y. 2019-20.
It is seen from intimation order that that the extended due date of filing of original return of income for the AY 2019-20 was 31/08/2019, however the appellant has filed its return of income on 30/11/2020. Thus, the return of income has not been filed within the due date as prescribed in section 139(1) of the Act. Accordingly, as per the provisions of section 80AC of the Act, the claim of deduction u/s 80P has been rejected by CPC. As per the provisions of section 80AC(ii), no deduction under any provisions of Chapter VIA under the head "C-deduction in respect of certain incomes will be allowed w.e.f. 01/04/2018 unless an assessee filed the return of his income on or before the due date specified under sub section (1) of section 139. Since the said provision was effective from 01/04/2018, tie assessment year involved in the present case falls within the purview of amended section 80AC of the Act as the return of income FT 92 – The Vilupuram. :- 3 -: was filed beyond the extended due date. Thus, since the return has been filed beyond the extended due date u/s 139(1) of the Act, the appellant is not eligible to claim deduction u/s 80P r.w.s. 80AC, the only remedy available lies in the machinery provisions of the Act rather seeking legal remedy. Such provisions are found in section 119(2)(b) which enables an assessee to approach the Board for seeking relief in such cases.
The ld.AR filed the coordinate orders of the Tribunal which have decided the issue in question in favour of the assessee. The details of the orders are as under:
i.) Chennai Kulalers Co-operative Credit Society Limited (Regd. No.X35) Vs DCIT [ITA No.712/Chny/2022 for AY 2018-19 dated 12.10.2022] ii) Villupuram District Revenue Department Employees Coop Thrift and Credit Society Vs ITO [ITA No.51/Chny/2024 for AY 2019-20 dated 31.05.2024] 5. The ld. DR vehemently supported the orders of the authorities below and pleaded for the dismissal of the appeal of the assessee.
We have gone through the rival submissions, materials on record and the orders of the authorities below. The coordinate orders of the Tribunal in the case of Chennai Kulalers Co-operative Credit Society Limited (Regd. No.X35) Vs DCIT [ITA No.712/Chny/2022 for AY 2018-19 dated 12.10.2022held as under:
2. The Ld. AR submitted that such an adjustment could have been made by CPC only w.e.f. Assessment Year (AY) 2021-22 since the amendment to Sec. 143(1)(a) was made by Finance Act, 2021 w.e.f. 01.04.2021. For the same, Ld.
FT 92 – The Vilupuram. :- 4 -: AR drew our attention to the relevant amendment made by Finance Act, 2021. The Ld. Sr. DR relied on impugned order wherein learned first appellate authority has relied on the provisions of Sec.80AC to confirm the adjustment so made in the intimation issued by CPC. Having heard rival submissions, the appeal is disposed-off as under.
3. The relevant provisions of Section 143(1)(a) prescribing processing of return of income (as amended by Finance Act, 2018), as applicable to AY 2018-19, read as under:
143(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:— (a) the total income or loss shall be computed after making the following adjustments, namely:—
(i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under subsection (1) of section 139; (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under sections 10AA. 80-IA. 80-IAB. 80- IB. 80-IC. 80-ID or section 80-IE. if the return is furnished beyond the due date specified under sub- j section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return:
It could be seen that sub-clause (v) covers only specified Sections and do not cover Sec.80P. In other words, no adjustment of deduction claimed u/s 80P could have been made while processing the return of income.
4. The sub-clause (v) has been amended by Finance Act, 2021 and the amended sub-clause read as under: - …… (v) disallowance of deduction claimed under section 10AA or under any of the provisions of Chapter VI-A under the heading "C.—Deductions in respect of certain incomes", if the return is furnished beyond the due date specified under sub-section (1) of section 139: or ……. Section 80P fall under Chapter VI-A under the heading “C-Deductions in respect of certain incomes”. The rational for the amendment, as given in the memorandum explaining the provisions in the Finance Bill, 2021 is as under: -
Rationalisation of the provision relating to processing of returned income and issuance of notice under sub-section (2) of section 143 of the Act.
FT 92 – The Vilupuram. :- 5 -: The existing provisions of clause (a) of sub-section (1) of section 143 of the Act provides that at the time of processing of return of income made under section 139, or in response to a notice under sub-section (1) of section 142, the total income or loss shall be computed after making the adjustments specified in clauses (i) to (vi) therein. It is proposed to amend the following provisions of sub-section (1) of section 143 of the Act,- (i) Amend sub-clause (iv) of clause (a) of sub-section (1) of the section 143 of the Act, to allow for the adjustment on account of increase in income indicated in the audit report but not taken into account in computing the total income. (ii) Amend sub-clause (v) of clause (a) of sub-section (1) of the section 143 of the Act so as to give consequential effect to amendment carried out in section 80 AC vide Finance Act, 2018. (iii) Amend the provisions of section 143 to reduce the time limit for sending intimation under sub-section (1) of section 143 of the Act from one year to nine months from the end of the financial year in which the return was furnished. Consequently, it is also proposed to reduce the time limit for issue of notice under sub-section (2) of section 143 of the Act from six months to three months from the end of the financial year in which the return is furnished. These amendments will take effect from 1st April, 2021.
It could thus be seen that the enabling provisions allowing specified adjustment for Sec. 80P u/s 143(1)(a) has been brought on statute only with effect from 01.04.2021 and before that no such adjustment of deduction u/s 80P could have been done by the CPC u/s 143(1)(a) even if the return of income was filed beyond due date as specified u/s 139(1). No doubt, the provisions of Sec.80AC mandate denial of deduction u/s 80P even for AY 2018-19. However, in our considered opinion, without there being corresponding enabling provisions u/s 143(1)(a), no such adjustment could have been made by CPC for AY 2018-19. The same is amply clear from the memorandum explaining the provisions in the Finance Bill, 2021 as extracted above. Considering the same, we direct revenue to grant deduction u/s 80P as claimed by the assessee in the return of income. No other ground has been urged before us.
6. The appeal stand partly allowed.
The coordinate Bench orders of the Tribunal in the case of Villupuram District Revenue Department Employees Coop Thrift and FT 92 – The Vilupuram. :- 6 -: Credit Society Vs ITO [ITA No.51/Chny/2024 for AY 2019-20 dated 31.05.2024held as under:
3.0 The only issue under consideration is the action of the Ld.CIT(A) in confirming action of CPC, Bangalore by which a deduction of Rs. 17,15,750/- was denied under 143(1)(a)(v). In the instant case return of income for AY- 2019-20 was filed on 16.10.2020 as belated return u/s 139(4). The Ld.CIT(A) has concurred with the findings of CPC that u/s.80AC, deduction u/s.80P shall be allowed only to assessee if the return is filed in time u/s 139(1). It is the case of the assessee that the law has been wrongly interpreted by the revenue has the impugned provision enabling CPC to make adjustments kick started only w.e.f 01.04.2021. 4.0 In support of its contentions, the appellate has relied upon the decision of the Hon’ble Bangalore ITI in the case of Villupuram Credit Society, inter- alia holding as under:- It could thus be seen that the enabling provisions allowing specified adjustment for Sec. 80P u/s 143(1)(a) has been brought on statute only with effect from 01.04.2021 and before that no such adjustment of deduction u/s 80P could have been done by the CPC u/s 143(1) (a) even if the return of income was filed beyond due date as specified u/s 139(1). No doubt, the provisions of Sec.0AC mandate denial of deduction u/s 80P even for AY2018-19, However, in our considered opinion, without there being corresponding enabling provisions u/s 143(1) (a), no such adjustment could have been made by CPC for AY 2018-19, The same is amply clear from the memorandum explaining the provisions in the Finance Bill, 2021 as extracted above. Considering the same, we direct revenue to grant deduction u/s 80P as claimed by the assessee in the return of income." 5.0 We have considered the rival submissions in the light of facts of the case and material available on records. It is seen that decision on identical facts has been taken by this tribunal in dated 20.02.2023 and in dated 12.10.2022. In the impugned cases revenue was directed to grant deduction u/s. 80P as claimed by the assessee. As the facts of the present case are identical to the said decision, respectfully following the same, the revenue directed to grant deduction u/s.80P to the assessee. 6.0 In the result the appeal is allowed.
The Ld. D.R referred the judgment of the Hon’ble Jurisdictional High Court in the case of AA520 Veerappampalayam Primary Agricultural FT 92 – The Vilupuram. :- 7 -: Cooperative Credit Society Ltd. Vs. DCIT [2022] 138 taxmann.com 571 (Madras) dated 07.04.2021.
We find that the present issue in question is squarely covered by the orders of the Co-ordinate Benches of Tribunal referred supra. The judgment of the Hon’ble Jurisdictional High Court in the case of AA520 Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. Vs. DCIT [2022] 138 taxmann.com 571 (Madras) is not applicable in view of amendment in Section 143(1)(a) of the Act w.e.f 01.04.2021. Hence, respectfully following the Co-ordinate Bench orders referred supra, we direct the A.O to allow the deduction u/s. 80P of the Act to the assessee.
In the result, the appeal of the assessee is allowed.