KHANDRA COLLIERY EMPLOYEES CO OPERATIVE CREDIT SOCIETY LTD.,BARDHAMAN vs. THE AO, CPC BANGALORE / ITO, WARD-1(1), BURDWAN, BURDWAN
PER SANJAY AWASTHI, ACCOUNTANT MEMBER 1. The present appeal arises from order u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”), passed by Ld. Commissioner of Income Tax (Appeals), Addl/JCIT(A), Indore vide order dated 21.10.2024. 1.1 In this case, the Ld. AO-CPC made an adjustment by denying the donation of Rs. 33,17,330/- u/s 80P(2)(a)(iv) and 80P(2)(d) of the Act. This addition has been made since admittedly the Return of Income was filed beyond the due date for filing the same. The assessee carried this matter before the Ld. CIT(A), where also he could not succeed. 2. Further aggrieved, the assessee is in appeal before the ITAT with the following grounds:
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Khandra Colliery Employees Cooperative Credit Society Ltd.
1) That the learned Commissioner of Income tax (Appeals) was not justified in upholding the action of the CPC, Bangalure denying the deduction of Rs. 33,17,330.00 u/s 80P(2)(a)(i), 80P(2)(a) (iv), 80P(2) (d) of The Income Tax Act, 1961 for submission of late return although the assessee is not a Co-operative bank, but a Non-Agricultural Co- operative Credit Society.
2) That the learned Commissioner of Income tax (Appeals), erred in law as well as in facts, in not allowing the deduction u/s.80P(2)(a) (i) to the extent of the profit earned on providing credit facilities to its members.
3) That in the facts and in the circumstances of the case is that the main reason of Late filling of Income Tax Return is that Statutory Audit was done very late and the audit report was also received very late although the 'Auditor of West Bengal Govt. done the audit of the society.
4) That in the facts and in the circumstances of the case is that section 234A for default in furnishing the return is not applicable because the delay in return of income is for late of receiving of audit report.
5) That in the facts and in the circumstances of the case is that section 234B for default in payment of Advance Payment because the society is not liable to pay tax as it can avail
100% of its profit as a deduction.
6) That in the facts and in the circumstances of the case is that section 234C for difference of advance tax as it not liable to pay tax.
7) That in the facts and in the circumstances of the case is that section 234F is applicable on the society only for amount of Rs. 1000.00 only.
8) That in the facts and in the circumstances of the case is that the appellant is also relied on the very recent Circular of Ministry of Co-Operation dated 3rd August 2023 referring to the CBDT circular 13-2023 dated 26-07-2023 which is most relevant in the present case.
9) That the appellant craves leave to supplement, amend, add, substitute, cancel, delete or otherwise modify all or any of the grounds herein before or at the time of hearing, if necessary, so arises.
2.1
Before us, the Ld. AR placed on record the order of coordinate Bench in the case of Durgamondap Samabay Krishi Unnayan Samiti, ITA No.
1153/Kol/2023, dated 24.07.2024. The Ld. AR argued that section 143(1)(a)(v) of the Act was amended w.e.f. 01.04.2021 only and prior to this amendment section 80P of the Act was not included in the same. In this manner, it was argued that no adjustment could have been made u/s 143(1) of the Act prior to 01.04.2021. Since, this case pertains to assessment year 2019-20 only hence the matter would be covered by the decision in the case of Durgamondap Samabay Krishi Unnayan Samiti Ltd.
(supra). The Ld. DR on the other hand, relied on the provisions of section 80AC of the Act and supported the action of the authorities below.
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Khandra Colliery Employees Cooperative Credit Society Ltd.
We have carefully considered the rival submissions and have also gone through the documents before us. It is seen that in the case of Durgamondap Samabay Krishi Unnayan Samiti Ltd. (supra), in which both of us have authored the said order, the following finding is given: “3. We have considered the rival submissions and also gone through the documents on record. For the sake of reference, the provisions of Section 143(1)(a)(v) of the Act as they stood prior to amendment, and relevant for the assessment year under consideration are as under: “v) disallowance of deduction claimed under sections 10AA, 80-IA, 80-1AB, 80-IB, 80-IC, 80-ID or section 80-IE, if the return is furnished beyond the due date specified under sub-section (1) of section 139; or” 3.1. Thereafter, with effect from 01.04.2021 the amended provisions read as under: “(v) disallowance of deduction claimed under 98[section 10AA or under any of the provisions of Chapter VI-A (emphasis added) 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” 3.2. Furthermore, Section 80AC of the Act reads as under: “[Deduction not to be allowed unless return furnished. 80AC. Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after— (i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80- IB or section 80-IC or section 80-ID or section 80-IE; (ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C. —Deductions in respect of certain incomes", no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139.]” 3.3. A careful perusal of the said Sections reveals that Section 143(1)(a) of the Act has been designed as a complete code in itself and lays down the mandate for any Assessing Officer undertaking processing of return of income under this Section. Section 80AC of the Act is clearly outside of the purview of Section 143(1)(a) of the Act and would come into play in case of assessment order was being framed u/s 143(3) of the Act. In fact, this interpretation is strengthened by the judgment of Hon’ble Kerala High Court in the case of Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham vs. CIT reported in [2023] 152 taxmann.com 347 (Kerala). The head notes are extracted for ready reference: “Section 80P, read with sections 80A and 80AC, of the Income-tax Act, 1961 - Deductions - Income of co-operative societies (Belated return) - Assessment years
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Khandra Colliery Employees Cooperative Credit Society Ltd.
2009-10 and 2010-11 - Assessee-society, engaged in financing and social welfare of toddy tappers/workers, had claimed deduction under section 80P - Assessing Officer made disallowance under section 80P(2)(a)(vi) since assessee's returns were filed much beyond date for filing prescribed under section 139 and even under section 148
- On reading sections 80A(5) and 80AC as they stood prior to 1-4-2018, it was noted that statutory scheme under Act was to admit only such claims for deduction under section 80P as were made by assessee in return of income filed by him - However, after 1-4-2018, even if assessee made his claim for deduction under section 80P in a return filed within time under section 139(4), 142(1) or 148, he would not be allowed deduction unless returns so filed was within due date prescribed under section 139(1) - Whether since assessee had filed its return of income after dates prescribed under section 139(1), returns were indeed non-est and could not be acted upon by Assessing Officer even if they were filed before completion of assessment - Held, yes
- Whether, since assessee failed to fulfil pre-condition prescribed under section 80P, it was not entitled to benefit of exemption under section 80P(2)(a)(vi) - Held, yes [Paras
11 to 14]”
3.4. Thus, clearly since the processing has been done u/s 143(1)(a) of the Act, where the treatment to be given to items under Chapter VI (which includes Section 80P of the Act) is clearly mentioned then there can be no reason why the provisions of Section 80C of the Act will need to be resorted to for the limited purposes of processing of return. At the expense of repetition, it needs to mentioned that Section 80P of the Act was introduced for the purposes of Section 143(1)(a)(v) of the Act only with effect from 01.04.2021. Hence, any prior period return cannot be adversely effected in case it is not filed within the time prescribed u/s 139(1) of the Act. With this discussion, the appellant gets relief and the AO is directed to allow the benefit of Section 80P of the Act to the appellant.”
3.1
Considering the discussion above, it is held that the Ld. AO-CPC could not have made the impugned adjustment for this year and hence the addition made on that account is directed to be deleted.
4. In result, the appeal of the assessee is allowed.
Order pronounced on 25.06.2025 (Pradip Kumar Choubey) (Sanjay Awasthi)
Judicial Member Accountant Member
Dated: 25.06.2025
AK, Sr. P.S.
Copy of the order forwarded to:
1. Khandra Colliery Employees Co-operative Credit Society Limited
2. The AO, CPC Bangalore/ITO, Ward 1(1), Burdwan
3. Pr. CIT
4. CIT(A)
CIT(DR)
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Khandra Colliery Employees Cooperative Credit Society Ltd.
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By order