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Facts
The assessee, a Co-operative Credit Society, filed its return of income claiming deductions under Section 80P. The CPC processed the return under Section 143(1) and disallowed these deductions, leading to the present appeal.
Held
The Tribunal held that the CPC's disallowance under Section 143(1)(a)(ii) was not in accordance with the law. The assessee is a Co-operative Credit Society and is eligible for the claimed deductions under Section 80P.
Key Issues
Whether the disallowance of deduction claimed by a Co-operative Credit Society under Section 80P by the CPC under Section 143(1) was justified.
Sections Cited
143(1), 250, 139(1), 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, 80-IE, 80P(2)(d), 80P(2)(c), 80P(2)(a)(i), 80P(2)(a)(ii), 80P(2)(a)(iii), 80P(2)(a)(iv), 80P(2)(a)(v), 80P(2)(a)(vi), 80P(2)(a)(vii), 80P(2)(b), 80P(2)(c)(i), 80P(2)(c)(ii), 80P(2)(d), 80P(2)(e), 80(2)(f)
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Income Tax Appellate Tribunal, PUNE BENCHES “A” :: PUNE
Before: MS.ASTHA CHANDRA & DR.DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the assessee against the order of ld.Additional/Joint Commissioner of Income Tax(Appeal)-2, Visakhapatnamunder section 250 of the Income Tax Act, 1961 dated 30.01.2025 emanating from the Assessment Order passed under section 143(1) of the Act, dated 02.12.2020 for AY 2019-20.The Assessee has raised the following grounds of appeal :
[A] “1. On the facts and circumstances prevailing in the case and as per provisions and scheme of the Act CPC has erred in not allowing the deduction u/s 80P(2)(d) and u/s 80P(2)(c) of the Act. Just and proper relief be granted 2. On the facts and circumstances prevailing in the case and as per provisions and scheme of the Act it be held that, disallowance of deduction claimed u/s 80P(2)(a)(i) of Rs.1,30,92,363/-, 80P(2)(c) of Rs.28,171/- and u/s 80P(2)(d) of Rs.13,08,573/- while processing the return u/s 143(1) of the Income Tax Act, 1961 is not covered by scope of the said section. It is held that intimation order is not passed in accordance with the provisions of the Act. The deduction so claimed by the assessee be allowed.
The appellant prays to be allowed to add, amend, modify, rectify, delete, or raise any grounds of appeal
at the time of the hearing.” Submission of ld.AR :
2. The ld.Authorised Representative(ld.AR) for the Assessee filed paper book. Ld.AR submitted that the Assessee is a Co- operative Credit Society of the employees’ of Government Printing press. The main activity of the assessee is to provide short term Loans to its members. During the year the assessee has earned interest income of Rs.1,30,73,976/- from various Loans given to its members. Assessee claimed deduction u/s.80P(2)(a) of the Act on the said Interest. Ld.AR took us through the Return of Income which is at page 96-162 of the Paper book. Ld.AR submitted that Assessee is eligible for deduction and CPC has erred. Ld.AR took us to page no.146 and 147 of the paper book, wherein Assessee in his Return of Income has claimed deduction u/s.80P(2)(a)(i), 80P(2)(c) and 80P(2)(d) of the Act. Ld.AR submitted that CPC erred in not allowing these deductions. 2 [A] Submission of ld.DR :
3. Ld.Departmental Representative for the Revenue relied on the order under section 143(1) of CPC/Assessing Officer and ld.CIT(A).
Findings & Analysis :
We have heard both the parties and perused the records. In this case, Assessee is a Co-operative Credit Society formed by employees working in Government Printing Press. During the year, Assessee filed Return of Income for A.Y.2019-20 u/s.139(1) of the Act. In the Return of Income, Assessee has claimed deductions as under :
Deductions under Chapter section 80P Income Amount eligible for deduction 1 Sec.80P(2)(a)(i) Banking/Credit Facilities to its 13092363 13092363 members 2 Sec.80P(2)(a)(ii) Cottage Industry 0 0 3 Sec.80P(2)(a)(iii)Purchase of Agricultural produce 0 0 grown by its members 4 Sec.80P(2)(a)(iv) Purchase of Agricultural 0 0 Implements, seeds, livestocks or other articles intended for agriculture for the purpose of supplying to its members 5 Sec.80P(2)(a)(v) Processing, without the aid of 0 0 power, of the agricultural Produce of its members 6 Sec.80P(2)(a)(vi) Collective disposal of Labour of its 0 0 members 7 Sec.80P(2)(a)(vii) Fishing or allied activities for the 0 0 purpose of supplying to its members 8 Sec.80P(2)(b) Primary cooperative society engaged 0 0 in supplying Milk, oilseeds, fruits or vegetables raised or grown by its members to federal cooperative society engaged in supplying Milk, oilseeds, fruits or vegetables/Government Company/corporation established by or under a Central, State or Provincial 3 [A] Act 9 Sec.80P(2)(c)(i) consumer Cooperative Society Other 35721 35721 than specified in 80P(2a) or 80P(2b) 10 Sec.80P(2)(c)(ii) Other Cooperative Society engaged 0 0 in activities Other than specified in 80P(2a) or 80P(2b) 11 Sec.80P(2)(d) Interest/Dividend from Investment in 1308573 1308573 other co-operative society 12 Sec.80P(2)(e) Income from Letting of godowns / 0 0 warehouses for storage, processing / facilitating the marketing of commodities 13 Sec.80(2)(f) Others 0 0 14 Total 14436657 14436657
Thus, Assessee had claimed deduction u/s.80P(2) of the Act.
It is an admitted fact that Assessee is a Co-operative Credit Society.
During the year, Assessee had earned Interest Income. CPC has disallowed assessee’s claim stating as under :
Sl.No Schedule Error Description Amount in Amount as Variance Income Tax computed Return 1 Schedule 80P In Schedule 80P, 35721 7550 28171 deduction u/s Sec.80P(2)(c)(i) Consumer Cooperative Society Other than specified in 80P(2a) or 80P(2b) deduction claimed cannot be more than Rs 100000 OR In Schedule 80P, deduction u/s Sec.80P(2)(c)(i) Consumer Cooperative Society Other than specified in 80P(2a) or 80P(2b) deduction claimed cannot be more than non speculative and non specified business income 2 Schedule 80P In Schedule 80P, 13092363 7550 13084813 deduction u/s 80P(2)(a)(i) to (vii) cannot be more non speculative and non specified business income [A] 6. Under Section 143(1) of the Act, only following adjustments are possible : 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 sub-section (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-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: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made: 36[Provided also that no adjustment shall be made under sub-clause (vi) in relation to a return furnished for the assessment year commencing on or after the 1st day of April, 2018;] 7. The CPC has invoked Section 143(1)(a)(ii) of the Act. Sub- Clause-ii of Section 143(1)(a) talks about any incorrect claim. However, in this case, we have noted that Assessee has claimed 80P in the Return of Income. The reason given by CPC is not as per law. In these facts and circumstances of the case, we are of the 5 considered opinion that Assessee is eligible for deduction claimed by [A] Assessee in the Return of Income. Accordingly, Grounds of appeal raised by the Assessee are allowed.
In the result, appeal of the Assessee is allowed. Order pronounced in the open Court on 30 September, 2025.