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Facts
The assessee, a Credit Cooperative Society, declared Nil income for AY 2019-20 after claiming a deduction u/s 80P. The CPC processed the return by disallowing this deduction. The CIT(A) upheld the CPC's action.
Held
The Tribunal held that the CPC was not justified in disallowing the deduction u/s 80P as the relevant amendment to Section 143(1)(a)(v) of the Act, which grants power to disallow such deductions, was prospective and effective from 01.04.2021, while the assessment year in question was 2019-20.
Key Issues
Whether the CPC was justified in disallowing deduction u/s 80P on processing the return u/s 143(1) for AY 2019-20, considering the amendment to Section 143(1)(a)(v) was prospective.
Sections Cited
80P, 143(1), 143(1)(a)(v), 139(1), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to assessment year 2019-20 is directed against the order dated 06.01.2025 passed by Addl/JCIT(A)-2, Hyderabad u/s.250 of the Income Tax Act, 1961 ( in short ‘the Act’) which inturn is arising out of the Intimation order dated 08.12.2020 passed u/s.143(1)(a)(v) of the Act.
When the case was called for, none appeared on behalf of the assessee despite due service of notice of hearing. However, considering that the issue raised in the instant appeal has been decided by this Tribunal in catena of decisions we proceed to adjudicate the appeal with the able assistance from the ld. Departmental Representative.
Facts of the case in brief are that the assessee is a Credit Cooperative Society registered under Maharashtra Cooperative Societies Act, 1960. Nil income declared in the return filed for the A.Y. 2019-20 after claiming deduction u/s.80P of the Act at Rs.34,04,292/-. The return was processed by the CPC disallowing the deduction claimed by assessee.
Aggrieved assessee preferred an appeal before the ld.CIT(A) contending that CPC is not justified in disallowing deduction claimed u./s.80P that too under intimation u/s.143(1) of the Act as CPC had no power to make suo motu prima-facie adjustment to disallow the deduction u/s.80P of the Act prior to 01.04.2021 and placed reliance on plethora of decisions passed by this Tribunal on this very issue. Ld.CIT(A) affirmed the action made by the CPC.
Now the assessee is in appeal before this Tribunal challenging the order passed by ld.CIT(A).
We have heard the ld. Departmental Representative and perused the record placed before us. The sole issue agitated in this appeal whether the CPC was justified in denying the deduction claimed by the assessee u/s.80P of the Act. We note that the amendment carried out in Finance Act, 2021 w.e.f. 01.04.2021 with respect to allowing of deduction u/s.80P of the Act is prospective in nature. Admittedly, the assessment year under consideration is 2019-20. To fortify our view, we would like quote the decision of Coordinate Bench of the Tribunal in the case of Finolex Industries Ltd. Employees Co-o. Credit Society Ltd. Vs. ITO in dated 03.04.2023 wherein the issue was decided in favour of the assessee by observing as under:
“5. We have heard the submissions of the parties, considered the relevant materials/documents on record and analysed the facts and circumstances in this case. Section143(1)(a)(v) of the Act spells out that if any deduction is claimed under any of the provisions of Chapter VI-A which include deduction u/s 80P such deduction has to be allowed only if the return is filed within due date specified under sub-section 139(1) of the Act. In other words, if any return is filed beyond due date u/s 139(1) of the Act then no deduction u/s 80P shall be allowed. However, clause (v) was inserted by the Finance Act, 2021 w.e.f. 01-04-2021. The case of the assessee, on the other hand, is for F.Y. 2018-19 relevant to A.Y. 2019-20 which is the period prior to amendment brought in by the Finance Act, 2021. Before this amendment, clause (v) did not include and cover deduction u/s 80P. So therefore, in the present Case of the assessee though admittedly return was filed beyond the time limit prescribed u/s 139(1) of the Act but still section 143(1)(a)(v) is not applicable to the assessee since the case of the assessee is for A.Y. 2019-20, which is before the amendment. We also accept the argument of the ld. A.R for the assessee that even if the revenue intends to invoke clause (ii) of section 143(1)(a) that would also not be permissible since in the definition of incorrect claim as provided in the provision, the deduction u/s 80P is not included anywhere and is therefore, outside the purview of the said provision. Therefore, rigors of provisions of section 143(1)(a)(ii) and clause (v) are not applicable to the case of the assessee. On this legal ground itself, the assessee succeeds and any other grounds on merits, if any, becomes academic in nature.”
On perusal of the above, we find that the facts of the above case are identical to the instant case of assessee. Following the decision of the Coordinate Bench of the Tribunal (supra), we hold that CPC was not justified in disallowing the deduction claimed by assessee u/s.80P of the Act for A.Y. 2019-20 as the powers to CPC for doing so were brought into effect from 01.04.2021. We therefore reverse the impugned order of the lower authorities and direct the AO to allow the deduction claimed by the assessee u/s.80P of the Act. Grounds of appeal raised by the assessee are allowed.
Order pronounced on this 05th day of May, 2025.