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Facts
The assessee, a Credit Cooperative Society, claimed a deduction under Section 80P of the Income Tax Act for AY 2018-19, resulting in Nil income. The CPC disallowed this deduction during processing under Section 143(1)(a) because the return was filed beyond the due date. The CIT(A) upheld the disallowance.
Held
The Tribunal held that the amendment to Section 143(1)(a)(v), which allows disallowance of Section 80P deduction for late returns, is prospective from AY 2021-22. Therefore, for AY 2018-19, the CPC had no power to make such an adjustment under Section 143(1)(a). The Tribunal reversed the CIT(A)'s finding and directed the AO to allow the deduction.
Key Issues
Whether the CPC was justified in disallowing a Section 80P deduction under Section 143(1)(a) for AY 2018-19 when the return was filed beyond the due date under Section 139(1), given that the relevant amendment to Section 143(1)(a)(v) is prospective from AY 2021-22.
Sections Cited
80P, 143(1)(a), 143(1), 250, 139(1), 143(1)(a)(v), 143(1)(a)(ii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD & SHRI S.S.VISWANETHRA RAVI
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to assessment year 2018-19 is directed against the order dated 16.12.2024 passed by Addl/JCIT(A), Mysore u/s.250 of the Income Tax Act, 1961 ( in short ‘the Act’) which inturn is arising out of the Intimation order dated 31.05.2019 passed u/s.143(1)(a) of the Act.
Facts of the case in brief are that the assessee is a Credit Cooperative Society and Nil income declared in the return filed for the A.Y. 2018-19 on 27.11.2018 after claiming deduction u/s.80P of the Act at Rs.14,00,744/-. 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 of the Act under intimation u/s.143(1)(a) of the Act as till 31.03.2021 CPC had no power to disallow the deduction u/s.80P of the Act and further placed reliance on plethora of decisions passed by this Tribunal on this very issue. Ld.CIT(A) countenanced the action made by the CPC by observing as under :
“7. The Ground No. 1 of the appeal raised by the appellant is with regard to Jurisdiction of the CPC, Bengaluru in disallowing deduction claimed u/s.80P of the Act under intimation u/s.143(1) of the Act. The appellant relied on decision of various ITATS. 7.1 Reply of the appellant has been perused. However, it is not found acceptable as the CPC, Bengaluru is legitimately allowed to make any addition/alteration in the return income as empowered by section 143(1) of the Act. In the present case, the appellant failed to fill necessary schedule at the time of filing the return of income to claim deduction under Chapter VI and accordingly, the deduction claimed under Chapter VI was correctly disallowed by CPC. Further, the decision of the various courts as submitted by the appellant has not reached finality. In view of this, I cannot find a place of interference in the order of the AO, CPC, Bengaluru with respect to disallowance of Chapter-VI-A deduction. Thus, the ground of appeal is dismissed.
8. As the appellant has not raised any additional grounds of appeal / additional submissions / additional evidence during the course of the appeal proceedings, Ground of appeal No. 2 doesn't require separate adjudication.
9. In the result, the appeal of the Appellant for AY 2018-19 stands DISMISSED.”
4. Now the assessee is in appeal before this Tribunal challenging the order passed by ld.CIT(A).
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.
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 making prima facie adjustment for disallowing deduction under Chapter VIA of the Act including disallowing deduction u/s.80P of the Act where return is not filed u/s.139(1) of the Act is prospective in nature. Admittedly, the assessment year under consideration is 2018-19 and therefore CPC had no power to make the alleged adjustment. 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. 2018-19 for not filing return u/s.139(1) of the Act in the return processed u/s.143(1)(a) of the Act, as the powers for doing so were brought into the Act from 01.04.2021, i.e. A.Y. 2021-22. We therefore reverse the finding in the impugned order 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.
In the result, appeal filed by the assessee is allowed. 8.
Order pronounced on this 05th day of May, 2025.