SHRI CHA RAJ SHAHU GRA BIGR SHETI SAHA PATHA SANSTHA MARYA RANDIVEWADI,,KOLHAPUR vs. INCOME-TAX OFFICER, WARD 1(3),, KOLHAPUR

The only issue raised in this appeal is against not allowing the deduction u/s.80P on the ground that the assessee raised claim for such deduction during the course of assessment proceedings and not in the return of income.

Succinctly, the facts of the case are that the assessee raised claim for deduction u/s.80P during the course of assessment proceedings, which was denied by the AO considering the provisions of section 80A(5) r.w.s 80AC. The claim was rejected primarily on the ground that it cannot be entertained except through the return of income. The ld. CIT(A) echoed the assessment order on this point.

We have heard the ld. DR and gone through the relevant material on record. There is no appearance from the side of assessee despite notice. We are, therefore, proceeding to dispose off the appeal ex parte qua the assessee.

It is seen that similar issue came up for consideration before the Nagpur Bench of Tribunal in the case of Krushi Vibhag Karmchari Vrund Sahakari Pat Sanstha Maryadit (ITA No.182/NAG/2019). Vide order dated 07-10-2022, the Tribunal has accepted the assessee’s contention. The reasoning has been given in Para 13 of the order, which is reproduced as under :

“13. On going through the judgments in G.M. Knitting Industries (supra) in juxtaposition to Wipro Limited (supra), the principle which emerges is that the fulfillment of requirement of making a claim for exemption under the relevant sections of Chapter III in the return of income is mandatory, but when it comes to the claim of a deduction, inter alia, under the relevant sections of Chapter VI-A, such requirement becomes directory. In the latter case, the making of a claim even after the filing of return but before completing the assessment, meets the directory requirement of making a claim in the return of income. The instant case involves deduction u/s 80P and hence, would be governed by the principle laid down in G.M. Knitting Industries (supra), as per which the making of a claim of deduction is mandatory but the timing is directory. Even if the claim is made during the course of assessment proceedings, such a claim has to be allowed. In view of the foregoing discussion, I am satisfied that the authorities below were not justified in rejecting the assessee’s claim of deduction u/s 80P only on the ground that such a claim was not made in the return but during the course of assessment proceedings. The impugned order is ergo set aside and the matter is remitted to the file of the AO for examining the claim of deduction u/s 80P on merits.”

The ld. DR fairly admitted that the facts and circumstances of the instant case are mutatis mutandis similar to those considered and decided by the Nagpur Bench of the Tribunal in the above noted case. The only reason taken by the AO for refusing the deduction is not making of claim in the return of income. Respectfully following the precedent, we overturn the impugned order and direct to grant deduction u/s.80P of the Act.

In the result, the appeal is allowed.