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Facts
The assessee, a cooperative society, filed its income tax return for AY 2018-19 claiming a deduction under Section 80P(2). CPC Bangalore processed the return under Section 143(1) and denied the deduction, raising a demand. The assessee's application under Section 154 was rejected, and the CIT (Appeals) subsequently dismissed the appeal, leading to the present appeal before the Tribunal.
Held
The Tribunal held that the power to disallow deductions during processing under Section 143(1)(a) was introduced by the Finance Act, 2021, and could not be retroactively applied by CPC Bangalore for Assessment Year 2018-19. Following precedents, the Tribunal deleted the disallowance and directed the AO to grant the deduction claimed under Section 80P(2).
Key Issues
The key issue was the validity of disallowing Section 80P deduction by CPC Bangalore for Assessment Year 2018-19 during processing under Section 143(1), specifically concerning the applicability of amendments introduced by Finance Acts 2018 and 2021.
Sections Cited
80P(2), 143(1), 154, 143(1)(a)(ii), 80AC, 139(1)
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Income Tax Appellate Tribunal, CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI MANOJ KUMAR AGGARWAL
PHYSICAL HEARING आदेश/ORDER PER RAJPAL YADAV, VP
The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax [in short ‘the CIT’] dated 25.09.2024 passed for assessment year 2018-19.
Though the assessee has taken six grounds of appeal but its grievance revolves around a single issue, namely, ld. CIT
ITA 1147/CHD/2024 A.Y. 2018-19 2 (Appeals) has erred in confirming the order of CPC, Bangalore vide which deduction claimed u/s 80P(2) for assessment year 2018-19 was disallowed to the assessee while processing his return u/s 143(1) of the Income Tax Act and thereafter rejecting the application moved u/s 154 of the Income Tax Act.
The assessee has filed its Income Tax Return for assessment year 2018-19 on 04.03.2019 and declared ‘nil’ income after claiming deduction u/s 80P amounting to Rs.2,14,547/-. This return was processed u/s 143(1) by CPC Bangalore and the deduction claimed u/s 80P was denied to the assessee which resulted into an income of Rs.2,14,547/-. The CPC Bangalore has raised a demand of Rs.80,930/- vide its order passed u/s 143(1)(a)(ii) of the Act on 12.07.2019. Thereafter, assessee filed application u/s 154 of the Income Tax Act which was rejected by the AO vide order dated 08.09.2023.
The ld. CIT (Appeals) further dismissed the appeal of the assessee by way of impugned order.
With the assistance of ld. Representative, we have gone through the record carefully. The ld. counsel for the assessee
ITA 1147/CHD/2024 A.Y. 2018-19 3 has submitted that issue in dispute is squarely covered by the orders of ITAT passed in in the case of Sathwin Co-operative Agriculture Service Society Ltd. Vs ITO, Hamirpur and in and other appeals in the case of Lanjani Co-operative Agriculture Service Society Ltd. Vs DCIT, CPC Bangalore.
5.1 On the other hand, ld. DR relied upon the orders of Revenue Authorities.
The submission of the assessee is that disallowance of Section 80P deduction u/s 143(1) has been enabled by Finance Act, 2018 which is applicable for assessment year 2019-20. The Section 80AC was inserted to the Act vide Finance Act 2018 and it restrict the eligibility for an assessee to claim deduction under Chapter VI-A in respect of certain incomes if return of income for any previous year relating to the assessment year commencing on or after 01.04.2018 is filed after due dates specified in Section 139(1) but the corresponding amendment for denial of such benefit while processing the return u/s 143(1)(a) has been made by Finance Act, 2021. Hence, such power could
ITA 1147/CHD/2024 A.Y. 2018-19 4 have not been exercised by the CPC Bangalore before assessment year 2021-22. Thus, it is a mistake apparent on the record which ought to have been rectified by the ld. AO. The CIT (Appeals) has failed to appreciate correct proposition of law contemplated in these provisions. The Tribunal in both the cases has accepted this proposition and deleted the disallowances.