THE RUHRU CO-OPERATIVE AGRI SERVICE SOCIETY LIMITED,KANGRA vs. ITO WARD, DHARAMSHALA

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,च�डीगढ़ �यायपीठ आयकर अपीलीय अिधकरण च�डीगढ़ �यायपीठ च�डीगढ़ �यायपीठ , च�डीगढ़ च�डीगढ़ �यायपीठ च�डीगढ़ च�डीगढ़ च�डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’ CHANDIGARH BEFORE: SMT. DIVA SINGH, JUDICIAL MEMBER & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील अपील संसंसंसं./ ITA No. 580/CHD/2022 आयकर आयकर आयकर अपील अपील Assessment Year. : 2018-19 The Ruhru Co-operative The DCIT, बनाम Agri Service Society Ltd., CPC, Bengaluru. VS VPO Sundher, Tehsil-Dhjaramsala, Kangra (HP). �थायी लेखा सं./PAN /TAN No: AACAT7361G अपीलाथ�/Appellant ��यथ�/Respondent िनधा�रती क� ओर से/Assessee by : ShriVishal Mohan, Advocate राज�व क� ओर से/ Revenue by : Smt. Amanpreet Kaur, Sr.DR तारीख/Date of Hearing : 02.11.2022 उदघोषणा क� तारीख/Date of Pronouncement : 21.11.2022 आदेश/ORDER आदेश आदेश आदेश PER DIVA SINGH

The present appeal has been filed by the assessee assailing the correctness of the order dated 16.06.2022 of NFAC Delhi acting as First Appellate Authority pertaining to 2018-19 assessment year.

ITA 580 /CHD/2022 A.Y. 2018-19 Page 2 of 9

Society Ltd. Vs DCIT & others in ITA 332/CHD/2021

pertaining to 2018-19 assessment year.

adjournment request had been moved alongwith the

submissions advanced by the ld. AR that the issue is fully

covered in favour of the assessee by virtue of order dated

30.08.2022 in ITA 332 to338/CHD/2021 in the case of

Lanjani Co-operative Agri Service Society Ltd. Vs DCIT &

others in ITA 332/CHD/2021. In the said backdrop, the ld.

AR referring to the record submitted that in the facts of the

present case also, the assessee had claimed deduction u/s

80P which had been disallowed by the AO taking cognizance

of the amendment carried out in Section 80AC by Finance

Act, 2018. Referring to the provisions of the Act it was

submitted that at the time of passing of the orde r, no such

power was vested on the AO by the Income Tax Act. The AO

was empowered to do so for the first time only by virtue of

the amendment of Section 143(1)(a) wherein sub-clause (2)

was amended by the Finance Act, 2021, thus, w.e.f. 2020-21

assessment year the AO was empowered by the Income Tax

Act to make such a disallowance. It was submitted that only

after that the CPC, Bangalore acting as the AO can be said to

be vested with the jurisdiction to make a disallowance on the

grounds where the return was filed beyond the due date.

ITA 580 /CHD/2022 A.Y. 2018-19 Page 3 of 9

Before the said amendment the AO did not have the power to

make this disallowance. This fact, it was submitted, has

been considered by the ITAT at length in the order cited.

Accordingly, relying upon the decisions taken into

consideration therein the provisions of the Act applicable at

the relevant point of time, he would rely upon the said order.

of the Revenue invited attention to Section 80AC of the Act

on the basis of which the disallowance was carrie d out. The

ld. Sr.DR relying on the impugned order further relied upon

the decision dated 07.04.2021of the Madras High Court in

the case of Veerappampalayam Primary Agricultural

Cooperative Credit Society Ltd. Vs DCIT W.P. No.7038 of

2020.

4.1 It is seen that this decision has been noticed and has

also been considered and held to be non applicable and

relevant in Lanjani Co-operative Agri Service Society Ltd.

Vs DCIT & others (cited supra).Atte ntion of the ld. Sr.DR

was invited to the discussion carried out in para 14.3 and

14.4 of the said order.

4.2 Considering the order, the ld. Sr.DR relied upon the

impugned order.

ITA 580 /CHD/2022 A.Y. 2018-19 Page 4 of 9

material available on record. In the facts of the present

case, it is seen that the deduction claimed u/s 80P was

denied to the assessee by CPC Bangalore acting as the

Assessing Officer determining total income of Rs.5,94,980/-

on the grounds that the return was filed beyond the due

date. The assessee is found to have pleaded before the First

Appellate Authority that it is an agricultural co-operative

Society engage d mainly in providing credit facility to its

members and also engaged in the retail business of

supplying general store items, agricultural implements,

seeds, fertilizers or other items intended for agricultural use

under PDS system of government on a subsidized rate to its

members. It has been pleaded that this was the first year

when the said requirement was set out in terms of the

provisions of Section 80AC. Thus, since it came into play for

the first time, hence the disallowance by an order passed

u/s 143(1) was not permissible in view of the fact that the

issue was debatable. Arguments are also seen to have been

advanced canvassing that the AO was empowere d by an

amendment to Section 143(1(a) by insertion of clause (b) only

by the Finance Act, 2021 and thus, the amendme nt could

become effective only from 01.04.2021 i.e. from the

assessment year 2021-22. It has been pleaded that prior to

ITA 580 /CHD/2022 A.Y. 2018-19 Page 5 of 9

this, the AO was not vested with powers u/s 143(1) to

disallow deduction u/s 80P on the grounds that the return

was not filed within the time allowed u/s 139(1). However,

the said view did not find favour with the First Appellate

Authority.

consideration before the ITAT in the aforesaid decision cited.

We have seen that the relevant provision as it then stood and

the subsequent amendment carried out by the Finance

Act,2021 have been considered therein. We have also seen

that the decisions relied upon by the Revenue have also been

considered at length in the order of the ITAT. We further

note that no distinguishing fact, decision or provision of law

has been referred to by the ld. Sr.DR for our consideration in

order to canvass a contrary view. Accordingly, following the

precedent available, the appeal of the assessee is allowed.

For ready reference, the relevant extract from the impugned

order para 14 and 15 is extracted as under :

ITA 580 /CHD/2022 A.Y. 2018-19 Page 6 of 9

intimation and written submissions filed by the Appellant. These Grounds of Appeal are discussed and decided in subsequent paras of this order. b) It is not in dispute that from AY. 2018-19, the Appellant for claiming deduction u/s 80P has to file return of income within the due date of filing of ITR as provided in Section 80AC of the IT Act, 1961. Section 80AC was amended by Finance Act, 2018. From AY. 2018-19, all the deductions falling under the heading 'C of Chapter VIA of IT Act, 1961 were brought into the ambit of this section. Section 80P also falls under the heading 'C of Chapter VIA of the Act is included in Section 80AC of the Act. c) The amended Section 80AC provides as under:- "[Deduction not to be allowed unless return furnished. 80AC. Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after— (i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80- IC or or; (ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C.—Deductions in respect of certain incomes", no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139.]" d) Thus, from 01.04.2018, the clause(i) of the above section has become inoperative and clause (ii) was introduced which provides that all the deductions falling under the heading 'C of Chapter VIA of the Act will be allowed only when ITR is furnished before the due date specified u/s 139(1) of the Act. This amendment became effective from AY. 2018-19. e) In the present case the due date of filing ITR for AY. 2018-19 was 31.08.2018. However, the Appellant filed its return on 13.10.2018 i.e. after the due date for filing of ITR. Appellant had claimed deduction u/s 80P of Rs. 1,11,421/-. As discussed above Section 80P falls under the heading 'C of Chapter VIA of the Act. Therefore, from AY. 2018-19 and onwards, any assessee claiming deduction u/s 80P has to file its return within due date specified u/s 139(1) of the Act to avail such deduction as required u/s 80AC of the Act. In the present case, the Appellant did not file its return within the due date prescribed u/s 139(1) of the Act for AY. 2018-19, therefore, the AO rightly disallowed deduction u/s 80P of Rs. 1,11,421/- in intimation u/s 143(1). Thus, the action of AO in disallowing deduction u/s 80P is upheld. Grounds of Appeal Nos. 1 to 3 are dismissed.” 14.1 On consideration of the above when read alongwith the arguments advanced before the CIT(A) on behalf of the assessee which have been re-iterated before the ITAT, I find that on facts the case of the assessee is allowable. The AO/CPC Bangalore at the relevant time though considering the amended Section 80AC was exercising the powers as vested by the Section 143(1) of the Act as it then stood. At the relevant point of time, the provisions of Section 143(1) of the Act were as under : 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:—

ITA 580 /CHD/2022 A.Y. 2018-19 Page 7 of 9

(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 subsection (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, 80-1 A, 80-1 AB, 80- IB, 80- IC, 80-1D or section 80-1E 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: (emphasis supplied) 14.2 It is a matter of fact that sub-clause (v) of Section 143(1)(a) was amended by the Finance Act, 2021 wherein instead of reference to Sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or Section 80-IE, the provision instead makes a mention of Section 10AA or under any of the provisions of Chapter VI-A under the head ‘C-Deductions in respect of certain incomes”. Accordingly, the enabling provisions to address the amendment in Section 80-AC by Finance Act, 2018 came into play only in 2020-21 assessment year. Thus, no doubt Section 80AC as amended by the Finance Act, 2018 mandated that even for claiming deduction claimed u/s 80P, the return of income was to be filed before the due date as specified under sub-section (1) of Section 139. However, for the AO to insist upon the compliance by way of making a disallowance, the power was vested in the said Authority only vide Finance Act, 2021. Hence, in the absence of the enabling provisions, the CPC Bangalore lacked the jurisdiction to make this disallowance in the order u/s 143(1). Accordingly, on facts, I find that the appeal of the assessee has to be allowed. 14.3 Before parting, it may also be relevant to refer to the decision of the Apex Court dated 30.07.2018 in the case of Commissioner of Customs (Import) Vs M/s Dilip Kumar & Co. & Ors. Civil Appeal No.3327 of 2007 relied upon by the ld. Sr.DR. On a reading therefrom, it is seen that the issue for consideration before the Hon'ble Court was whether the denial of benefit of Customs Notification No. 20/1999 was justified to the party who pleaded

ITA 580 /CHD/2022 A.Y. 2018-19 Page 8 of 9

that the benefit of concessional rates for import of animal feed should also be available to import which admittedly contained chemical ingredients for animal feed. The concessional rate of duty under the extent Notification was being considered. The order of denial by the Customs Officer was reversed by Commissioner of Customs. This order was confirmed by Customs Excise & Service Tax Tribunal (CESTAT) which led to the filing of the appeal before the Hon'ble High Court and then the Apex Court. It is in that background that the Hon'ble Court held that exemption notification should be interpreted strictly and the burden of proving that the case comes within the parameters of the exemption clause or exemption notification would be on the assessee. In such circumstances, in case there is ambiguity, the Notification must be interpreted in favour of the Revenue. In the facts of the present case, there is no ambiguity. It is a case of absence of enabling provision. Hence, the ratio laid down therein has no applicability to the facts of the present case. 14.4 It is also necessary to refer to the decision of the Hon'ble Madras High Court in the case of Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. Vs DCIT (cited supra). A perusal of the same shows that the issue for consideration before the Hon'ble High Court in the Writ Jurisdiction invoked by the assessee was very fact specific. The assessee therein was canvassing that u/s 143(1)(a) for considering denial on the grounds of “incorrect claims” the scope was limited to “entry” in the return of income. The Court therein did not permit such a restrictive interpretation commenting variously on the conduct of the assessee. Hence, the decision is distinguishable. Further, before the Hon'ble High Court, the amendment carried out in Section 143(1)(a) by the Finance Act 2021 was neither argued nor referred to for consideration of the Hon'ble Court. 14.5 It is further seen that the decision of the Apex Court in the case of CIT Vs B.C. Srinivasa Shetty 128 ITR 294 fully supports the view taken. The Court therein at page 299 has held as under : " …………..The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the chagrining section and the computation provisions together constitute an integrated code . When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise one would be driven to conclude that while a certain income seems to fall within the charging section there is no scheme of computation for quantify it…………….. (emphasis supplied) 14.6 In the facts of the present case, admittedly the provision enabling the AO to pass an order relying upon sub-clause (5) of

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Section 143(1)(a) was not on the Statute for 2018-19 assessment year. Accordingly, for the detailed reasons hereinabove, setting aside the impugned order, the appeal of the assessee is allowed. 15. Since in the remaining appeals, the facts, circumstances and position of law continues to remain the same, accordingly, mutatis- mutandis the decision arrived at in ITA 332/CHD/2021 would apply. Accordingly, all appeals of the assessees are allowed.”

where at the relevant point of time the enabling provisions

empowering the AO to make such a disallowance was not

existing on the Statute, relying on the decision of the Apex

Court in the case of CIT Vs B.C.Srinivasa Shetty 128 ITR 294

(S.C.), the appeal of the assessee is allowed.

Order pronounced in the Open Court on 21 s t November,

2022.

Sd/- Sd/- (VIKRAM SINGH YADAV) (DIVA SINGH) लेखा सद�य सद�य/ Accountant Member �याियक �याियक सद�य सद�य/ Judicial Member लेखा लेखा लेखा सद�य सद�य �याियक �याियक सद�य सद�य “Poonam” आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�/ CIT 4. आयकर आयु� (अपील)/ The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar