SHREE JALARAM COOP. CREDIT SOCIETY LTD,VIRAMGAM vs. THE ITO, WARD-3(2)(1), AHMEDABAD

The assessee filed return of income for assessment year 2019- 20 on 27-07-2020 declaring total income at Rs. nil after claiming exemption u/s. 80P to Rs. 20,05,865/-. The return of income was processed u/s. 143(1) of the Income Tax Act, 1961 on 23-09-2020 by making an addition of Rs. 20,05,865/- by disallowing the deduction claim u/s. 80P of the Act. The assessee filed rectification petition u/s. 154 dated 27-01-2021. The rectification order u/s. 154 dated 05-02- 2021 confirming the addition made as per the intimation order u/s. 143(1).

Being aggrieved by the order u/s. 154 of the Act, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The ld. A.R. submitted that the claim of deduction made in respect of section 80P was admissible because the assessee society is engaged in providing credit facilities to its members as in past as per its bye-laws. The total interest income earned by the society is Rs. 92,45,723/- out of which the interest income from fixed deposits with bank was only Rs. 18,77,754/- whereas the balance interest income was that of Rs. 73,67,969/- derived from providing credit facilities to 2 Shree Jalaram Coop. Credit Society Ltd. ITO, A.Y. 2019-20 the members which was exempt u/s. 80P(2)(a)(i) of the Act so far as the interest income from deposits with bank of Rs. 18,77,754/-, the audited account clearly shows that the society is having fixed deposit with which is exempt u/s. 80P(2)(a)(i) being received from another co- operative bank. The ld. A.R. relied upon the decision of Hon’ble Gujarat incase of PCIT vs. Ashwinkuamr Arban Co-operative Bank Ltd. (2024) 168 taxmann.com 314. The ld. A.R. submitted that adjustment made u/s. 143(1)(a)(v) which provides for disallowance of deduction or failure to file ITR within the due date u/s. 139(1). However, this clause was amended by Finance Act, 2021 w.e.f. 01-04- 2021 whereby the disallowance of deduction under the provisions of Chapter 6A under the head “C” deduction in respect of certain income was inserted and therefore such adjustment would be made from assessment year 2021-2012 only whereas the present appeal for assessment year 2019-20 and therefore the adjustment made by CPC is without jurisdiction and illegal.

The ld. D.R. submitted that the due date was over and thus the assessee cannot claim 80P deduction if the assessee has not filed its return within the stipulated due period. The ld. D.R. relied upon the assessment order and the order of the CIT(A).

Heard both the parties and perused all the material available on record. It is pertinent to note that the assessee is in fact entitled for the deduction u/s. 80P as the fixed deposits were with the co-operative bank which is registered under Co- Operative Societies Act. As regards delay in filing of the return beyond stipulated due period, the same comes into effect on 01- 04-2021 and thus for the present assessment year it will not be applicable as it is the assessment year 2019-20. Thus, the appeal of the assessee is allowed.

In the result, the appeal of the assessee is allowed.