ALIGARH BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LIMITED,ALIGARH vs. J.A.O,W-4(1)(4),, ALIGARH

The assessee is a registered co-operative society providing credit facility to its members against interest. The assessee claimed deduction u/s 80P for Rs.41.90 Lacs which was denied by CPC solely on the ground that the return was not filed within due date. The assessee stated that the return was filed on 28-09-2019 which was well within extended due date. The Ld. CIT(A) concurred with the same. However, Ld. CIT(A) went ahead to disallow the deduction claimed on interest income u/s 80P(2)(d) on the ground that interest income other than from co-operative society and co-operative bank is not eligible for deduction u/s 80P and accordingly, dismissed the appeal of the assessee. Aggrieved, the assessee is in further appeal before us.

From the facts, it is quite clear that CPC denied the impugned deduction solely on the ground that the return was not filed within due date. The assessee established that the return was filed on 28-09-2019 which was well within extended due date. The Ld. CIT(A) concurred with the same. This being admitted fact, the denial of impugned deduction by CPC would have no legs to stand since while processing the return of income u/s 143(1), only prima-facie adjustment could be done by CPC. Once the reason to disallow the impugned deduction was well addressed by the assessee, Ld. CIT(A) could not traverse beyond the scope of processing of return of income u/s 143(1). The Ld. CIT(A), in our opinion, has enhanced the scope of processing of return of income by going into the merits of the deduction. It is another fact that the assessee derives interest income from its members and it is otherwise eligible to claim the said deduction u/s 80P(2)(a)(i) itself. On both these counts, the impugned denial of deduction stand reversed. The Ld. AO is directed to re-compute the income of the assessee.