GAJRA GEARR KAMGAR SSHAKARI SANSTHA MY.,DEWAS vs. THE DCIT,CPC , BANGLORE

Feeling aggrieved by appeal-order dated 28.07.2022 passed by learned Commissioner of Income-Tax (Appeal), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”], which in turn arises out of intimation of assessment dated 31.05.2019 passed by CPC, Bengaluru [“Ld. AO”] u/s 143(1) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2018-19, the assessee has filed this appeal.

The assessee is a co-operative society. For the relevant assessment- year, the assessee filed return claiming deduction u/s 80P amounting to Rs. 8,61,958/-. However, in the intimation of assessment u/s 143(1), Ld. AO disallowed deduction claimed by assessee precisely for the reason that the return was filed belatedly on 08.03.2019 after due date u/s 139(1) [due date was 31.08.2018] and therefore the deduction was not allowable by virtue of section 80AC. Aggrieved, the assessee carried matter in first-appeal but could not succeed. Now, the assessee has come in next appeal before us.

Presently, the controversy between assessee and revenue is whether the deduction u/s 80P could be disallowed in the intimation u/s 143(1) for AY 2018-19?

Ld. AR straightaway carried us to the provision of section 143(1) and demonstrated that the power to disallow deduction for belated filing of return after due date u/s 139(1) is prescribed in section 143(1)(a)(v). Then, he submitted that at the relevant time, the provision of said section 143(1)(a)(v) prescribed thus:

Ld. AR submitted that prior to amendment, specific deductions, namely the deductions u/s 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE could only be disallowed if the return was not filed in time. But there was no provision to disallow deduction u/s 80P. It is after amendment from 01.04.2021 that the language was widened to confer power to disallow any deduction falling under heading “C-Deductions in respect of certain incomes” of Chapter VI-A. Thus, the disallowance of deduction u/s 80P was brought in the scope of section 143(1) through amendment from 01.04.2021. Ld. AR also filed a copy of the “Memorandum explaining the provisions in The Finance Bill, 2021” wherein it is clearly mentioned that the amendment shall apply from 01.04.2021. Ld. AR submitted in the present case, the AO has disallowed deduction in the intimation passed on 31.05.2019 for AY 2018-19 at the time when there was no authority to disallow deduction u/s 80P for the reason of non-filing of return in time. Ld. AR also relied upon the decision of ITAT, Rajkot Bench in Aliudepur Seva Sahakari Mandli Ltd. Vs. The ADIT (CPC), Bengaluru, order dated 24.02.2023, relevant paragraph is extracted below: “6.2 Respectfully following the above Co-ordinate Bench decisions, we have no hesitation in holding that the assessee cannot be denied the deduction u/s 80P of the Act on the ground that the assessee did not file the return of income within the due date prescribed u/s 139(1) of the Act under proceedings made u/s 143(1) of the Act for the Assessment year 2019-20.”

With these submissions, Ld. AR argued that the disallowance made by Ld. AO in present case is beyond authority and the same deserves to be deleted. Ld. DR could not controvert the submissions of Ld. AR.

In view of settled legal position, we agree that the disallowance made by Ld. AO is not justified. We therefore delete the same and direct the AO to allow deduction as claimed by assessee.

Resultantly, this appeal of assessee is allowed.