KOODARANHI REGIONAL AGRICULTURAL WELFARE CO-OP SOCIETY LTD,KOZHIKKODE vs. THE ITO, KOZHIKKODE

The stay petition and the appeal by the assessee is against the order of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC] dated 28.10.2022 for the assessment year 2019-20.

The assessee raised the following grounds of appeal –

The return for the above was filed on 12/03/2020 by claiming deduction under section SOP of the act to an extent of Rs 12,68,076/- and both the Centralized Processing Centre and first appellate authority are not justified in denying the above deduction 4. The provision containing section 80 AC of the act as to the filing of the return within the due date specified under section 139(1) of the act, in order to claim deduction under section SOP of the act, is only directory and not Mandatory.

The CIT(A) confirmed the disallowance by stating that the assessee has filed the return belatedly and therefore in accordance with section 80AC of the Act, deduction u/s. 80P cannot be allowed as per the amended provisions w.e.f. 1.4.2018. Aggrieved the assessee is in appeal before the Tribunal.

Before us, the ld. AR submitted that the amount disallowed u/s. 80P(2) is allowable on merits as per the decision of the Hon’ble Supreme Court in the case of Mavilayil Service Coop. Bank Ltd. v. CIT [2021] 123 taxmann.com 161. The ld AR further submitted that the provisions contained in section 80AC of the Act as to the filing of return within the due date specified u/s. 139(1) of the Act in order to claim deduction u/s. 80P is only directory and not mandatory. In this SP No.77/Coch/2022 & Page 4 of 9 regard, the ld. AR relied on the decision of the Chennai Tribunal in the case of Uthangarai Milk Producers Co-op. Society Ltd. v. ITO [2022] ITL 1605 TPD 101 (Chennai Trib). The ld. AR further submitted that the assessee is a co-op society registered under Kerala Co-operative Societies Act and is subject to audit under the said Act. The delay in filing the return of income is on account of delay in completion of audit by the co-operative department and such delay cannot be attributed to the assessee. Accordingly, the ld. AR submitted that the deduction u/s. 80P cannot be denied only for the reason that the assessee has not filed the return within the due date.

We heard the parties and perused the material on record. The issue for consideration before us is that whether when the return of income is filed beyond the prescribed date u/s. 139(1) of the Act, can the deduction u/s. 80P of the Act be denied to the assessee, by way of adjustment u/s. 143(1)(a) of the Act. Section 80AC has been amended w.e.f. 01.04.2018 to provide that –

Now coming to whether the deduction can be denied u/s.143(1)(ii) which permits an adjustment in case of an incorrect claim, if such incorrect claim is apparent from any information in the return. The explanation to section 143(1) specifies what is to be construed as an “incorrect claim apparent from any information in the return” as extracted above, from the perusal of which it is clear that, the scope of the adjustments that can be made under the said provision does not include denial of deduction claimed by the assessee in case the assessee does not furnish its return of income within the date stipulated under section 139(1) of the Act. The Explanation to the said section specifically provides for cases/instances when the claim made by the assessee could be said to be "incorrect". Therefore, in our considered view, the case of the assessee would also not fall within the purview of prima facie adjustment under section 143(1)(a)(ii).

We further notice that as per the ratio laid down by the jurisdictional High Court in the case of Chirakkal Service Co- Operative Bank Ltd. v. CIT (2016) 384 ITR 490 (Ker) where it is held that a return filed by assessee beyond period stipulated under section 139(1) or 139(4) or under section 142(1) or section 148 can also be accepted and acted upon for entertaining claim raised under section SP No.77/Coch/2022 & Page 8 of 9 80P provided further proceedings in relation to such assessments are pending in statutory hierarchy of adjudication in terms of provisions of Act. In view of these discussion and considering the facts of the case we are of the view that claim of deduction u/s 80P of the Act cannot be denied to the assessee on the basis that the assessee did not file return of income its return of income within due date u/s 139(1) of the Act through an intimation u/s.143(1)(a). Accordingly, in the interests of justice, we restore the case to CIT(A) for fresh adjudication on merits of the case keeping in mind the decision of the Hon’ble Supreme Court in the case Mavilayil Service Coop. Bank Ltd. (supra), after giving due opportunity of hearing to the assessee. It is ordered accordingly.

In view of the disposal of the appeal, the stay petition has become infructuous and dismissed as such.

In the result, the appeal by the assessee is allowed for statistical purposes and the stay petition is dismissed.