SHRI BHAGYALAXMI CO-OPERATIVE CREDIT SOCIETY LIMITED,MALLAPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CPC, BANGALURU

The appeals are solitary concerned with denial of 80P deduction owning to return filed beyond due date prescribed u/s 139(1) of the Act.

Tersely stated facts of ITA No. 001/PAN/2023 are; The appellant assessee is a credit co-operative society has e-filed its return of income [‘ITR’ hereinafter] on 15/03/2019 declaring total income of NIL after claiming a deduction u/c VI-A of the Act with sum of ₹17,17,931/-. The ITR of the assessee society was e-processed determining the total income at ₹17,17,931/- by disallowing deduction claimed u/c VI-A of the Act by virtue of provisions of sub-clause (v) of clause (a) of section 143(1) of the Act. Aggrieved assessee challenged the denial of deduction before first appellate authority in an appeal u/s 246(1) of the Act. By impugned DIN & Order No. ITBA/NFAC/S/250/2022- 23/1047469390(1) dt. 17/11/2022 the Ld. NFAC pressing into service clause (ii) of section 80AC of the Act confirmed the disallowance.

Briefly stated facts of ITA No. 030/PAN/2023 are; The appellant assessee is a credit co-operative society has e-filed its ITR on 30/11/2018 declaring total income of NIL after claiming a deduction u/c VI-A of the Act with sum of ₹8,21,966/-, which was e-processed determining total income at ₹8,21,966/- on account of disallowance of deduction claimed u/c VI-A of the Act by virtue of provisions of sub- clause (v) of clause (a) of section 143(1) of the Act. When matter

Both aggrieved assessees have come up before us in present separate appeals by alleging the action of tax authorities as untenable in law.

At the virtual hearing, Ld. AR Mr Nadagouda reiterated appellant’s version of submission as were laid before tax authorities below and without re-quoting grounds from appeal memo has submitted that, both the tax authorities below have erred in law by disallowing the claim for 80P deduction made in the return of income furnished by way of making adjustment u/sc (v) of clause (a) of section 143(1) of the Act. Per contra Ld. DR N. Shrikanth vehemently supported the impugned orders.

Heard rival common contentions; and subject to provision of rule 18 of ITAT-Rules, 1963 perused material placed on record, case laws relied upon by both the rival parties and we note that precisely two issues have arisen for our consideration viz; (1) eligibility for claim of deduction u/s 80P of chapter VI-A of the Act and (2) the jurisdiction to disallow 80P deduction in summary assessment u/s 143(1) of the Act.

Let us deal with issue of eligibility of the claim of deduction u/s 80P of VI-A of the Act first; it goes without saying that, by virtue of section 80A(1) of the Act, in computing total income of assessee, subject to the provisions of Chapter VI-A of the Act, certain deductions are allowed from gross total income. Precisely these deductions u/c VI-A are subjected to twin riders laid in sub-section (5) of section 80A and clause (ii) of section 80AC of the Act. The s/s (5) of section 80A of the Act disentitles assessee to eligible claim of deduction if same is not made in return of income. That is to say, if assessee fails to make a claim in return of income, then no deduction u/c VI-A shall be allowed irrespective of reason of its failure. Further from AY 2018-19, clause (ii) of section 80AC of the Act makes claim for deduction harder by subscribing that, no deduction u/c VI-A of the Act shall be allowed to assessee unless a return of income making a claim for deduction therein is furnished within a due date prescribed u/s 139(1) of the Act, i.e. return filed within the due dates could only be eligible for deduction u/c VI-A of the Act.

The cumulative reading of both, s/s (5) of section 80A and clause (ii) of section 80AC of the Act unambiguously lays down that, from AY 2018-19 a claim for deduction u/c VI-A of the Act is allowable to assessee utterly when such claim is made in return of income filed within statutory due date prescribed u/s 139(1) of the Act; and this position of law can be more clearly adumbrated or tabulated as under;

In present appeals we note that, the appellant societies have furnished their ITR albeit beyond the prescribed due date (filed belated) and however those were filed with an eligible claim for 80P deduction therein. Therefore jurisdiction of Ld. CPC s/c (v) of clause (a) of sub section (1) of section 143 of the Act is not available as the matter of fact that s/c (v) (supra) 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(ii) 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 u/s 139(1) of the Act. However, for the Ld. CPC to insist upon the compliance by way of making a disallowance owning to filing the return belated, the power vested in the said Authority only vide Finance Act, 2021 and came into effect accordingly. Therefore, in the absence of the enabling jurisdiction provisions, the Ld. CPC lacked the jurisdiction to make any disallowance of claim made u/c VI-A of the act while processing the return summarily u/s 143(1)(a)(v) of the Act.

We found that similar views has been taken by various co-ordinate benches in ‘Lanjani Co-Operative Agri Service Society Ltd. Vs DCIT’ reported in 146 taxmann.com 468, ‘Lunidhar Seva Sahkari Mandali Ltd. Vs. Assessing Officer (Cpc)’ 200 ITD 0014, And ‘Karohta Co-Operative Agriculture Service Society Ltd. Vs ITO (ITA No. 447/CHD/2022)’

Respectfully maintaining the judicial precedents, we find favour with the claim of the appellant societies that as the Ld. CPC had clearly traversed and in fact exceeded its jurisdiction in disallowing u/s 143(1)(a)(v) of the Act, the assessee’s claim for deduction u/s 80P de hors any power vested with it at the relevant point of time, thus, the same cannot be sustained in law and is liable to be vacated. Consequently we set-aside impugned orders of Ld. NFAC and direct the Ld. CPC to reverse the disallowance and accept the claim of deduction u/c VI-A of the Act as made in the return of income filed by both these assessees.

In result, both these appeals are ALLOWED. In terms of rule 34 of ITAT Rules, order pronounced in open court on this Friday 01st day of September, 2023.