Section 80AC of the Income Tax Act
The decision most relied on for Section 80AC is AA520 Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. v. Deputy Commissioner of Income Tax (138 Taxmann.com 571), cited in 78 of the 666 judgments on BharatTax that turn on this section.
Leading authorities on Section 80AC
The Centralized Processing Centre (CPC) can deny deductions claimed under Chapter VI-A, such as Section 80P, during the processing of a return under Section 143(1) if conditions for claiming such deductions, including filing the return by the due date as per Section 80AC, are not met.
Timely filing of the income-tax return under section 139(1) is a mandatory condition for claiming deductions under Chapter VI-A, including section 80P, especially for Assessment Years 2018-19 onwards due to the amendment to section 80AC. Such deductions are not allowable if the return is filed belatedly or in response to a section 148 notice.
Deductions under Chapter VI-A (e.g., Sections 10B, 10BA) and other specified provisions are not allowable if the claim is not explicitly made in the return of income as mandated by Section 80A(5). Such a claim cannot be subsequently entertained during assessment proceedings or even during revision proceedings under Section 264.
A deduction under Section 80P can be claimed by an assessee even if the return of income is filed belatedly under Section 139(4), provided a return has been filed.
An adjustment under section 143(1)(a)(ii) or (v) of the Income-tax Act cannot be made without affording the assessee an opportunity to explain their case, as considerations like Section 80AC(ii) do not fall within the scope of adjustments permissible at the section 143(1) stage.
Adjustments under section 143(1)(a)(ii) cannot be made if the assessee's case is allowable on facts. The Assessing Officer or CPC cannot exercise powers under section 143(1) to make adjustments contrary to the facts allowable to the assessee, even when considering amended sections like 80AC.
A tribunal can exercise its discretion to admit an additional ground of appeal, even if raised for the first time, provided it considers the facts and circumstances of the case.
A claim for deduction under section 80P must be made in a valid return filed within the timelines prescribed by the Act (prior to April 1, 2018, this included sections 139(1), 139(4), 142(1), or 148; post-amendment, only section 139(1) is accepted). Statutory benefits like this deduction require strict adherence to legal conditions.
Section 2(22)(e) of the Income Tax Act applies if a shareholder has a substantial interest in a company that receives a loan, making the loan amount a deemed dividend.
Section 2(22)(e) cannot be applied where the assessee is not a shareholder of the lending company, as its purpose is to prevent tax avoidance by distributing company profits as loans to shareholders.
