The Rajkot Division Bench of the Income Tax Appellate Tribunal (ITAT) while dealing with the issue of incorrect claim held that denying the exemption under Section 80P of the Income Tax Act of 1961 (hereinafter referred to as “1961 Act”) solely on the basis of the Assessee's late filing of a return is not justifiable and defeats the purpose of exemptions.
Brief Facts:
The Appellant (Assessee) is a cooperative society registered under the Mumbai Co-operative Societies Act, 1925, with the object and activities of providing credit facilities to its members. It provides facilities to members for the purchase of agricultural implements, seeds, livestock, or other articles intended for agricultural activities.
The original return of income for the year under consideration was filed on November 30, 2020, declaring total income as NIL and claiming deduction under Section 80P of the 1961 Act.
It was intimated to the Assessee that for the proposed adjustment in returned income for not granting the deduction claimed in the return of income under Section 80P, the Assessee made an incorrect claim by way of deduction under Section 80P as the returned income was not filed within the due date.
Thereafter, Assessee received intimation under Section 143(1) of the Act and no deduction was made while determining total income. An appeal was filed by the Assessee which was rejected.
Hence, the present case.
Contentions of the Appellant:
It was contended that the return of income was filed as per the time limit under Section 139(4) of the Act and provisions of Section 143(1)(a)(b) of the Act do not provide for denial of deduction under Section 80P of the Act even when the return of income is not filed within the time limit as per Section 139(1) and, therefore, the denial of deduction under Section 80P was not valid in law.
Contentions of the Respondent:
It was submitted that the Hon’ble Madras High Court has given a categorical finding that it is an administrative order and the same was properly done by the Assessing Officer as the return was filed beyond the due date of Section 139(1) of the Act. The Respondent relied upon the decision of the Hon’ble Supreme Court in the case of Prakash Khanna, 135 taxman 327 (SC).
Observations of the Tribunal:
The Tribunal observed that the Assessee filed a return of income not as per Section 139(1) of the Act due date, but prior to the due date of Section 139(4) of the Act. This fact was not disputed by the Revenue at any juncture.
In light of the decision of the Hon’ble Kerala High Court in the case of Chirakkal Service Co-operative Bank Limited Vs. CIT(68 taxmann.com 298), the Bench opined that denying the exemption under Section 80P of the Act merely on the ground of belated filing of return by the Assessee is not justifiable.
The decision of the Tribunal:
The ITAT allowed the Appeal and held that a return filed at any stage of the proceedings could be treated as non-est in law and invalid for the purpose of deciding exemption under Section 80P of the Income Tax Act and to substantiate the same the Bench relied upon has relied on the decision of the Kerala High Court in the case of Chirakkal Service Co-operative Bank Limited vs. CITin which it was held that in cases where returns have been filed, the question of exemptions or deductions referable to Section 80P would definitely have to be considered and granted if eligible.
Case Title: Ambaradi Seva Sahkari Mandali Ltd. Versus DCIT
Coram: Suchitra Kamble and Waseem Ahmed
Case No.: ITA Nos.186, 197, 204 & 203/RJT/2022
Advocate For Appellant: Adv. D.M. Rindani
Advocate For Respondent: Adv. B.D. Gupta
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