Centralized Processing Centre Not Authorized To Carry Out Adjustment For Disallowance Of Section 80P Deduction: ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the Centralised Processing Centre (CPC) was not authorized to carry out such adjustments for disallowance of deduction under section 80P of the Income Tax Act.

The two-member bench of Pavan Kumar Gadale (Judicial Member) and Om Prakash Kant (Accountant Member) observed that the assessment year 2007-08 occurred prior to the CPC being empowered to carry out adjustments, and thus making adjustments were beyond the CPC's power.

On September 19, 2017, the appellant or assessee filed a return of income claiming a deduction under Section 80P of the Act. While processing the return, the CPC denied the deduction claimed of Rs. 1,82,74,406 under Section 80P.

The CIT(A) determined that the order merged with the assessment order dated 12.17.2019, by which the Assessing Officer denied the deduction.

The assessee contended that the CPC was not authorized to make an adjustment as the issue of deduction was of a debatable nature. Only the Finance Act, of 2021, with effect from April 1, 2012, grants the authority to disallow deductions for certain incomes under Section VI-A while processing a return. Prior to April 1, 2022, the Assessing Officer lacked the authority to grant the claim made under the heading "C- deduction in respect of certain incomes" under Chapter VI-A.

The ITAT allowed the appeal and deleted the adjustment made by the CPC.

Case Title: Sai Prerana Co-op. Credit Society Ltd. Versus Income Tax Officer

Citation: ITA No. 3169/MUM/2022

Date: 20.02.2023

Counsel For Appellant: Ruby Srivastava, Bharat Kumar

Counsel For Respondent: Sonia Kumar

Click Here To Read The Order