Late Filing Of Return, Denial Of Section 80P Exemption Not Justified: ITAT

The Rajkot Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that denying the exemption under Section 80P of the Income Tax Act solely on the basis of the assessee's late filing of a return is not justifiable.

The two-member bench of Suchitra Kamble (Judicial Member) and Waseem Ahmed (Accountant Member) has relied on the decision of the Kerala High Court in the case of Chirakkal Service Co-operative Bank Limited vs. CIT, in 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.

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 Income Tax Act of 1961.

The assessee was informed 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.

The assessee stated that the return of income was filed 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 is not valid in law.

The tribunal stated 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.

Case Title: Ambaradi Seva Sahkari Mandali Ltd. Versus DCIT

Citation: ITA Nos.186, 197, 204 & 203/RJT/2022

Date: 10.02.2023

Counsel For Appellant: D.M. Rindani

Counsel For Respondent: B.D. Gupta

Click Here To Read The Order