Section 80P deduction allowed despite no return filed for AY 2017-18, section 80A(5) doesn't apply when no return exists

ITAT Bangalore allowed the assessee's appeal regarding section 80P deduction claim. Revenue authorities wrongly denied the deduction solely because no return was filed for AY 2017-18. The tribunal held that section 80A(5) applies only when a return is filed but deduction not claimed therein, not when no return is filed. Section 80AC provisions don't apply to section 80P deductions. The matter was remanded to AO for fresh examination of eligibility conditions and quantum of section 80P deduction.

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Issues:
1. Denial of deduction under section 80P of the Income Tax Act for not filing the return of income for Assessment Year 2017-18.

Analysis:
The appellant, an agricultural co-operative society, appealed against the order of the AO denying the benefit of deduction under section 80P of the Act for not filing the return of income for Assessment Year 2017-18. The AO invoked section 80A(5) of the Act, which states that if an assessee fails to claim a deduction in the return of income, no deduction shall be allowed. The appellant argued that the failure to file the return was unintentional due to lack of guidance and requested condonation. The AO, however, proceeded to assess the appellant's total income at Rs. 1,89,165 as income from business and denied the deduction under section 80P.

The appellant contended before the CIT(A) that section 80A(5) is directory, not mandatory, and cited relevant case laws to support their claim. The CIT(A) upheld the AO's order, stating that filing a return is a precondition for claiming deduction under section 80P. The appellant then appealed to the Tribunal.

During the Tribunal hearing, the appellant argued that section 80A(5) applies only when a return is filed and a deduction is not claimed therein. They pointed out that section 80AC, which deals with deductions under specific sections, does not include section 80P. The Tribunal agreed with the appellant, stating that section 80A(5) does not apply when no return is filed. As the AO and CIT(A) did not assess the other conditions for claiming deduction under section 80P, the Tribunal remanded the issue to the AO for a fresh examination. The Tribunal allowed the appeal for statistical purposes.

In conclusion, the Tribunal ruled in favor of the appellant, stating that the denial of deduction under section 80P for not filing the return of income was not justified. The issue of the appellant's eligibility for claiming the deduction under section 80P was remanded to the AO for further examination, emphasizing that section 80A(5) does not apply when no return is filed.

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