Revenue cannot deny section 80P deduction for cooperative society due to incorrectly filled return columns

ITAT Ahmedabad allowed the assessee's appeal for statistical purposes regarding section 80P deduction denial. The revenue denied the deduction through section 143(1) intimation due to improperly filled return columns, and subsequently rejected the section 154 rectification application. ITAT held that revenue cannot deny legitimate benefits due to assessee's ignorance and must rectify genuine mistakes. The matter was remanded to AO for fresh adjudication to verify if interest was earned from cooperative society and whether deduction falls within section 80P(d)/80P2(c)(ii) provisions.

---

---

Issues involved:
The appeal filed against the order of the Learned Commissioner of Income Tax (Appeals) regarding the denial of claim made under section 80P of the Income Tax Act for the Assessment Year 2018-2019.

Summary:

Issue 1: Denial of claim under section 80P of the Act by Ld. CIT(A)

The assessee, a cooperative housing society, claimed a deduction under section 80P of the Act in the return filed under section 139. However, the claim was denied in the intimation under section 143(1) due to alleged improper filling of Sch. VIA. The rectification application under section 154 was also denied, stating that the deduction was not allowable for a status other than a cooperative society. The Ld. CIT(A) upheld the denial, stating that the columns in the return were not properly filled up, rejecting the claim under section 80P(2)(d) of the Act.

Issue 2: Appeal before ITAT

The assessee appealed before the ITAT, arguing that the deduction claimed under section 80P(2)(d) and 80P(2)(c)(ii) was legitimate. The Ld. AR contended that the deduction should not be denied solely based on improper filling of columns in the return. The Ld. DR argued that there was no apparent mistake to be rectified under section 154, supporting the lower authorities' decision.

Judgment:

After considering the contentions of both parties and the records, the ITAT found that the assessee had shown the deduction claimed under section 80P(2)(d) and 80P(2)(c) in the computation of income. The ITAT noted that the Ld. CIT(A) denied the benefit to the assessee based on a defect in the return, without questioning the submissions regarding the deduction's availability supported by judgments. Citing the decision of the Hon'ble Gujarat High Court, the ITAT held that the revenue cannot deny legitimate benefits to the assessee due to the assessee's mistake, emphasizing the revenue's duty to rectify any mistakes. The ITAT directed the AO to verify the genuineness of the claim and the compliance with the provisions of section 80P(d)/80P2(c)(ii) for fresh adjudication. Consequently, the appeal was allowed for statistical purposes.

Conclusion:

The ITAT allowed the appeal filed by the assessee against the denial of the claim under section 80P of the Act, directing the AO to verify the deduction claimed within the provisions of the law for fresh adjudication.

---