Co-operative housing society gets Section 80P deduction for bank interest after filing return within extended deadline

The ITAT Mumbai held that a co-operative housing society was entitled to deduction under sections 80P(2)(c) and 80P(2)(d) for interest on fixed deposits and savings bank interest from co-operative banks. The revenue department contended the ITR was filed beyond the due date of 31st August 2018, making the 80P claim impermissible. However, the tribunal determined that as the society was governed by Maharashtra Co-operative Society Act 1960 and required audit thereunder, the due date was 30th September 2018. Since the return was filed on 18th September 2018, it was within the prescribed time limit. The tribunal allowed the assessee's appeal and deleted the addition.

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Issues:
1. Disallowance of deductions under sections 80P(2)(c) and 80P(2)(d) of the Income Tax Act, 1961 due to late filing of income tax return.
2. Controversy over the due date for filing the income tax return by the Assessee.

Analysis:
1. The Assessee declared income and claimed deductions under sections 80P(2)(c) and 80P(2)(d) of the Income Tax Act, 1961. The Assessing Officer (AO) disallowed the deductions as the income tax return was filed after the due date, citing non-compliance with section 139(1) of the Act. The AO added the disallowed amount to the Assessee's income for penalty proceedings under section 270A of the Act.

2. The Assessee challenged the addition before the Ld. Commissioner, who upheld the AO's decision. The Ld. Commissioner emphasized the importance of adhering to the due dates prescribed in the Income Tax Act and Rules, regardless of audits conducted under other laws. The Ld. Commissioner affirmed that the Assessee failed to comply with the Act's provisions, rendering them ineligible for deductions under section 80P.

3. The Appellate Tribunal analyzed the due date controversy, noting that the Assessee, a Co-Operative Housing Society audited under the Maharashtra State Co-Operative Act, was required to file the return by September 30. The due date was extended to October 31, effective from April 1, 2020. As the Assessee filed the return on September 18, 2018, within the prescribed due date, the Tribunal accepted the Assessee's claim for deductions under sections 80P(2)(c) and 80P(2)(d). Consequently, the Tribunal allowed the appeal, deleting the addition made by the AO and upheld by the Ld. Commissioner.

4. The Tribunal's decision was based on the Assessee's timely filing of the return as per the extended due date, in alignment with the provisions of section 139 of the Act. The Tribunal emphasized the significance of meeting statutory deadlines for filing returns and audit reports under the Income Tax Act, ultimately ruling in favor of the Assessee's entitlement to the claimed deductions.

5. In conclusion, the Appellate Tribunal allowed the Assessee's appeal, overturning the disallowance of deductions under sections 80P(2)(c) and 80P(2)(d) due to the timely filing of the income tax return within the prescribed due date, as per the provisions of the Income Tax Act, 1961.

Orders pronounced in the open court on 27.07.2023.

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