CPC cannot deny belated 80P deduction u/s143(1)(a)(v) before AY 2020-21 despite amended s.80AC requirement

ITAT held that the Centralized Processing Centre (CPC) had no jurisdiction under s.143(1)(a)(v) to disallow the assessee-societies' deduction claimed u/s 80P solely on the ground that the returns were filed belatedly u/s 139(1). While s.80AC, as amended by Finance Act 2018, required timely filing for claiming Chapter VI-A deductions, the corresponding enabling amendment to s.143(1)(a)(v) empowering CPC to adjust any Chapter VI-A deductions, including u/s 80P, took effect only from AY 2020-21. For the relevant year, s.143(1)(a)(v) did not extend to 80P claims. The disallowance was therefore ultra vires the provision, and the assessee's appeals were allowed.

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Issues: (i) Whether deduction under section 80P (Chapter VI-A) is allowable where the return claiming the deduction was filed after the due date prescribed under section 139(1) for assessment year 2018-19; (ii) Whether the Centralised Processing Centre (CPC) had jurisdiction to disallow the claim under summary processing provision of section 143(1)(a)(v).

Issue (i): Whether deduction under section 80P of Chapter VI-A is allowable when the return claiming it was filed beyond the due date prescribed under section 139(1) for AY 2018-19.

Analysis: Section 80A(5) requires that a deduction under Chapter VI-A be claimed in the return; from AY 2018-19 clause (ii) of section 80AC further conditions allowance of Chapter VI-A deductions on the return being furnished within the due date under section 139(1). For AY 2018-19 a return filed after the due date therefore fails the additional temporal requirement in section 80AC(ii), making claims in belated returns ineligible unless other provisions permit.

Conclusion: The claim for deduction under section 80P is not allowable if the return claiming it is filed after the due date prescribed under section 139(1), as per the combined effect of section 80A(5) and section 80AC(ii).

Issue (ii): Whether the CPC, by summary processing under section 143(1)(a)(v), had the jurisdiction to disallow the section 80P deduction for AY 2018-19.

Analysis: The power relied upon by CPC under clause (v) of section 143(1)(a) to make adjustments was amended subsequently (Finance Act, 2021) to explicitly enable denial of Chapter VI-A deductions during summary processing; that enabling amendment took effect for later assessment years. At the relevant time for AY 2018-19 the statutory text did not confer on CPC the requisite jurisdiction to disallow eligibility under section 80AC(ii) by summary processing under section 143(1)(a)(v).

Conclusion: The CPC lacked jurisdiction under section 143(1)(a)(v) to disallow the section 80P deduction in summary processing for AY 2018-19; such disallowance made by CPC is not sustainable and must be reversed.

Final Conclusion: The disallowances effected by CPC under section 143(1)(a)(v) and upheld by the first appellate authority are vacated and the deductions claimed under Chapter VI-A (section 80P) in the respective belated returns are to be accepted by reversing the summary disallowance; the appeals are allowed.

Ratio Decidendi: For AY 2018-19 a Chapter VI-A deduction is permissible only if claimed in a return filed within the due date of section 139(1), and summary processing under section 143(1)(a)(v) did not, at that time, vest the CPC with jurisdiction to disallow such Chapter VI-A claims absent a later enabling amendment.

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