Return-processing adjustments for Chapter VI-A deductions cannot exceed section 143(1)(a) limits or apply retrospectively.

At the return-processing stage, a disallowance of a Chapter VI-A deduction could not be sustained where it exceeded the permissible scope of section 143(1)(a). The Tribunal held that the amendment in section 143(1)(a)(v) enabling such an adjustment could not be applied to a period before 1 April 2021, and the bar under section 80AC did not justify the adjustment on the relevant facts. In the absence of any contrary binding authority or distinguishing feature, the intimation under section 143(1) could not support the impugned disallowance, and the assessee's deduction claim succeeded.

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Issues: Whether the disallowance of deduction under section 80P of the Income-tax Act, 1961, while processing the return under section 143(1), was maintainable in view of section 80AC and the time limit under section 139(1).

Analysis: The claim for deduction under section 80P had been denied at the processing stage on the footing that section 80AC barred the allowance because the return was filed beyond the prescribed time under section 139(1). The Tribunal followed its earlier view that the adjustment made under section 143(1)(a)(ii) was beyond the scope of that provision, and that the corresponding amendment in section 143(1)(a)(v) could not be applied to the relevant period before 01.04.2021. In the absence of any contrary binding authority or distinguishing feature, the disallowance could not be sustained.

Conclusion: The disallowance under section 80P in processing under section 143(1) was held to be unsustainable, and the assessee succeeded.

Final Conclusion: The assessment intimation could not sustain the impugned adjustment, and the assessee was entitled to the deduction claim on the facts of the case.

Ratio Decidendi: An adjustment disallowing a Chapter VI-A deduction at the return-processing stage cannot be made beyond the permissible scope of section 143(1)(a), and the amended clause enabling such disallowance cannot be applied retrospectively to a period before its effective date.

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