Extended return filing due date and 80P deduction eligibility under s. 80AC(ii), disallowance set aside, deduction allowed

The dominant issue was whether deduction under s. 80P could be denied by applying s. 80AC(ii) on the ground that the return was filed beyond the due date under s. 139(1). The Tribunal held that, pursuant to the CBDT's extension under s. 119, the due date for filing the original return stood extended to 31.10.2019, and the anonymized assessee's return filed on 27.10.2019 was therefore within time; consequently, s. 80AC(ii) was inapplicable. The disallowance by CPC and the affirmance by CIT(A) were set aside, and the AO was directed to allow deduction under s. 80P in accordance with law.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the return of income was filed within the "due date specified under section 139(1)" when the due date stood extended by the CBDT, and consequently whether section 80AC(ii) barred the claim of deduction under section 80P.

(ii) Whether the disallowance of deduction under section 80P on the premise of a belated return, made in processing under section 143(1), could be sustained when the record itself reflected the extended due date and the return was filed within that extended date.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Applicability of section 80AC(ii) to the section 80P deduction where the CBDT extended the section 139(1) due date

Legal framework (as discussed by the Court): The Tribunal proceeded on the premise that section 80AC(ii) denies deductions under the relevant Chapter where the return is not furnished on or before the due date specified under section 139(1). The determinative fact, therefore, was the operative due date under section 139(1) as applicable to the assessee for the relevant year, including any CBDT extension.

Interpretation and reasoning: The Tribunal treated the CBDT's extension of the due date from 30/09/2019 to 31/10/2019 as undisputed, and further relied on the fact that this extended due date was acknowledged in the intimation issued under section 143(1). On these facts, the Tribunal held that the return filed on 27/10/2019 was within the extended due date and could not be characterized as belated for purposes of section 80AC(ii).

Conclusion: Since the return was filed within the extended due date under section 139(1), the assessee was not hit by section 80AC(ii), and the statutory bar to deduction did not apply. The disallowance of deduction under section 80P on the ground of late filing was therefore erroneous.

Issue (ii): Sustainability of disallowance of section 80P deduction in section 143(1) processing when the return was within the extended due date

Legal framework (as discussed by the Court): The Tribunal examined the disallowance as made in the processing/intimation under section 143(1), and assessed it against the foundational premise used by the processing authority and the first appellate authority-namely, that the return was filed beyond the due date and hence section 80AC(ii) operated to deny the deduction.

Interpretation and reasoning: The Tribunal found that both the processing authority and the first appellate authority proceeded on an incorrect factual/legal basis, because the due date had in fact been extended and the return was filed before that extended deadline. Once that premise failed, the reason for disallowing the deduction under section 80P also failed.

Conclusion: The Tribunal set aside the appellate order and directed the Assessing Officer to allow the deduction under section 80P in accordance with law, holding that the prior disallowance based on "belated return" was unsustainable on the record.

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