2024 (9) TMI 576 - AT - Income Tax

CPC cannot disallow section 80P(2)(d) deduction for co-operative society's interest income during section 143(1) processing

ITAT Mumbai held that CPC's disallowance of deduction u/s 80P(2)(d) for interest received from co-operative banks was beyond the scope of adjustment u/s ... Deduction u/s 80P(2)(d) - interest received from co-operative banks - adjustment u/s 143(1) - HELD THAT:- As decided in assessee own case [2024 (6) TMI 1395 - ITAT MUMBAI] wherein held admittedly assessee is a Co-operative Housing Society registered under Maharashtra Society act 1960 and as per the said act of the Co-operative Housing Societies have to get their accounts audited ones there is requirement to furnish and audit before from Charted Accountant, and therefore the due date was 31/10/2012 and 31/10/2014 for the A.Y 2012-23 and 2014 15 respectively and thus assessee had filed the return of income within the due date of under section 139(1). Thus even under amended provision no prima facie adjustment have been made no prima facie adjustment on account of deduction u/s. 80P could have been made. In the early provision of adjustment u/s. 143(1)(a) no such disallowance could have been made. Accordingly, we hold that disallowance made by the CPC u/s. 143(1)(a) on the claim of deduction u/s. 80P is beyond the scope of adjustment u/s. 143(1) - Decided in favour of assessee. Delay in filing of the return - Section 80AC specifies the under which section deduction would not be allowed unless the return was furnished on or before the due date specified u/s 139(1). The disallowance of deduction claimed u/s 80P(2)(d) is not mentioned therein As before 01.04.2018 the disallowance of deduction u/s 80IA, 80IAB, 80IB, 80IC, 80ID, 80IE only could be made in case of belated filing of returns. Therefore, deduction u/s 80P(2)(d) is not hit by the provisions of 80AC. Issues Involved:1. Failure to appreciate the rectification application filed by the appellant.2. Failure to provide an opportunity to be heard.3. Error in not dealing with the grounds of appeal.4. Jurisdiction of CPC to make adjustments in respect of deductions claimed under Section 80P(2)(d).5. Delay in filing appeals and condonation of delay.Issue-wise Detailed Analysis:1. Failure to Appreciate the Rectification Application:The appellant contended that the Learned Additional/Joint Commissioner of Income Tax (Addl. CIT) failed to appreciate that a rectification application was filed with the Income Department. The rectification application, filed on 14.06.2013, was still pending as of 25.07.2024. The appellant believed that the request for rectification would be allowed since for AY 2013-14, an identical relief was granted under Section 154. However, no order under Section 154 was passed, leading the appellant to file an appeal after a significant delay. The tribunal found that the appellant had a reasonable cause for the delay due to the pending rectification application.2. Failure to Provide an Opportunity to be Heard:The appellant argued that the Addl. CIT failed to provide an opportunity to be heard. The tribunal noted that the appellant had raised this issue in their grounds of appeal, emphasizing the importance of natural justice. The tribunal did not specifically address this issue separately but implicitly considered it while discussing the overall delay and the appellant's reasonable cause for the delay.3. Error in Not Dealing with the Grounds of Appeal:The appellant claimed that the CIT(A) erred in not dealing with the grounds of appeal raised. The tribunal acknowledged that the CIT(A) dismissed the appeal on the ground of inordinate delay without addressing the merits of the case. The tribunal found that the CIT(A) should have considered the appellant's grounds, especially given the reasonable cause for the delay.4. Jurisdiction of CPC to Make Adjustments:The appellant contended that the CPC had no jurisdiction to make adjustments regarding the deduction claimed under Section 80P(2)(d), as this authority was given only with effect from AY 2021-22. The tribunal agreed, citing a co-ordinate bench decision in the case of Vishva Villa Co-op. Housing Society Ltd. v/s ITO, Ward 19(3)(1), which held that disallowance of claims under Section 80P(2)(d) was beyond the scope of adjustments under Section 143(1) for years prior to AY 2021-22. The tribunal concluded that the CPC's adjustments were beyond its jurisdiction and directed the AO to allow the claim of deduction under Section 80P(2)(d).5. Delay in Filing Appeals and Condonation of Delay:The tribunal considered the appellant's affidavit explaining the delay in filing appeals. The appellant, a small co-operative housing society, relied on a part-time accountant and faced challenges due to the voluntary nature of its managing committee. The tribunal noted that a significant portion of the delay was covered by the Supreme Court's decision regarding the exclusion of certain periods due to the COVID-19 pandemic. The tribunal found that the appellant had a reasonable cause for the delay and condoned it, allowing the appeals.Separate Judgments for Each Assessment Year:Assessment Year 2012-13:The tribunal allowed the appeal, directing the AO to allow the claim of deduction under Section 80P(2)(d), following the co-ordinate bench's decision.Assessment Year 2014-15:The tribunal found the facts similar to AY 2012-13 and allowed the appeal, directing the AO to allow the claim of deduction under Section 80P(2)(d).Assessment Year 2015-16:The tribunal noted that the return was filed late but found that Section 80AC did not apply to disallow deductions under Section 80P(2)(d) for belated returns before 01.04.2018. The tribunal allowed the appeal, directing the AO to allow the claim of deduction under Section 80P(2)(d).Assessment Year 2016-17:The tribunal considered the delay and the appellant's affidavit, finding a reasonable cause for the delay. The tribunal allowed the appeal, directing the AO to allow the claim of deduction under Section 80P(2)(d).Assessment Year 2018-19:The tribunal found the facts similar to AY 2016-17 and allowed the appeal, directing the AO to allow the claim of deduction under Section 80P(2)(d).Conclusion:The tribunal allowed all the appeals, directing the AO to allow the claims of deduction under Section 80P(2)(d) for the respective assessment years, and condoned the delays in filing the appeals.