2025 (10) TMI 46 - AT - Income Tax

Deduction under s.80P and s.80AC denied where return filed belatedly under s.148, timely filing required

ITAT (Chennai) dismissed the appeal of the assessee-society, upholding denial of deduction under s.80P (and s.80AC) because the return of income was filed ... Deduction u/s 80P - claim denied the said deduction claimed u/s 80AC and u/s 80P on the ground that the return of income was not filed within stipulated time period - return filed under Section 148 of the Act was a belated return - HELD THAT:- We do not find any reason to deviate from the decision of Veerapampalayam Primary Agricultural Cooperative Credit Society Ltd. [2021 (4) TMI 1169 - MADRAS HIGH COURT] wherein it has already been held that for claiming of deduction u/s 80P, the return of income should have been filed within the stipulated due date. In the present case, the assessee-society has filed its return of income after the stipulated time. Accordingly, the appeal of the assessee is dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether a cooperative society that files its return under notice issued under Section 148 (i.e., a belated return) after the due date under Section 139(1) is eligible to claim deductions under Chapter VI-A, specifically Section 80P. 2. Whether disallowance of Chapter VI-A deductions (including Section 80P) on account of late filing falls within the scope of adjustments permissible under Section 143(1)(a) for the relevant assessment year. 3. Whether the amendment to Section 143(1)(a) introduced by the Finance Act, 2021 (adding sub-clause permitting disallowance of certain claims for non-filing within due date) is applicable to the assessment year under consideration. ISSUE-WISE DETAILED ANALYSIS - Issue 1: Eligibility for Section 80P deduction where return filed belatedly under notice under Section 148 Legal framework: Section 80P grants deduction to specified cooperative societies subject to conditions prescribed by the Act; eligibility requires compliance with statutory conditions including procedures for claiming deductions by filing return of income within prescribed timelines under Section 139(1). Section 148/148A deal with reopening of assessment/issuance of notice leading to belated returns. Precedent treatment: The Tribunal followed the reasoning of the High Court decision which held that entitlement to Section 80P deduction requires filing the return within the prescribed due date; belated filing does not confer eligibility. Other decisions taking an opposite view were cited by the assessee but not accepted by the Tribunal. Interpretation and reasoning: The Tribunal accepted the view that the statutory scheme contemplates filing within the due date as a precondition for claiming Chapter VI-A benefits, and a return filed only after a notice under Section 148 is a belated return; therefore the condition of timely filing is not met. The Tribunal observed that the authorities below correctly disallowed the Section 80P claim because the return was not filed under Section 139(1) within the prescribed time. Ratio vs. Obiter: Ratio - A cooperative society filing a return only after issuance of notice under Section 148 (i.e., belated return) is not entitled to deduction under Section 80P where timely filing under Section 139(1) is a statutory precondition; this principle was applied to dismiss the claim. Observational dicta - references to alternative authorities and factual distinctions were noted but not adopted as binding. Conclusion: The Tribunal concluded that the Section 80P deduction was rightly denied because the return was belated and therefore did not satisfy the prerequisite of filing within the due date under Section 139(1). ISSUE-WISE DETAILED ANALYSIS - Issue 2: Scope of Section 143(1)(a) adjustments to disallow Chapter VI-A claims for late filing Legal framework: Section 143(1)(a) permits certain adjustments to returned income, historically limited to arithmetical errors, incorrect claims apparent from information in the return, and disallowances indicated in audit reports; post-2021 amendment expanded the scope to specifically allow disallowance where return not filed within due date, by insertion of a sub-clause effective 1 April 2021. Precedent treatment: The Tribunal relied on the High Court decision that held disallowance of Section 80P deductions on account of late filing fell within the permissible scope of Section 143(1)(a) as applied to the relevant facts and timeline. The assessee cited cases supporting a narrower pre-amendment view, but the Tribunal followed the High Court reasoning. Interpretation and reasoning: The Tribunal examined the temporal applicability of the expanded scope of Section 143(1)(a). It observed that the Finance Act, 2021 amending Section 143(1)(a) became effective 1 April 2021 and that the amended provision explicitly enabled treating untimely filed returns as grounds for disallowance of Chapter VI-A claims. Having accepted the High Court's interpretation on identical facts, the Tribunal treated the disallowance as permissible under the statutory framework operative for the assessment year in question. Ratio vs. Obiter: Ratio - Disallowance of Chapter VI-A deductions on account of filing the return after the due date falls within the scope of adjustments under Section 143(1)(a) as construed in the controlling authority relied upon by the Tribunal for the assessment year at issue. Obiter - discussion of pre-amendment limitations of Section 143(1)(a) served as contextual background but did not alter the holding. Conclusion: The Tribunal affirmed that the adjustments made to deny the Section 80P deduction were within the permissible scope of Section 143(1)(a) as interpreted in the authoritative decision it followed. ISSUE-WISE DETAILED ANALYSIS - Issue 3: Temporal applicability of Finance Act, 2021 amendment to Section 143(1)(a) Legal framework: The Finance Act, 2021 inserted an express provision (sub-clause) in Section 143(1)(a) to permit disallowance of Chapter VI-A deductions where returns are not filed within the due date; the amendment is effective from 1 April 2021 and governs assessments falling under its temporal ambit. Precedent treatment: The Tribunal relied on the High Court decision that addressed the same legal question and applied the amended provision to deny deduction where return was belated, finding the amendment operative for the assessment year in question. Interpretation and reasoning: The Tribunal considered the assessee's submission that the expanded power under Section 143(1)(a) may not apply to the assessment year but found that the controlling authority had already decided the point against the assessee. The Tribunal treated the amendment and the High Court's construction as determinative for the assessment year and concluded that non-filing within the due date justified disallowance under the adjusted scope of Section 143(1)(a). Ratio vs. Obiter: Ratio - The amendment to Section 143(1)(a) as effected by the Finance Act, 2021 is relevant and operative for the assessment year under consideration such that late filing may be treated as a ground for disallowance of Chapter VI-A deductions. Obiter - comparison to pre-amendment jurisprudence was discussed but not adopted. Conclusion: The Tribunal held that the Finance Act, 2021 amendment is applicable and supports the denial of the Section 80P claim for a return filed after the due date. ADDITIONAL OBSERVATIONS The Tribunal noted conflicting authorities relied upon by the assessee but declined to depart from the High Court view on identical facts; therefore, distinctions raised were not accepted as sufficient to overturn the controlling precedent. The Tribunal dismissed both the appeal and the connected stay application as infructuous following dismissal on merits.