The Kolkata Bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that the Centralized Processing Centre (CPC) lacked authority for preliminary deduction under Section 80P of the Income Tax Act, 1961, prior to April 2021.
The assessee was a Registered Cooperative Society, formed by the residents of the locality of Bisarpara Kodalia. The primary objective of the assessee Society is to accept deposits of the members of the society and to provide loan and credit facilities to them. All the Deposits, received from the members, and the Loans, advanced to them, carry respective and corresponding Interests. Interest is also earned from Investments, principally made with West Bengal State Co-operative Bank, with a small amount coming from Interests on Savings Bank Deposits with Commercial Banks. The Return of Income was filed under section 139(4) on 25.11.2018
The assessee has filed Rectification of Mistake stating that assessee a Credit Co-operative Society dealing only with its members and its Income is exempt U/S 80P(2)(b) of the Act and Interest Income from West Bengal State Co-operative Bank is also exempt U/S 80P(2)(d) of the Act. But, CPC computed the income and passed order U/S 154, total income remaining same as processed originally under Section 143(1) of the Income Tax Act
The bench noticed that the assessee is a Co-operative Society engaged in the business of providing credit to its members. The assessee is required under law to get its account audited under the rules and regulations of West Bengal Cooperative Societies Act, 2006 by the auditor appointed by Directorate of Cooperative Societies. For the AY 2018-19 due date for filing the return was 30.09.2018. However, the return was submitted on 25.11.2018.
It was noted that before 01.04.2021 there was no mechanism for the CPC to prima facie disallow the claim under Section 80P of the Income Tax Act. It was only from 01.04.2021 that such powers have been conferred with the CPC to make prima facie disallowance in case of the claim made u/.s 10AA or deduction claimed under any of the provisions in Chapter VIA which, inter alia, includes 80 P of the Income Tax Act
Further noted that section 80AC of the Income Tax Act put a bar against claiming deduction in respect of certain income provided under the head (C) of Chapter VIA which includes section 80P of the Act also if the return of income was not filed before the due date prescribed under Section 139(1) of the Income Tax Act. Had it been a case of scrutiny proceeding under Section 143(3) of the Income Tax Act, the situation certainly would have been against the assessee subject to the approval by the authorities for condonation of delay in filing the return.
Therefore, the two member bench consisting Rajpal Yadav ( Vice President ) and Girish Agarwal ( Accountant member) set aside the order of the CIT(A) and allowed the grounds of appeal raised by the assessee for the claim of deduction under Section 80P of the Income Tax Act at Rs.19,42,264/-. Accordingly, appeal of the assessee was allowed.
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