S. 80P Deduction not to be Denied to Co-operative Societies for Belated Returns, if Claim is Valid: ITAT [Read Order]

The Rajkot Bench of the Income Tax Appellate Tribunal (ITAT) has recently delivered a noteworthy decision addressing the eligibility of co-operative societies to claim deductions under Section 80P of the Income Tax Act, 1961, even when their returns have been filed after the due date prescribed under Section 139(1) of the Income Tax Act.

The consolidated appeals pertained to three co-operative societies from Gujarat, which had filed their returns belatedly, under Section 139(4), and were subsequently denied the Section 80P deduction by the Centralized Processing Centre (CPC), Bengaluru, through an intimation issued under Section 143(1).

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The tax department’s position was that, as per Section 80AC(ii), filing a return after the due date automatically disentitles the assessee from such deductions, regardless of the merits of the claim.

The case was heard and decided by Dr. Arjun Lal Saini, Accountant Member, of the Rajkot ITAT Bench.

On behalf of the assessees, arguments were presented by Shri D. M. Rindani, Authorized Representative (A.R.), while the Revenue was represented by Shri Abhimanyu Singh Yadav, Senior Departmental Representative (Ld. Sr. DR).

The assessees maintained that their claims under Section 80P were bona fide and that the returns, although late, were still within the extended time permitted under Section 139(4). They cited several judicial precedents to assert that a return filed under Section 139(4) is not necessarily disqualified from all Chapter VI-A deductions and that the nature of the deduction claim—being debatable and not an apparent error—should not be adjudicated summarily through the mechanism of Section 143(1) adjustments.

Upon detailed consideration, the tribunal agreed with the assessees’ submissions, highlighting that the core issue—whether a deduction can be denied solely on account of delayed filing when the substantive requirements are otherwise satisfied—remains debatable.

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The ITAT bench further remarked that the legislative intent behind Section 80P is to encourage the functioning and financial health of co-operative societies. The Tribunal emphasized that adjustments under Section 143(1) are limited to instances of patent mistakes or mathematical errors and cannot extend to controversial issues requiring detailed examination.

In result, the Tribunal set aside the CPC’s summary denial of the deduction and remanded the matter to the Assessing Officer, instructing that the validity of the Section 80P claim should be assessed on its merits, rather than dismissed on procedural grounds alone.

It is important to note that the Tribunal’s ruling is expressly limited to the specific facts of these cases and should not be construed as a general precedent. Nevertheless, genuine deduction claims, particularly those aimed at supporting co-operative societies, ought not to be summarily rejected due to technical lapses if they are otherwise legitimate and substantiated.

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