ITAT Holds That Primary Agricultural Credit Co-operative Society Not Entitled to Section 80P Deduction for Return Filed in Response to Section 148 Notice

The Income Tax Appellate Tribunal (ITAT), Bangalore, has held that a Primary Agricultural Credit Co-operative Society cannot claim a deduction under Section 80P of the Income Tax Act, 1961 where the return of income was not filed within the due date prescribed under Section 139(1).

The assessee is a co-operative society registered under the Karnataka Co-operative Societies Act, 1959 engaged in providing agricultural credit facilities to its members and in distribution of fertilizers, food and grains under the public distribution system. The assessment for assessment year 2018-19 was reopened under Section 147 and notice under Section 148 was issued on March 25, 2022. In response to the notice, the assessee filed its return of income on April 19, 2022 and claimed a deduction of Rs 1,150,523 under Section 80P. The AO observed that the return had not been filed within the due date provided under Section 139(1) and hence disallowed the deduction.

Aggrieved by the assessment order passed under Section 147 read with Section 144B, the assessee filed an appeal before the CIT(A). However, the CIT(A) dismissed the appeal and confirmed the disallowance.

Before the Tribunal, the assessee contended that Section 80P is a beneficial provision and the deduction should not be denied merely because the return was filed after the issue of the notice under Section 148. It was argued that the amended provisions of Section 80AC should not be applied to the assessee.

The Tribunal noted that the Finance Act, 2018 substituted Section 80AC with effect from April 1, 2018 and expanded its scope to cover all deductions available under Chapter VI-A under the heading “C.—Deductions in respect of certain incomes.” The amended provision expressly provides that such deductions shall be available only where the return of income is furnished on or before the due date specified under Section 139(1). It was observed that the assessee had admittedly failed to file the return within the prescribed due date and had filed the same only on April 19, 2022 in response to a notice under Section 148. No evidence seeking condonation of delay was produced either before the lower authorities or before the Tribunal.

Holding that timely filing of a return under Section 139(1) is a statutory condition for claiming a deduction under Section 80P, the Tribunal ruled that the assessee was not entitled to the benefit claimed in the returns filed under Section 148. Accordingly, the Tribunal dismissed all the appeals filed by the assessee.