2016 (10) TMI 1301 - AT - Income Tax

Benefit of deduction u/s 80P - return of income was not furnished within the time limit prescribed u/s 139 - Assessee is primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969 - HELD THAT - Belated filing of return of income by the assessee does not disentitle it from the benefit of deduction u/s 80P(2) of the Act. Further, the assessee, in the instant case, is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate has been issued by the Registrar of Cooperative Societies to the above said effect and the same is on record. The Hon ble High Court, in assessee s own case and 2014 (11) TMI 843 - ITAT COCHIN had held that primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society, I hold that the assessee is entitled to the benefit of deduction u/s 80P(2) - Decided in favour of assessee.

Summary

Issues:
1. Denial of deduction u/s 80P of the Income Tax Act due to belated filing of return.
2. Interpretation of section 80A(5) and its application in cases of belated returns.
3. Entitlement of a primary agricultural credit society to deduction u/s 80P(2) of the Act.

Analysis:

Issue 1: Denial of deduction u/s 80P
The case involved a cooperative society failing to file a return of income for AY 2010-11, leading to a best judgment assessment u/s 144 denying the benefit of deduction u/s 80P of the IT Act. The Tribunal, in an earlier order, upheld the denial of deduction due to belated filing of return. However, the Hon'ble High Court reversed this decision, emphasizing that belated filing alone cannot disentitle the assessee from claiming the deduction u/s 80P. The High Court considered whether a return filed beyond the prescribed time limits can be deemed non-existent for the purpose of deciding exemption u/s 80P. The High Court's findings clarified that the denial of exemption based solely on belated filing is not justified, and returns filed beyond the stipulated period can still be considered for exemption if other proceedings are pending. Therefore, the High Court ruled in favor of the assessee, allowing the deduction u/s 80P.

Issue 2: Interpretation of section 80A(5)
The High Court's analysis of section 80A(5) highlighted that if no returns are filed for a specific assessment year, no deductions can be allowed. However, in cases where belated returns are filed, the question arises whether such returns can be accepted for exemption purposes. The High Court clarified that if belated returns are eligible as per the law, claims for exemption must also be considered and granted if eligible. The inhibition in section 80A(5) against allowing deductions applies only when no returns are filed. Therefore, the Tribunal's denial of exemption solely based on the belated filing of return was deemed unjustified by the High Court.

Issue 3: Entitlement of a primary agricultural credit society to deduction
The judgment also addressed the entitlement of a primary agricultural credit society, registered under the Kerala Cooperative Societies Act, to the benefit of deduction u/s 80P(2) of the Act. In this case, the assessee was such a society, and the Registrar of Cooperative Societies had issued a certificate confirming its status. Citing previous rulings, the High Court affirmed that such societies are entitled to the deduction u/s 80P(2). Given the certificate provided by the Registrar, the assessee was held entitled to the benefit of deduction u/s 80P(2) of the Act. Consequently, the appeal filed by the assessee was allowed based on this entitlement.

In conclusion, the judgment highlighted the importance of considering the specific circumstances of belated filing of returns, the interpretation of relevant sections of the IT Act, and the entitlement of certain types of societies to deductions under the law.