2022 (6) TMI 1464 - AT - Income Tax

Deduction u/s 80P - Claim denied as assessee did not file the return of income for Assessment Year 2017-18 - as contended that since the assessee did not file return of income for Assessment Year 2017-18 there was no question of invoking the provision of section 80A(5) - HELD THAT - Section 80A(5) of the Act is applicable only when a return of income is filed by an assessee and a deduction under Chapter VI A of the Act is not claimed in such return of income. It will not apply to a case where no return of income is filed. The provisions of section 80AC of the Act as we have already seen contemplates denial of deduction in respect of certain provisions of Chapter VI A of the Act if a return of income is not filed by an assessee. Those provisions as rightly contended by assessee do not apply to the claim for deduction under section 80P - Revenue authorities were not justified in not entertaining the claim of the assessee for deduction under section 80P of the Act as made by the assessee. Since neither the AO nor the CIT(A) have examined the other conditions for allowing deduction under section 80P of the Act we deem it fit and proper to remand the issue of the assessee s eligibility to claim deduction u/s 80P in the sense with regard to the quantum of deduction and also with regard to the other conditions for allowing deduction u/s 80P for examining afresh by the AO. Allow the appeal of the assessee for statistical purposes.

Summary

Issues:
1. Denial of deduction under section 80P of the Income Tax Act for not filing the return of income for Assessment Year 2017-18.

Analysis:
The appellant, an agricultural co-operative society, appealed against the order of the AO denying the benefit of deduction under section 80P of the Act for not filing the return of income for Assessment Year 2017-18. The AO invoked section 80A(5) of the Act, which states that if an assessee fails to claim a deduction in the return of income, no deduction shall be allowed. The appellant argued that the failure to file the return was unintentional due to lack of guidance and requested condonation. The AO, however, proceeded to assess the appellant's total income at Rs. 1,89,165 as income from business and denied the deduction under section 80P.

The appellant contended before the CIT(A) that section 80A(5) is directory, not mandatory, and cited relevant case laws to support their claim. The CIT(A) upheld the AO's order, stating that filing a return is a precondition for claiming deduction under section 80P. The appellant then appealed to the Tribunal.

During the Tribunal hearing, the appellant argued that section 80A(5) applies only when a return is filed and a deduction is not claimed therein. They pointed out that section 80AC, which deals with deductions under specific sections, does not include section 80P. The Tribunal agreed with the appellant, stating that section 80A(5) does not apply when no return is filed. As the AO and CIT(A) did not assess the other conditions for claiming deduction under section 80P, the Tribunal remanded the issue to the AO for a fresh examination. The Tribunal allowed the appeal for statistical purposes.

In conclusion, the Tribunal ruled in favor of the appellant, stating that the denial of deduction under section 80P for not filing the return of income was not justified. The issue of the appellant's eligibility for claiming the deduction under section 80P was remanded to the AO for further examination, emphasizing that section 80A(5) does not apply when no return is filed.