2017 (3) TMI 1478 - AT - Income Tax

Entitled to the benefit of deduction u/s 80P - belated filing of return of income - Held that - It is not justified in denying the benefit of exemption u/s 80P of the Act on the mere ground of belated filing of return of income. See Chirakkal Service Co-Operative Bank Ltd. Versus The Commissioner of Income Tax 2016 (4) TMI 826 - KERALA HIGH COURT 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 other batch of cases, 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, we hold that the assessee is entitled to the benefit of deduction u/s 80P(2) of the Act. - Decided in favour of assessee

Summary

Issues:
- Failure to file return of income for AY 2010-11
- Denial of benefit of deduction u/s 80P of the IT Act
- Appeal to first appellate authority
- Confirmation of assessment order by CIT(A)
- Dismissal of appeal by Tribunal
- Restoration of matter to Tribunal by High Court
- Belated filing of return and denial of exemption u/s 80P
- Interpretation of section 80A(5) in relation to belated returns
- Entitlement of primary agricultural credit society to deduction u/s 80P(2)

Analysis:
The case involved an assessee, a cooperative society registered under the Kerala Cooperative Societies Act, 1969, who failed to file a return of income for the AY 2010-11. The Assessing Officer (AO) completed a best judgment assessment u/s 144 of the Act, denying the benefit of deduction u/s 80P of the IT Act due to the belated filing of the return. The CIT(A) and the Tribunal upheld the assessment order, leading to an appeal to the High Court, which restored the matter to the Tribunal for reconsideration.

Upon hearing the parties, the Tribunal referred to a High Court judgment in a similar case, emphasizing that the belated filing of the return should not automatically disentitle the assessee from the benefit of deduction u/s 80P of the Act. The Tribunal noted that a primary agricultural credit society, like the assessee, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the deduction u/s 80P(2) if duly certified by the Registrar of Cooperative Societies. Relying on this interpretation, the Tribunal allowed the appeal in part, granting the assessee the benefit of deduction u/s 80P(2) based on the certification provided.

The High Court's judgment highlighted that the denial of exemption under section 80P should not solely be based on the belated filing of returns, as returns filed even beyond the prescribed period could still be accepted and acted upon if further proceedings were pending. The Court clarified that the inhibition in section 80A(5) against allowing deductions applies only when no returns have been filed, not in cases of belated filings. It emphasized that claims for exemptions or deductions under section 80P should be considered if eligible, even in cases of delayed return filings, as long as proceedings were ongoing in the statutory hierarchy of adjudication.

In conclusion, the Tribunal, following the High Court's interpretation, ruled in favor of the assessee, holding that the belated filing of the return did not disqualify the assessee from the benefit of deduction u/s 80P(2). The Tribunal recognized the assessee as a primary agricultural credit society entitled to the deduction based on the certification provided by the Registrar of Cooperative Societies. As no other issues were raised during the hearing, the appeal was partly allowed, granting the assessee the benefit of the deduction under section 80P(2) of the Act.