2022 (6) TMI 406 - AT - Income Tax

Deduction claimed u/s.80P(2) - Claim denied as assessee does not file its return on or before due date specified u/s.139(1) - Eligible reason of delay - HELD THAT - Except this, the AO has not brought on record any other reasons to deny deduction claimed u/s.80P(2) of the Act. Therefore, from the reasons given by the assessee for not filing return of income within the due date specified under the Act, we are of the considered view that the delay in filing of return, cannot be attributable to the assessee, because, completion of Audit by the Co-operative Department, is not under the control of the assessee. Assessee has filed its return of income as soon as it has received the Audit Report from the Department. Further, the delay in filing of the return for the relevant AY is very small in as much as the extended due date for filing of return of income for the AY 2019-20 was 31.10.2019, whereas, the assessee has filed its return of income on 14.11.2019. Therefore, considering reasons given by the assessee for delay in filing of return of income for the relevant AY and also taken note of the fact that the assessee is, otherwise, entitled for deduction u/s.80P(2) of the Act, we are of the considered view that the ACIT/CPC were erred in rejecting deduction claimed u/s.80P(2) of the Act. Hence, we direct the AO to allow deduction as claimed by the assessee u/s.80P(2) of the Act, and delete additions made to total income. - Decided in favour of assessee.

Summary

Issues:
1. Disallowance of deduction claimed under section 80P(2) of the Income Tax Act, 1961.
2. Interpretation of provisions of section 80AC of the Act regarding the due date for filing a return to claim deductions.
3. Impact of delayed filing of return on eligibility for deductions under section 80P(2) of the Act.

Issue 1: Disallowance of deduction claimed under section 80P(2) of the Income Tax Act, 1961:
The appeal was against the order of the Commissioner of Income Tax (Appeals) concerning the disallowance of a deduction claimed under section 80P(2) of the Income Tax Act for the assessment year 2019-20. The appellant, a Co-operative Society, filed its return of income after claiming the deduction, which was disallowed by the assessing officer and upheld by the First Appellate Authority. The main contention was that the appellant did not file the return within the due date specified under section 139(1) of the Act, leading to the denial of the deduction. The Tribunal, after considering the facts and legal provisions, held that the delay in filing the return was due to the completion of the Audit by the Co-operative Audit Department, which was beyond the control of the appellant. As the appellant satisfied all conditions for the deduction under section 80P(2) and the delay was minimal, the Tribunal directed the assessing officer to allow the deduction claimed by the appellant.

Issue 2: Interpretation of provisions of section 80AC of the Act regarding the due date for filing a return to claim deductions:
The Assessing Officer disallowed the deduction claimed under section 80P(2) of the Act on the grounds that the appellant did not file the return within the due date specified under section 139(1) of the Act. The Tribunal analyzed the provisions of section 80AC of the Act, as amended by the Finance Act, 2018, which made it mandatory to file the return within the specified due date to claim deductions. However, the Tribunal noted that the delay in filing the return was due to the completion of the Audit by the Co-operative Audit Department, which was not within the appellant's control. The Tribunal held that the provisions of section 80AC should be interpreted in a manner that considers genuine reasons for delayed filing, especially when the taxpayer is otherwise eligible for the deduction.

Issue 3: Impact of delayed filing of return on eligibility for deductions under section 80P(2) of the Act:
The delay in filing the return for the relevant assessment year was attributed to the completion of the Audit by the Co-operative Audit Department, which was completed after the due date specified under section 139(1) of the Act. The appellant argued that the delay should not result in the denial of the deduction under section 80P(2) as they were otherwise eligible and the delay was minimal. The Tribunal agreed with the appellant, emphasizing that the delay was not attributable to the appellant and that they promptly filed the return upon receiving the Audit Report. The Tribunal held that the assessing officer erred in disallowing the deduction solely based on the delayed filing of the return and directed the allowance of the deduction claimed by the appellant.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by the parties, and the Tribunal's decision based on the interpretation of relevant legal provisions and factual circumstances.