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2023 (1) TMI 893 - AT - Income TaxDeduction u/s. 80(P)(2)(a)(i) - Due date for filing the return of income under Section 139(1) - AO denied the deduction u/s. 80(P)(2)(a)(i) observing that the credit co-operative society is eligible for availing the exemption under Section 80P(20(a)(i) of the Act only if the return of income is filed with the due date - HELD THAT - A conjoint reading of Section 139(1) of the Act read with the Explanation 2(ii) of the section and Section 63 of the Karnataka Co-Operative Societies Act, 1959 makes it clear that the assessee s books are required to be audited under the Co-Operative Societies Act, the extended time is available to the assessee upto 31.10.2018 to the file the return of income for the AY 2018- 19. Admittedly in the present case the assessee filed the return of income on 31.10.2018. The assessee cannot be denied deduction under Section 80P(2)(a)(i) of the Act if the assessee filed the return of income on or before 31.10.2018 and the same has been disclosed in the return of income as required in ITR-5 stating that assessee is liable to audit under Cooperative Society Act and mentioned the date of audit in the return of income filed by the assessee. If it is so, the assessee could avail the benefit of circular issued by CBDT cited supra and the assessee has to be granted with the deduction under Section 80P(2)((i)(a). As discussed earlier in the present case assessee has filed return of income on 31.10.2018, which is within the extended time limit in the case of the present assessee whose books are to required to be audited under the relevant Co-operative Societies Act and Explanation 2(ii) of Section 139(1) of the Act is applicable to the assessee s case. We find no force in the argument of the learned D.R. Accordingly, direct the AO to grant deduction claimed by the assessee under Section 80P(2)(i)(a) of the Act if the assessee establish that it has disclosed the fact that assessee is liable to audit under Cooperatives Societies Act and mentioned the date of furnishing audit report in the return of income filed by the assessee on 31.10.2018 for the impugned AY 2018-19. Accordingly the issue in dispute is remitted to the file of AO for fresh consideration in the light of above observations - Appeal filed by the assessee is partly allowed for statistical purposes.
Issues Involved:
1. Eligibility for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. 2. Applicability of the extended due date for filing the return of income under Section 139(1) of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Eligibility for Deduction under Section 80P(2)(a)(i): The assessee, a Credit Cooperative Society registered under the Karnataka State Cooperative Society's Act, 1959, claimed a deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Assessing Officer (AO) denied this deduction, stating that the credit co-operative society is eligible for availing the exemption under Section 80P(2)(a)(i) only if the return of income is filed within the due date. The assessee filed the return on 31.10.2018, which was after the original due date but within the extended time limit provided by the Central Board of Direct Taxes (CBDT). On appeal, the CIT(A) upheld the AO's decision, emphasizing that the deduction under Section 80P is not allowable if the return is not filed within the time permitted under Section 139(1) for AY 2018-19 and onwards. The CIT(A) referred to the 2018 Budget amendment, which extended the scope of Section 80AC to all deductions under Chapter VIA, including Section 80P, making timely filing a prerequisite for claiming such deductions. 2. Applicability of the Extended Due Date for Filing the Return of Income: The assessee argued that the return was filed within the extended due date of 31.10.2018 as per the CBDT notification dated 08.10.2018. The assessee's books of accounts are required to be audited under Section 63 of the Karnataka Co-Operative Societies Act, 1959, and thus, as per Explanation 2(ii) to Section 139(1) of the Income Tax Act, the due date for filing the return was extended to 31.10.2018. The Tribunal noted that the regular time limit for filing the return for the assessee was 31.08.2018, but this was extended by the CBDT to 31.10.2018. The Tribunal observed that the assessee's books are indeed required to be audited under the Karnataka Co-Operative Societies Act, and thus, the extended time limit applied. The Tribunal concluded that the assessee filed the return on 31.10.2018, within the extended due date, and therefore, the deduction under Section 80P(2)(a)(i) should not be denied. The Tribunal directed the AO to grant the deduction claimed by the assessee, provided the assessee establishes that it disclosed the fact of being liable to audit under the Cooperative Societies Act and mentioned the date of furnishing the audit report in the return filed on 31.10.2018. Conclusion: The Tribunal allowed the appeal partly for statistical purposes, remitting the issue to the AO for fresh consideration. The AO is directed to grant the deduction under Section 80P(2)(a)(i) if the assessee establishes compliance with the audit requirements and timely filing as per the extended due date.
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