2024 (4) TMI 709 - AT - Income Tax

Deduction u/s 80P(2)(a)(i) - denial of deduction as no return had been filed within the time stipulated by the Assessing Officer in furtherance to his sec. 142(1) notice - HELD THAT - As the amended provision herein i.e., sec. 80AC of the Act imposing such a stipulation of filing of sec. 139(1) return within the due date, has been substituted by the Finance Act, 2018 w.e.f. 01.04.2018 whereas the impugned assessment year herein is 2017-2018 only. There is no indication in the statute that this substituted sec. 80AC carries any retrospective effect. Thus find no merit in Revenue s instant preliminary argument going by stricter interpretation as per Commissioner of Customs (Imports), Mumbai vs. M/s. Dilip Kumar And Co. Ors. 2018 (7) TMI 1826 - SUPREME COURT As per sec. 80A(5) of the Act that the assessee had not made the impugned claim even in it s alleged belated return - DR failed to rebut the clinching fact emerging from the assessee s pleadings in Form-35 that the assessee had indeed raised the impugned claim in it s return filed on 11.12.2019. It is reiterated that sec. 80AC of the Act has already been held as not applicable in light of the detailed discussion in preceding paragraph(s). Faced with this situation,we reject the Revenue s instant second substantive argument while placing reliance on sec. 80A(5) of the Act. Assessee has derived it s impugned interest income from both nominal as well as regular members - This last issue is found to be no more res integra once hon ble apex court s recent landmark decision in Mavilayi Service Co-operative Bank Ltd., 2021 (1) TMI 488 - SUPREME COURT has rejected the Revenue s very stand. Faced with this situation, thus accept the assessee s impugned sec. 80P(2)(a)(i) deduction claim in very terms. Necessary computation shall follow as per law. Ordered accordingly.

Summary

Issues involved: Appeal against assessment u/s. 144 of the Income Tax Act, 1961 for the assessment year 2017-18 involving deduction u/s. 80P(2)(a)(i).

Assessee's Grounds:
1. Whether the addition made u/s. 80P(2)(a)(i) of Rs. 19,33,650/- was justified.
2. Request for the liberty to add or alter any other ground.

Assessee's Substantive Grievance:
The assessee sought to claim a deduction u/s. 80P(2)(a)(i) of Rs. 19,33,650/-. The Revenue contended that the deduction was not eligible due to the late filing of the return. The Revenue argued that filing a return u/s. 139(1) is a prerequisite for claiming the deduction. However, the CIT(A) confirmed that the return was filed belatedly in response to the notice u/s. 142(1). The Tribunal noted that the amended provision u/s. 80AC, which requires filing the return within the due date, was effective from 01.04.2018, while the assessment year in question was 2017-2018. Referring to a Supreme Court case, the Tribunal rejected the Revenue's argument based on a strict interpretation.

The Revenue's Arguments:
1. The Revenue contended that the assessee did not make the claim in the belated return.
2. The CIT(A) rejected the claim, but the assessee had indeed raised the claim in the return filed on 11.12.2019. The Tribunal held that u/s. 80AC was not applicable, and relying on sec. 80A(5), rejected the Revenue's argument.

Regarding Interest Income:
The Revenue argued that the assessee derived interest income from both nominal and regular members. Citing a recent Supreme Court decision, the Tribunal accepted the assessee's deduction claim u/s. 80P(2)(a)(i) based on the precedent set by the apex court.

Conclusion:
The Tribunal allowed the assessee's appeal, accepting the deduction claim u/s. 80P(2)(a)(i) of Rs. 19,33,650/-. The delay in filing was condoned, emphasizing substantial justice. The order was pronounced on 16.04.2024.