2017 (1) TMI 451 - AT - Income Tax

Disallowance of claim of deduction u/s 80P by invoking the provisions of section 80A(5) - belated filing of return of income - Held that - The belated filing of return of income by the assessee does not disentitle it from the benefit of deduction u/s 80P(2) of the Act. Further, 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 the case of Chirakkal Service Co-operative Bank Ltd reported in (2016 (4) TMI 826 - KERALA HIGH COURT), 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, 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:
1. Assessment based on belated filing of return of income.
2. Denial of deduction u/s 80P of the Act.
3. Interpretation of section 80A(5) in relation to exemption u/s 80P.
4. Entitlement of primary agricultural credit society to deduction u/s 80P(2).

Analysis:

1. The appeal was restored to the Tribunal by the Kerala High Court due to issues related to the belated filing of the return of income for the AY 2010-11 by the assessee, a cooperative society. The Assessing Officer initiated best judgment assessment u/s 144 of the Act as the return was filed beyond the prescribed time. The AO disallowed the claim of deduction u/s 80P, leading to an appeal by the assessee.

2. The CIT(A) confirmed the assessment order, relying on a previous Tribunal decision. The Tribunal also upheld the denial of the deduction u/s 80P due to the belated filing of the return. Subsequently, the High Court intervened, questioning the denial of exemption solely based on the delay in filing the return.

3. The High Court analyzed the provisions of section 80A(5) and its impact on deductions under section 80P. It emphasized that if returns are filed within the statutory timelines, claims for exemptions should be duly considered. The Court clarified that a belatedly filed return can still be valid for exemption purposes if pending in the statutory hierarchy of adjudication, as seen in the present case.

4. Considering the High Court's judgment, the Tribunal ruled in favor of the assessee, a primary agricultural credit society, entitled to deduction u/s 80P(2) under the Kerala Cooperative Societies Act, 1969. The presence of a certificate from the Registrar of Cooperative Societies confirming the society's status supported the assessee's entitlement to the deduction. Consequently, the appeal was allowed, granting the assessee the benefit of deduction u/s 80P(2) of the Act.