2017 (3) TMI 1479 - 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 2009-10
- Denial of deduction u/s 80P of the IT Act
- Appeal to first appellate authority confirmed assessment order
- Tribunal dismissing the appeal
- Restoration of the matter to the Tribunal by the Hon'ble Kerala High Court
- Belated filing of return of income
- Interpretation of section 80A(5) and 80P of the IT Act
- Entitlement to benefit of deduction u/s 80P(2) for a primary agricultural credit society

Analysis:
The case involved the failure of the assessee, a cooperative society registered under the Kerala Cooperative Societies Act, 1969, to file a return of income for the assessment year 2009-10. 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 non-filing of the return within the prescribed time limit. The CIT(A) and the Tribunal upheld this decision, leading to the assessee filing a further appeal u/s 260A of the Act, which was restored to the Tribunal by the Hon'ble Kerala High Court.

The Hon'ble High Court, in a related case, held that the Tribunal erred in denying the benefit of exemption u/s 80P solely based on the belated filing of the return of income. The High Court examined the provisions of section 80A(5) and 80P of the IT Act, emphasizing that the denial of deductions under section 80A(5) applied only when no returns were filed for a specific assessment year. It was clarified that belatedly filed returns could still be considered for exemptions under section 80P if the assessments were pending in the statutory hierarchy of adjudication. The High Court's judgment highlighted that a return filed beyond the prescribed time limit could not be deemed non-existent for the purpose of deciding exemption under section 80P of the IT Act.

In light of the High Court's decision, the Tribunal ruled that the belated filing of the return of income did not disentitle the assessee, a primary agricultural credit society, from the benefit of deduction u/s 80P(2) of the Act. The Tribunal noted that the assessee held a certificate issued by the Registrar of Cooperative Societies confirming its status as a primary agricultural credit society under the Kerala Cooperative Societies Act, 1969. As per the High Court's precedent, such societies were entitled to the benefit of deduction u/s 80P(2). Therefore, the Tribunal allowed the appeal in part, granting the assessee the benefit of deduction u/s 80P(2) based on the provided certificate.

During the hearing, no other issues were raised by the assessee's counsel, and the Tribunal pronounced the order on March 14, 2017, partially allowing the appeal and granting the assessee the entitled deduction under section 80P(2) of the IT Act.