2022 (8) TMI 732 - AT - Income Tax

Disallowance of deduction claimed u/s 80P - AR submitted that intimation issued under section 143(1) of the Act did not mention any reason for disallowing claim for deduction under section 80P - HELD THAT - As per sec. 80A(5), if an assessee has not made a claim for deduction under any of the sections mentioned in sec. 80A(5) of the Act, then such deduction shall not be allowed to him. As rightly pointed out by learned AR, the provisions of section 80A(5) would be applicable only if an assessee fails to make a claim for deduction under the heading C Deductions in respect of certain incomes under Chapter VIA, which includes section 80P of the Act. In the instant cases, there is no dispute that the assessee has made a claim for deduction u/s 80P of the Act. Hence the provisions of sec. 80A(5) are not applicable to the assessee. The provisions of section 80AC which bars claiming of deduction if the return of income was not filed before the due date specified under section 139(1) of the Act, was made applicable to the deduction under the heading C Deductions in respect of certain incomes under Chapter VIA of the Act w.e.f. 1st day of April, 2018. Hence, for all the three years under consideration, provisions of section 80AC are also not applicable to the assessee, since all these three years prior to assessment year 2018-19. AR also brought to notice that the power to make disallowance of deduction under the heading C Deductions in respect of certain incomes under Chapter VIA, while processing return under section 143(1) of the Act has been given to the Assessing Officer only by the Finance Act 2021 w.e.f. 1.4.2021. Prior to that, there was no power available with the AO to disallow the claim made under the heading C Deductions in respect of certain incomes under Chapter VIA. Thus Assessing Officer could not have disallowed the deduction claimed by the assessee under section 80P of the Act in all the three years under consideration, while processing the returns of income u/s 143(1) - Appeal of assessee allowed.

Summary

Issues:
- Disallowance of deduction claimed under section 80P of the Income Tax Act.
- Applicability of provisions of section 80A(5) and section 80AC.
- Power of the Assessing Officer to disallow deductions under section 80P.

Analysis:
1. The appeals challenged the orders passed by the CIT(A) regarding the disallowance of deduction claimed under section 80P for the assessment years 2012-13 to 2014-15. The issue was identical in nature for all three appeals.

2. The assessee, a cooperative housing society, was aggrieved by the decision of the CIT(A) confirming the disallowance of the deduction claimed under section 80P of the Income Tax Act in all three years under consideration.

3. The returns of income for the relevant years were filed belatedly by the assessee. The initial disallowance of the deduction claimed under section 80P was based on the provisions of section 80A(5) of the Act, which the CIT(A) upheld due to the belated filing of returns.

4. The appellant argued that the provisions of section 80A(5) and section 80AC were not applicable to them as they had made a claim for deduction under section 80P in their returns. They contended that the CIT(A) was wrong in confirming the disallowance based on these provisions.

5. The appellant further argued that the Assessing Officer did not have the power to disallow the claim under section 80P during the relevant years, as the power to do so was granted only from April 1, 2021, by the Finance Act 2021. Prior to that, the Assessing Officer could only disallow deductions claimed under specific sections, not including section 80P.

6. After considering the arguments presented, the Tribunal held that the provisions of section 80A(5) and section 80AC were not applicable to the assessee as they had made a claim for deduction under section 80P. Additionally, the Tribunal noted that the Assessing Officer did not have the authority to disallow the deduction claimed under section 80P for the years under consideration.

7. Consequently, the Tribunal allowed all three appeals filed by the assessee and directed the Assessing Officer to delete the disallowance of the claim for deduction under section 80P for the relevant years.

8. The order was pronounced in the open court on 20.07.2022, setting aside the decisions of the CIT(A) and ruling in favor of the assessee in all three appeals.