2022 (8) TMI 1029 - AT - Income Tax

Deduction u/s. 80P(2)(a)(i) - assessee has failed to file its return of income claiming the deduction - HELD THAT - As per sub-section (5) of section 80A of the Act it is imperative to the assessee to make a claim in its return of income for any deduction under any provisions of the Chapter under the heading C-deduction in respect of certain incomes . Since the assessee has failed to file its return of income claiming the deduction prima facie no deduction is permissible under the Act. Similarly, the assessee has filed return of income manually on 5/3/2022 which was sent by speed post to CPC, Bangalore on 15/3/2022. It is noticed from the submissions made by the AR that the return has been filed u/s.139(4) - As per section 139(4) of the Act Any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any previous year at any time before three months prior to the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. It is noted from the paper book page no. 21 the assessee has filed its return of income for the AY 2017-18on 5/3/2022 u/s. 139(4). Since the return of income has been filed after completion of the assessment, the return should have been held as invalid and hence the claim made by the assessee for deduction u/s. 80P(2)(a)(i) cannot be held as an admissible deduction under the Act. As assessee has never filed its return of income. We therefore are inclined to uphold the order of the Revenue Authorities and dismiss the appeal of the assessee.

Summary

Issues:
- Disallowance of deduction claimed under section 80P of the Income Tax Act for the AY 2017-18 due to non-filing of return of income.
- Interpretation of section 80A(5) in relation to claiming deductions.
- Validity of filing return of income under section 139(4) after completion of assessment.
- Consideration of additional grounds for deduction under section 80AC of the IT Act.

Analysis:
1. The appeal was filed against the order of the Learned Commissioner of Income Tax (Appeals) regarding the disallowance of deduction claimed under section 80P of the Income Tax Act for the AY 2017-18 due to the non-filing of the return of income by the assessee. The Assessing Officer (AO) treated the deduction claimed under section 80P as business income and computed the total income of the assessee. The AO rectified the order under section 154 to correct the mistake in the initial order. The assessee appealed to the Ld. CIT(A) who upheld the AO's order, leading to the current appeal before the Tribunal.

2. The assessee contended that as a Primary Agricultural Cooperative Credit Society, it was eligible for deduction under section 80P of the Act. The assessee had not filed the return of income as required under section 139(1) but filed it under section 139(4). The assessee argued that it was entitled to the deduction under section 80P(2)(a)(i) for providing credit facilities to its members. However, the Departmental Representative (DR) argued that since no return was filed to claim the deduction, it was impermissible under section 80A(5) of the Act.

3. The Tribunal observed that as per section 80A(5), the assessee must make a claim for any deduction under the relevant provisions of the Act in the return of income. Since the assessee failed to file the return claiming the deduction, the Tribunal held that no deduction could be allowed. The Tribunal noted that the return was filed under section 139(4) after the completion of the assessment, making it invalid for claiming the deduction under section 80P(2)(a)(i). The Tribunal distinguished the cited cases where belated returns were filed within due dates, emphasizing that in this case, the assessee never filed the return of income.

4. The Tribunal considered the additional grounds raised by the assessee regarding the denial of the deduction under section 80P and the applicability of section 80AC of the IT Act. However, based on the failure to file a valid return within the prescribed timeline and the specific provisions of section 80A(5), the Tribunal upheld the orders of the Revenue Authorities and dismissed the appeal of the assessee.

5. In conclusion, the Tribunal dismissed the appeal of the assessee, emphasizing the importance of complying with the statutory requirements for claiming deductions under the Income Tax Act. The judgment was pronounced on the 23rd of August, 2022.