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2023 (2) TMI 462 - AT - Income TaxExemption u/s 80P - return was filed beyond the due date of Section 139(1) - HELD THAT - It is pertinent to note that the assessee though filed return of income not as per Section 139(1) of the Act due date, but prior to due date of Section 139(4) of the Act. This fact was not disputed by the Revenue at any juncture. In the light of the decision of Chirakkal Service Co-operative Bank Limited 2016 (4) TMI 826 - KERALA HIGH COURT has observed that denying the exemption under Section 80P of the Act merely on the ground of belated filing of return by the assessee is not justifiable - Decided in favour of assessee.
Issues Involved:
1. Incorrect claim under Section 143(1) of the Income Tax Act. 2. Disallowance of deduction under Section 80P due to late filing of return. 3. Prima facie adjustment under Section 143(1)(a). 4. Non-adjudication of deduction claim on merits. Detailed Analysis: 1. Incorrect Claim under Section 143(1) of the Income Tax Act: The assessees contended that the Commissioner (Appeals) erred in confirming the action of CPC Bengaluru by holding that the claim made by the Appellant was an "Incorrect claim" as per Section 143(1) of the Act. The original return of income was filed on 30.11.2020, claiming a deduction of Rs.18,20,276/- under Section 80P. However, the CPC Bengaluru proposed an adjustment under Section 143(1)(a) for not granting the deduction on the grounds that the return was not filed within the due date under Section 139(1). 2. Disallowance of Deduction under Section 80P due to Late Filing of Return: The assessees argued that the Commissioner (Appeals) erred in disallowing the claim of deduction under Section 80P, despite the return being filed within the time allowed under Section 139(4). The assessees relied on the decision of the Hon'ble Kerala High Court in the case of Chirakkal Service Co-operative Bank Limited, which stated that denying exemption under Section 80P merely on the grounds of belated filing of return is not justifiable. 3. Prima Facie Adjustment under Section 143(1)(a): The Commissioner (Appeals) upheld the action of CPC Bengaluru in making adjustments to the returned income by way of an intimation under Section 143(1), denying the benefit of Section 80P. The assessees contended that such adjustments were not permissible as prima facie adjustments under Section 143(1)(a). The Ld. AR argued that the issue of prima facie adjustment could not be taken into account for disallowing the claim under Section 80P, citing various judicial precedents. 4. Non-adjudication of Deduction Claim on Merits: The assessees also raised the issue that the Commissioner (Appeals) failed to adjudicate the ground of disallowance of the claim of deduction under Section 80P on merits. The Ld. AR emphasized that the return was filed within the time limit under Section 139(4), and the rejection of the return on this basis was not valid. Tribunal's Findings: The Tribunal noted that the assessees filed their returns of income not as per Section 139(1) due date but prior to the due date under Section 139(4). This fact was undisputed by the Revenue. Citing the decision of the Hon'ble Kerala High Court in Chirakkal Service Co-operative Bank Limited, the Tribunal observed that denying the exemption under Section 80P merely on the ground of belated filing of return is not justifiable. The Tribunal highlighted that if returns are filed and eligible for consideration, exemptions or deductions under Section 80P should be granted if eligible. The Tribunal also distinguished the present case from the decision of the Hon'ble Madras High Court, which did not consider whether the return was filed beyond the due date of Section 139(4). The Tribunal concluded that the issue contested by the assessees is squarely covered by the decision of the Hon'ble Kerala High Court. Conclusion: The Tribunal allowed all four appeals, holding that the assessees were entitled to the deduction under Section 80P despite the late filing of returns within the time allowed under Section 139(4). The Tribunal emphasized that the denial of exemption under Section 80P merely on the grounds of belated filing of return is not justifiable, aligning with the decision of the Hon'ble Kerala High Court. Order Pronounced: The Tribunal pronounced the order in the open Court on 10th February 2023, allowing all the appeals.
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