AI Insights
The case involves Sai Prerana Co-op. Credit Society Ltd., which appealed against the order of the Faceless Appeal Centre, Delhi, concerning the disallowance of a deduction claimed under section 80P of the Income Tax Act, 1961, for the assessment year 2017-18. The CPC had initially disallowed the deduction while processing the return under section 143(1). The CIT(A) upheld this decision, stating that the issue had merged with the subsequent assessment order under section 143(3). However, the Tribunal referenced a prior ITAT decision in the same case, which had allowed the deduction, and noted that the CPC's action was beyond its authority as the power to disallow such deductions under section 143(1) was only granted by the Finance Act, 2021, after the relevant assessment year.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 123629 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 month(s) 6 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-02-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
G
Next Hearing Date
14-02-2023
Assessment Year
2017-2018
Appeal Filed On
13-12-2022
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI PAVAN KUMAR GADALE (JUDICIAL MEMBER) ITA No. 3169/MUM/2022 Assessment Year: 2017-18 Sai Prerana Co-op. Credit Society Ltd, 317, Puran Aasha Bldg., Gr. Fl. Narashi Natha Street, Kathe Bazar Masjid Bunder (W), Mumbai-400 009. Vs. Income Tax Officer-17(3)(2), Room No. 126, 1 st floor, Kautilya Bhavan, C-41 to C- 43, G Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051. PAN No. AADTS 5638 M Appellant Respondent Assessee by : Ms. Ruby Srivastava- Advocate & Mr. Bharat Kumar, CA Revenue by : Mrs. Sonia Kumar, DR Date of Hearing : 15/02/2023 Date of pronouncement : 20/02/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 19.10.2022 passed by the Ld. Faceless Appeal Centre, Delhi, [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, arising from the order u/s 143(1) of the Income-tax Act, 1961 (in short ‘the Act’) passed by the Ld. Centralized Processing Centre (CPC) on 09.03.2019. The ground raised by the assessee are reproduced as under: 1. On the facts and circumstances case in law, the Ld. NaCIT(A) erred in not providing deduction u/s 80P of the Act. 2. On the facts and circumstances of the case in law, the Ld. NaCIT(A) erred in not considering facts that assessee is facing issue of double taxation if addition is sustained. 2. The assessee also raised additional ground which is reproduced as under: 1. On the facts and circumstances of the case in law, CPC erred in disallowing 80P deduction while processing return u/s 143(3) which is bad in law. 3. Briefly stated, facts of the case are that in the case, the assessee filed return of income claiming deduction Act on 19.09.2017. While the deduction claimed of Rs.1,82,74,406/ further appeal, the Ld. CIT(A) held that the order u/s 143(1) of the Act has merged with the assessment order dated 17.12.2019 wherein the Assessing Officer has disallowed deduction u/s 80P of the Act and therefore, no intervention was required as the subject matter and the issue involved has merged with the subsequent assessment order chall 4. Before us, the Ld. Counsel of the assessee order of the Ld. CIT(A) passed in Sai Prerana Co 09.03.2019. The ground raised by the assessee are reproduced as On the facts and circumstances case in law, the Ld. NaCIT(A) erred in not providing deduction u/s 80P of the Act. On the facts and circumstances of the case in law, the Ld. NaCIT(A) erred in not considering facts that assessee is facing issue of double taxation if addition is sustained. The assessee also raised additional ground which is reproduced as under: e facts and circumstances of the case in law, CPC erred in disallowing 80P deduction while processing return u/s 143(3) which is bad in law. Briefly stated, facts of the case are that in the case, the assessee filed return of income claiming deduction While processing the return, the Ld. CPC denied the deduction claimed of Rs.1,82,74,406/- u/s 80P of the Act. On further appeal, the Ld. CIT(A) held that the order u/s 143(1) of the Act has merged with the assessment order u/s 143(3) of the Act dated 17.12.2019 wherein the Assessing Officer has disallowed deduction u/s 80P of the Act and therefore, no intervention was required as the subject matter and the issue involved has merged with the subsequent assessment order challenged by the assessee. Before us, the Ld. Counsel of the assessee filed order of the Ld. CIT(A) passed in relation to the order u/s 143(3) ITA No. 3169/M/2022 2 Sai Prerana Co-op. Credit Society Ltd. 09.03.2019. The ground raised by the assessee are reproduced as On the facts and circumstances case in law, the Ld. NaCIT(A) erred in not providing deduction u/s 80P of On the facts and circumstances of the case in law, the Ld. NaCIT(A) erred in not considering facts that assessee is facing issue of double taxation if addition The assessee also raised additional ground which is e facts and circumstances of the case in law, CPC erred in disallowing 80P deduction while processing return u/s 143(3) which is bad in law. Briefly stated, facts of the case are that in the case, the assessee filed return of income claiming deduction u/s 80P of the processing the return, the Ld. CPC denied u/s 80P of the Act. On further appeal, the Ld. CIT(A) held that the order u/s 143(1) of the u/s 143(3) of the Act dated 17.12.2019 wherein the Assessing Officer has disallowed deduction u/s 80P of the Act and therefore, no intervention was required as the subject matter and the issue involved has merged enged by the assessee. filed a copy of the the order u/s 143(3) dated 17.12.2019 and submitted the Assessing Officer has not reduced the demand which was raised co the Act, though Ld. CIT(A) has allowed the claim of the assessee in order passed with reference to 143(3) order of the Assessing Officer. We find that the Ld. CIT(A) has 80P of the Act observing “8.0 The sole issue involved relates to Section 80P disallowance. In this respect, it is found that the assessee had, for the instant A.Yr., relied on the order passed in its own case by the Hon'ble ITAT, Mumbai Benches Mumbai in ITA No.5741 15 dated 3/12/2018, wherein the para no. 8 & 9 read as follows:- 8. In view of the foregoing, we set aside the order passed by the learned CIT(A) and direct the Assessing Officer to allow deduction us 80P(2)(d) of the Act in r from the deposits kept with Co 5. Before us, the Ld. Departmental Representative (DR) submitted that the Revenue has preferred appeal against t order of the Ld. CIT(A) before the ITAT, henc subjudice addition should not be deleted. 6. We have heard rival submission of the parties and perused the relevant material on record. has already been allowed by the Ld. CIT(A) in 143(3) proceedings and therefore, the Revenue should have reduce u/s 143(1) of the Act Sai Prerana Co dated 17.12.2019 and submitted the Assessing Officer has not reduced the demand which was raised consequent to u/s 143(1) of the Act, though Ld. CIT(A) has allowed the claim of the assessee in order passed with reference to 143(3) order of the Assessing Officer. We find that the Ld. CIT(A) has allowed the claim of deduction u/s 80P of the Act observing as under: 8.0 The sole issue involved relates to Section 80P disallowance. In this respect, it is found that the assessee had, for the instant A.Yr., relied on the order passed in its own case by the Hon'ble ITAT, Mumbai Benches Mumbai in ITA No.5741/Mum/2018 for Asst. Year 2014 15 dated 3/12/2018, wherein the para no. 8 & 9 read as 8. In view of the foregoing, we set aside the order passed by the learned CIT(A) and direct the Assessing Officer to allow deduction us 80P(2)(d) of the Act in respect of interest earned by the assessee from the deposits kept with Co-operative Banks. Before us, the Ld. Departmental Representative (DR) submitted that the Revenue has preferred appeal against t order of the Ld. CIT(A) before the ITAT, hence matter being subjudice addition should not be deleted. We have heard rival submission of the parties and perused the relevant material on record. In our opinion, the issue of deduction has already been allowed by the Ld. CIT(A) in 143(3) proceedings and therefore, the Revenue should have reduced the demand raised also. The Ld. AO is accordingly directed to give ITA No. 3169/M/2022 3 Sai Prerana Co-op. Credit Society Ltd. dated 17.12.2019 and submitted the Assessing Officer has not nsequent to u/s 143(1) of the Act, though Ld. CIT(A) has allowed the claim of the assessee in order passed with reference to 143(3) order of the Assessing Officer. allowed the claim of deduction u/s 8.0 The sole issue involved relates to Section 80P disallowance. In this respect, it is found that the assessee had, for the instant A.Yr., relied on the order passed in its own case by the Hon'ble ITAT, Mumbai Benches "G", /Mum/2018 for Asst. Year 2014- 15 dated 3/12/2018, wherein the para no. 8 & 9 read as 8. In view of the foregoing, we set aside the order passed by the learned CIT(A) and direct the Assessing Officer to allow deduction us 80P(2)(d) of espect of interest earned by the assessee operative Banks.” Before us, the Ld. Departmental Representative (DR) submitted that the Revenue has preferred appeal against the said e matter being We have heard rival submission of the parties and perused the In our opinion, the issue of deduction has already been allowed by the Ld. CIT(A) in 143(3) proceedings d the demand raised . The Ld. AO is accordingly directed to give effect of the finding of the Ld. CIT(A) in the impugned order that order u/s 143(1) already and the said addition u/s 143(3) vide order dated 01.12.2022. 6.1 Before us, the Ld. Counsel of the assessee has raised an additional ground that the Ld. CPC was not authorized to make adjustment u/s 143(1) of the Act as the issue of deduction u/s 80P of the Act was of debatable nature. The Ld. Counsel also submitted that power to make disallowance of deduction under the heading C – “Deductions in respect of processing return u/s 143(1) only by the Finance Act, 2021 w.e.f. 01.04.2022 prior to that there was no power available to the Assessing Officer to allow the claim made under the heading deduction in respect of certain incomes submitted that assessment year in the year under consideration being assessment year 2007 CPC for carrying out such adjustment adjustment was beyond the power of the CPC. She relied on the decision of the Tribunal in ITA No. 612 to 614/M/2022 for assessment year 2012 Apartment Co-operative Housing Society Ltd. v. ITO 20.07.2022. The relevant finding of the said decision is reproduced as under: Sai Prerana Co effect of the finding of the Ld. CIT(A) in the impugned order that order u/s 143(1) already merged with the section 143(3) of the Act addition u/s 143(3) has been deleted by the Ld. CIT(A) vide order dated 01.12.2022. Before us, the Ld. Counsel of the assessee has raised an additional ground that the Ld. CPC was not authorized to make adjustment u/s 143(1) of the Act as the issue of deduction u/s 80P of the Act was of debatable nature. The Ld. Counsel also submitted that power to make disallowance of deduction under the heading C “Deductions in respect of certain incomes u/s processing return u/s 143(1) only by the Finance Act, 2021 w.e.f. 01.04.2022 prior to that there was no power available to the Assessing Officer to allow the claim made under the heading deduction in respect of certain incomes” under Chapter VI submitted that assessment year in the year under consideration being assessment year 2007-08 which is prior to empowering the out such adjustments and therefore, making adjustment was beyond the power of the CPC. She relied on the decision of the Tribunal in ITA No. 612 to 614/M/2022 for assessment year 2012-13 to 2014-15, in the case of operative Housing Society Ltd. v. ITO 20.07.2022. The relevant finding of the said decision is reproduced ITA No. 3169/M/2022 4 Sai Prerana Co-op. Credit Society Ltd. effect of the finding of the Ld. CIT(A) in the impugned order that with the section 143(3) of the Act has been deleted by the Ld. CIT(A) Before us, the Ld. Counsel of the assessee has raised an additional ground that the Ld. CPC was not authorized to make adjustment u/s 143(1) of the Act as the issue of deduction u/s 80P of the Act was of debatable nature. The Ld. Counsel also submitted that power to make disallowance of deduction under the heading C u/s VI-A, while processing return u/s 143(1) only by the Finance Act, 2021 w.e.f. 01.04.2022 prior to that there was no power available to the Assessing Officer to allow the claim made under the heading “C- under Chapter VI-A. She submitted that assessment year in the year under consideration o empowering the and therefore, making such adjustment was beyond the power of the CPC. She relied on the decision of the Tribunal in ITA No. 612 to 614/M/2022 for 15, in the case of Meghana operative Housing Society Ltd. v. ITO order dated 20.07.2022. The relevant finding of the said decision is reproduced “7. I have heard rival contentions and perused the record. Provisions of section 80A(5) reads as udder : “80A(5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or secti or under any provision of this Chapter under the heading "C. incomes", no deduction shall be allowed to him thereunder. As per sec. 80A(5), if an assessee has not made a claim for deduction under any of the sections 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 assessee. 8. I also noticed that 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 heading "C under Chapter VIA of the Act w.e.f. Ist 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 t year 2018-19. 9. The Learned AR also brought to my notice that the power to make disallowance of deduction under the heading "C under Chapter VIA, while processing return unde 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 Sai Prerana Co 7. I have heard rival contentions and perused the record. Provisions of section 80A(5) reads as udder :- 80A(5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or secti or under any provision of this Chapter under the heading "C.-Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder. 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 8. I also noticed that 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. Ist 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 19. 9. The Learned AR also brought to my 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 unde 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 ITA No. 3169/M/2022 5 Sai Prerana Co-op. Credit Society Ltd. 7. I have heard rival contentions and perused the record. 80A(5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the Deductions in respect of certain incomes", no deduction shall be allowed to him As per sec. 80A(5), if an assessee has not made a claim 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 applicable to the 8. I also noticed that 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 under the Deductions in respect of certain incomes" under Chapter VIA of the Act w.e.f. Ist day of April, 2018. Hence, for all the three years under consideration, provisions of section 80AC are also not applicable to the hese three years prior to assessment 9. The Learned AR also brought to my notice that the power to make disallowance of deduction under the 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 of certain inc 10. Hence, for all reasoning mentioned above, I am of the view that the 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, whil processing the returns of income us 143(1) of the Act. Accordingly, I set aside the orders passed by ld CIT(A) on this issue in all the three years under consideration and direct the A to delete the disallowance of claim for deduction made u/s 80P of the 6.2 Respectfully following the above decision, we uphold that the Ld. CPC was not authorized to carry out such adjustment for disallowance of deduction u/s 80P of the Act. The adjustment made by the CPC is accordingly deleted on this ground also. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court Sd/- (PAVAN KUMAR GADALE JUDICIAL MEMBER Mumbai; Dated: 20/02/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai Sai Prerana Co claim made under the heading "C - Deductions in respect of certain incomes" under Chapter VIA. 10. Hence, for all reasoning mentioned above, I am of the view that the 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, whil processing the returns of income us 143(1) of the Act. Accordingly, I set aside the orders passed by ld CIT(A) on this issue in all the three years under consideration and direct the A to delete the disallowance of claim for deduction made u/s 80P of the Act.” Respectfully following the above decision, we uphold that the Ld. CPC was not authorized to carry out such adjustment for deduction u/s 80P of the Act. The adjustment made CPC is accordingly deleted on this ground also. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 20/02/2023. Sd/- PAVAN KUMAR GADALE) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Order forwarded to : ITA No. 3169/M/2022 6 Sai Prerana Co-op. Credit Society Ltd. Deductions in respect 10. Hence, for all reasoning mentioned above, I am of the view that the 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 us 143(1) of the Act. Accordingly, I set aside the orders passed by ld CIT(A) on this issue in all the three years under consideration and direct the A to delete the disallowance of claim for Respectfully following the above decision, we uphold that the Ld. CPC was not authorized to carry out such adjustment for deduction u/s 80P of the Act. The adjustment made CPC is accordingly deleted on this ground also. In the result, the appeal filed by the assessee is allowed. 02/2023. - OM PRAKASH KANT) ACCOUNTANT MEMBER 6. Guard file. //True Copy// Sai Prerana Co BY ORDER, (Assistant Registrar) ITAT, Mumbai ITA No. 3169/M/2022 7 Sai Prerana Co-op. Credit Society Ltd. BY ORDER, (Assistant Registrar) ITAT, Mumbai
Other Referred Cases
ITA No. 5741/Mum/2018, ITA No. 612 to 614/M/2022
Laws Referred To
Income-tax Act, 1961
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