Finolex Industries Ltd. Employees Co-Op Credit Soc. Ltd., Pune V. Income-Tax Officer, Ward 8(3), Pune

ITA 76/PUN/2023

AI Insights

The case revolves around the disallowance of a deduction claimed under section 80P of the Income Tax Act, 1961 by Finolex Industries Ltd. Employees' Co-op. Credit Society Ltd. for the Assessment Year 2019-20. The deduction of Rs. 14,32,480 was initially disallowed by the Assessing Officer due to the late filing of the return. The Tribunal examined whether the disallowance was justified under the provisions applicable at the time of the assessment. The key legal contention was whether the amendment to section 143(1)(a)(v), which came into effect from April 1, 2021, could be retrospectively applied to the assessment year 2019-20. The Tribunal concluded that the amendment was not applicable retrospectively and thus, the deduction under section 80P should not have been disallowed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124369 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-03-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 19-01-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 10AA; 143(1); 80P; 139(1); 139(4)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, PUNE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JM ITA No. 76/PUN/2023 : Assessment Year : 2019-20 Finolex Industries Ltd. Employees‟ Co-op. Credit Society Ltd. Block No. D-1/10 MIDC Chinchwad, Pune-411 019 PAN: AAAAFO553C Appellant Vs. Income-tax Officer Ward 8(3) Pune. Respondent Appellant by : Shri Nikhil Pathak Respondent by : Shri Ramnath P. Murkunde Date of Hearing : 24-03-2023 Date of Pronouncement : 03-04-2023 ORDER PER SHRI PARTHA SARATHI CHAUDHURY, JM : This appeal preferred by the assessee emanates from the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 22-11-2022 for the Assessment Year 2019-20 on the following grounds of appeal. On the facts of the case and in law: 1. The learned Assessing Officer/CPC erred in disallowing amount of Deduction u/s 80P of Rs. 14,32,480/- due to delay in filing return. 2. The Learned Commissioner of Income Tax - Appeals erred in not appreciating the fact that the Appellant co-operative society is an eligible person under the provisions of Income Tax Act,1961 to claim deduction under section 80P on merit and the same should not be disallowed merely because of the fact that there is an inadvertent delay in filing the return for the relevant Assessment Year under consideration. Hence no disallowance was warranted on the fact of the case. 3. The Appellant co-operative society is carrying on the business of providing credit facility to its members and is entitled to claim deduction under section 80P. The relevant books and document are also maintained by the co- operative society. 4. The Learned Commissioner of Income Tax - Appeals erred in not appreciating the fact that provisions of 143(I)(a)(v) of the Income Tax Act,1961 has been amended w.e.f 1 st April 2021 which provide that claim of deduction under section 80P could be denied in case assessee did not file return within time 2 ITA No. 76/PUN/2023 Finolex Industries A.Y. 2019-20 prescribed under section 139(1). Appellants Claim under section 80P would not come within purview of prima facie adjustment under section 143(I)(a)(v) for simple reason that section 143(I)(a)(v) was not in force during period under consideration, i.e., assessment year 2019-20 5. The Appellant Society prays for appropriate relief. 6. The Appellant Society craves leave to add to, alter, amend, modify and [, or delete any or all of the above Grounds of Appeal.” 2. In the instant case, the original return of income for A.Y. 2019-20 was filed by the assessee on 30-09-2020 declaring total income at Rs. NIL and claiming therein total deduction of Rs. 14,32,480/- u/s 80P of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). The case was processed u/s 143(1) of the Act by CPC Bangaluru on 23-11-2020 wherein claim of deduction of Rs. 14,32,480/- u/s 80P was disallowed. The assessee contested this disallowance on the ground that it is bad in law since the return of income was filed u/s 139(4) of the Act and the provisions of section 143(1)(a)(v) of the Act do not provide for denial of deduction u/s 80P of the Act even when the return of income is not filed within the time limit as per section 139(1) of the Act. This argument was not accepted by the revenue authorities and it was held that deduction u/s 80P of the Act was covered under Part „C‟ deduction of Chapter VI-A, so the deduction u/s 80P cannot be allowed if the return filed after due date which was 30-09-2020 in this case. Therefore, the claim of deduction u/s 80P of the Act was found ineligible since the assessee has not filed its return of income u/s 139(1) of the Act within the prescribed time allowed under the Act. 3. At the time of hearing, the ld. A.R of the assessee admitted the delay in filing of the return of income but contested on a legal ground for the first time before the Tribunal and since it goes to the root of the matter, the prayer was accepted and even the ld. D.R did not raise any objection for adjudicating the legal ground raised for the first time in this case. The arguments of the ld. A.R were two-fold. First u/s 143(1) of the Act it allows the total income or loss shall 3 ITA No. 76/PUN/2023 Finolex Industries A.Y. 2019-20 be computed after making certain adjustment as provided u/s 143(1)(a) of the Act and therein clause (v) provides as follows: “143(1)(a)(v) : disallowance of deduction claimed under [section 10AA or any of the provisions of Chapter VI-A under the heading „C‟ – deduction in respect of certain incomes‟ if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or This particular clause has been inserted by the Finance Act 2021 w.e.f. 01-04- 2021. But the case of the assessee pertains to A.Y. 2019-20 so therefore, seciton143(1)(a)(v) of the Act is not applicable to the case of the assessee since this clause was introduced only on 01-04-2021. Prior to this amendment, deduction 80P was not included in clause (v). Second contention of the ld. A.R was that once clause (v) is out then department may deny deduction u/s 80P on the basis of clause (ii) which is as follows: “(ii) an incorrect claim -, if such incorrect claim is apparent from any information in the return. The subsequent Explanation defines what is the incorrect claim, as follows: Explanation – For the purposes of this sub-section, (a) “an incorrect claim apparent from any information in the return” shall mean a claim, on the basis of an entry, in the return, - (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage of ratio or fraction. Again by this definition also, claim of deduction u/s 80P does not fall within the ambit of definition of an incorrect claim. Therefore, even clause (ii) of section 143(1)(a) would not be applicable in the case of the assessee. 4. Per contra, the ld. .D.R supported the findings of the subordinate authorities. 5. We have heard the submissions of the parties, considered the relevant materials/documents on record and analysed the facts and circumstances in 4 ITA No. 76/PUN/2023 Finolex Industries A.Y. 2019-20 this case. Section143(1)(a)(v) of the Act spells out that if any deduction is claimed under any of the provisions of Chapter VI-A which include deduction u/s 80P such deduction has to be allowed only if the return is filed within due date specified under sub-section 139(1) of the Act. In other words, if any return is filed beyond due date u/s 139(1) of the Act then no deduction u/s 80P shall be allowed. However, clause (v) was inserted by the Finance Act, 2021 w.e.f. 01-04-2021. The case of the assessee, on the other hand, is for F.Y. 2018-19 relevant to A.Y. 2019-20 which is the period prior to amendment brought in by the Finance Act, 2021. Before this amendment, clause (v) did not include and cover deduction u/s 80P. So therefore, in the present Case of the assessee though admittedly return was filed beyond the time limit prescribed u/s 139(1) of the Act but still section 143(1)(a)(v) is not applicable to the assessee since the case of the assessee is for A.Y. 2019-20, which is before the amendment. We also accept the argument of the ld. A.R for the assessee that even if the revenue intends to invoke clause (ii) of section 143(1)(a) that would also not be permissible since in the definition of incorrect claim as provided in the provision, the deduction u/s 80P is not included anywhere and is therefore, outside the purview of the said provision. Therefore, rigors of provisions of section 143(1)(a)(ii) and clause (v) are not applicable to the case of the assessee. On this legal ground itself, the assessee succeeds and any other grounds on merits, if any, becomes academic in nature. 6. In the result, appeal of the assessee stands allowed. Order pronounced in the open Court on this 3 rd day of April 2023. Sd/- sd (R.S. SYAL) (PARTHA SARATHI CHAUDHURY) VICE PRESIDENT JUDICIAL MEMBER Pune; Dated, the 3 rd day of April 2023. Ankam 5 ITA No. 76/PUN/2023 Finolex Industries A.Y. 2019-20 Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The NFAC Delhi 4. Pr. CIT concerned. 5. The D.R. ITAT „A‟ Bench Pune. 5. Guard File BY ORDER, Sr. Private Secretary ITAT, Pune. /// TRUE COPY/// 6 ITA No. 76/PUN/2023 Finolex Industries A.Y. 2019-20 Date 1 Draft dictated on 24-03-2023 Sr.PS/PS 2 Draft placed before author 27-03-2023 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 03-04-2023 Sr.PS/PS 7 Date of uploading of order 03-04-2023 Sr.PS/PS 8 File sent to Bench Clerk 03-04-2023 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order