Chatrai Primary Agricultural Cooperative Credit Society Limited Vs ITO (ITAT Visakhapatnam)
The Income Tax Appellate Tribunal (ITAT), Visakhapatnam, dismissed the assessee’s appeal and upheld the denial of deduction under Section 80P(2)(a)(i) of the Income Tax Act, holding that filing a return of income before completion of assessment is mandatory for claiming the deduction.
The assessee, a cooperative society, challenged the assessment completed under Section 144 for Assessment Year 2017-18, contending that deduction under Section 80P(2)(a)(i), being an incentive provision, should be interpreted liberally and allowed even though no return of income had been filed under Section 139(1).
The Assessing Officer noted that the assessee had not filed its return of income and had also failed to respond to the notice issued under Section 142(1). Consequently, Section 80A(5) was held to be applicable, and since no claim for deduction under Section 80P had been made, the entire net profit of ₹24.94 lakh disclosed in the profit and loss account was assessed as business income without allowing any deduction. The assessment was completed under Section 144.
Before the Commissioner of Income Tax (Appeals), the assessee submitted that it had filed its return of income on 26 December 2019 claiming deduction of ₹26.07 lakh under Section 80P. However, the assessment had already been completed on 25 December 2019. The Commissioner (Appeals) held that to claim deduction under Section 80P, the assessee was required to file a return of income under Sections 139(1), 139(4), 142(1), or 148. Since the return was filed only after completion of the assessment, the Assessing Officer had rightly denied the deduction and assessed the income under the head “Business or Profession.”
