Primary Agricultural Coperative Credit Society Vs ITO (ITAT Hyderabad)
Hyderabad ITAT: Belated Return No Bar to Section 80P Deduction Once Delay Is Condoned u/s 119(2)(b)
The Hyderabad ITAT in Primary Agricultural Cooperative Credit Society v. ITO, ITA No.1180/Hyd/2024, AY 2022-23 dealt with denial of Section 80P deduction of ₹53.82 lakh to a Primary Agricultural Cooperative Credit Society engaged in providing finance to its farmer-members and facilitating sale of seeds and tools.
The Society had filed its return declaring Nil income after claiming deduction of ₹53,82,057 under Section 80P. However, CPC denied the deduction under Section 143(1) because the return was filed on 30/31 December 2022, beyond the extended due date of 7 November 2022. The appellate authority also did not grant relief.
During the pendency of the matter, the Society approached the Chief Commissioner of Income Tax, Hyderabad under Section 119(2)(b) seeking condonation of the delay in filing the return. By order dated 29 July 2026, the Chief Commissioner condoned the delay specifically for enabling the Society to claim deduction under Section 80P.
In view of this subsequent development, the ITAT held that the original basis for denying the Section 80P deduction-belated filing of the return-could no longer stand in the way once the competent authority had condoned the delay under Section 119(2)(b).
The Tribunal accordingly directed the AO to give effect to the Chief Commissioner’s condonation order and grant the Section 80P deduction after carrying out necessary verification in accordance with law. The matter was restored to the AO to re-decide the claim accordingly.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
The present appeal filed by the assessee society is directed against the order passed by the Additional/Joint Commissioner of Income Tax (Appeals)-1, Pune (for short, “Addl/Jt. CIT(A)”), dated 16/09/2024, which in turn arises from the intimation issued by the Assessing Officer/CPC (for short, “AO”) under Section 143(1) of the Income-tax Act, 1961 (for short, “Act”), dated 03/04/2023 for Assessment Year (A.Y.) 2022-23. The assessee has assailed the impugned order on the following grounds of appeal before us:
“1. Your Appellant submits that the CII (A) has erred in not allowing the exemption under the principle of mutuality and confirming the order passed by the CPC
2. Your appellant submits that the CIT(A) ought to have allowed the deduction under section 80P as there is a claim in the return of income filed and also made a claim regarding allowing the exemption before the CIT (A) as a fresh claim since it was not allowed by the CPC. The addition is bad in law and may be deleted.
3. Your appellant submits the CIT (A) ought to have considered the deduction claim under 80P as fresh claim made before the appellate authority and adjudicated the case on merits. The addition is bad in law.
4. For these and such other grounds that may be urged at the time of hearing your appellant prays that the additions made may be deleted.”
2. Succinctly stated, the assessee which is a Primary Agricultural Cooperative Credit Society (PACCS), and is engaged in providing finance to Members who are farmers and facilitating sale of seeds and tools, had filed its return of income for AY 2022-23 on 31/12/2022, declaring an income of Rs. NIL after claiming deduction under section 80P of the Act of Rs.53,82,057/-. However, the AO/CPC, Bengaluru vide its intimation issued under section 143(1) of the Act, dated 03/04/2023 declined the assessee society’s claim for deduction under section 80P of the Act for the reason that the assessee society had filed its return of income for the subject year on 30/12/2022, i.e., beyond the extended due date of 07/11/2022.
3. Aggrieved, the assessee society assailed the intimation issued by the AO/CPC under section 143(1) of the Act, dated 03/04/2023 before the Addl/Jt. CIT(A) but without success.
4. The assessee society, aggrieved with the order of the Addl/Jt. CIT(A), has carried the matter in appeal before us.
5. Shri M V Anil Kumar, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee society, at the threshold of hearing of the appeal submitted that the assessee society had filed an application for condonation of delay under section 119(2)(b) of the Act, with the Ld. Chief Commissioner of Income Tax, Hyderabad seeking condonation of the delay in filing of the return of income of income under section 139(1) of the Act, as a result whereof its claim for deduction under section 80P of the Act had been declined by the AO/CPC. Elaborating further on his contention, the Ld. AR submitted that the Ld. Chief Commissioner of Income Tax, Hyderabad vide his order dated 29/07/2026 has accepted the application filed by the assessee society and condoned the delay in filing the return of income to claim deduction under section 80P of the Act for the subject year. The Ld. AR to buttress his contention has taken us through the order passed by the Ld. Chief Commissioner of Income Tax, Hyderabad, dated 29/07/2026. The Ld. AR submitted that now when the Ld. Chief Commissionerof Income Tax has condoned the delay in filing of the return of income for the year under consideration to claim deduction under section 80P of the Act, therefore, the AO be directed to consider the said order of the Ld. Chief Commissioner of Income Tax Hyderabad and grant deduction under section 80P of the Act.
6. Per contra, Shri Mohan Babu, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) did not object to the aforesaid request of the assessee’s counsel.
7. We have given thoughtful consideration and in the backdrop of the order passed by the Ld. Chief Commissioner of Income Tax, Hyderabad, dated 29/07/2026, DIN & Order No. ITBA/COM/F/17/2026-27/1091569706(1) passed under section 119(2)(b) of the Act, as per which the delay involved in filing the return of income by the assessee society has been condoned to claim the deduction under section 80P of the Act, direct the AO to consider the said order and grant deduction under section 80P of the Act to the assessee society after carrying out necessary verification as per the extant law.
8. We thus, set aside the matter to the file of the AO to give effect to our aforesaid direction of the Ld. Chief Commissioner of Income Tax, Hyderabad and re-decide the assessee society’s claim for deduction under section 80P of the Act.
9. In the result, appeal filed by the assessee society is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in the open court on 07th August, 2026.
