Navavaghniya Seva Sahkari Mandali Ltd Vs DCIT/ACIT (ITAT Rajkot)
In a significant ruling for co-operative societies, the Income Tax Appellate Tribunal (ITAT) Rajkot bench recently overturned an order denying exemption under Section 80P of the Income Tax Act, 1961, to Navavaghniya Seva Sahkari Mandali Ltd. The tribunal held that the deduction could not be disallowed merely because the return of income was filed beyond the due date specified under Section 139(1) of the Act.
The case, Navavaghniya Seva Sahkari Mandali Ltd. vs. DCIT/ACIT (ITAT Rajkot), pertained to the Assessment Year 2019-20. The appellant, a co-operative society providing credit facilities to its members, had filed its original return of income on November 30, 2020, declaring a nil income and claiming a deduction of Rs. 3,52,877/- under Section 80P.
However, the Centralized Processing Centre (CPC), Bengaluru, processed the return under Section 143(1) of the Act and denied the Section 80P benefit. The CPC’s reasoning was that the return was not filed within the due date stipulated by Section 139(1). This denial led to a tax demand of Rs. 1,37,180/-.
Aggrieved by this action, the society appealed to the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. The society argued that a prima facie adjustment under Section 143(1)(a) could not be used to deny the Section 80P deduction. It presented several judicial precedents to support its claim.
