Primary Agricultural Credit Co-Operative Society Ltd. Vs ITO (ITAT Bangalore)
Bangalore ITAT: Section 80P Deduction Not Available on Return Filed in Response to Section 148 if Original Return Was Not Filed in Time
The Bangalore ITAT held that a Primary Agricultural Credit Co-operative Society was not entitled to deduction u/s 80P(2)(a)(i) where it had failed to file its original return u/s 139(1) and claimed the deduction only in the return filed pursuant to a notice u/s 148. The Tribunal upheld the action of the Assessing Officer in invoking section 80AC, observing that the assessee had also not sought condonation of delay by filing an application u/s 119(2)(b) before the CBDT. Accordingly, the denial of the deduction under section 80P was sustained.
The Tribunal, however, accepted the assessee’s alternative contention that if the income had been assessed as “Income from Other Sources” under section 56, the assessee would be entitled to the corresponding deduction permissible under section 57. Since the assessment order did not clearly indicate the head under which the income had been assessed, the ITAT remanded the matter to the Assessing Officer for this limited purpose. It directed that if the income is assessed u/s 56, the deductions admissible u/s 57 must necessarily be granted. The appeal was partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 05/03/2026 in respect of the A.Y. 2019-20.
2. The brief facts of the case are that the assessee is a co-operative society registered under the provisions of the Karnataka Co-operative Societies Act. The assessee had not filed their return of income. The assessee’s case was reopened for complete scrutiny for verifying the cash deposits made into their bank account. Notice u/s. 148A(b) was issued and thereafter an order u/s. 148A(d) was made. Simultaneously, notice u/s. 148 was issued and the assessee filed their return of income and claimed deduction u/s. 80P(2)(a)(i) of the Act. The AO relied on section 80AC of the Act and disallowed the claim of deduction.
3. As against the said order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) dismissed the appeal.
4. As against the said order, the present appeal has been filed by the assessee before this Tribunal.
5. At the time of hearing, the Ld.AR submitted that the assessee being a co-operative society is entitled for deduction u/s. 80P(2)(a)(i) of the Act even though the return was not filed u/s. 139(1) of the Act. The Ld.AR made an alternate submission that even though the income was treated as income from other sources u/s. 56 of the Act, the necessary deduction contemplated u/s. 57 should be granted and the balance income can be treated as income from other sources.
6. The Ld.DR submitted that the order of the lower authorities are in accordance with the provisions and prayed to dismiss the same.
7. We have heard the arguments of both sides and perused the materials available on record.
8. As seen from the assessment order, the assessee had not filed their return of income u/s. 139(1) of the Act and therefore the claim made u/s. 80P(2)(a)(i) of the Act in the return filed pursuant to notice issued u/s. 148 of the Act was denied by the AO by relying on the section 80AC of the Act. The AO as well as the Ld.CIT(A) had also observed that the assessee had not filed any application u/s. 119(2)(b) of the Act before the Board to condone the delay in filing the return of income. In such circumstances, we do not find any error in the orders of the lower authorities.
9. We have also considered the alternate submission made by the Ld.AR in which it was contended that if the interest income was disallowed and treated the same as income from other sources, necessary deduction u/s. 57 has to be granted. The AO had disallowed the deduction and treated the same as taxable. From the order, we do not find that under which head the income was assessed by the AO. We therefore thought it fit to remit this issue to the AO for ascertaining the fact under which the AO had assessed the income. If the AO had assessed the same u/s. 56 of the Act, necessarily the deductions has to be granted u/s. 57 of the Act. For this limited purpose of verifying the fact, we remit this issue to the file of the AO.
10. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 04th August, 2026.
