Shree Jalram Coop. Credit Society Ltd. Vs (ITAT Ahmedabad)
Section 80P Deduction Cannot Be Disallowed by CPC for AY 2019-20 Using Later Amendment: ITAT Ahmedabad
Summary:
The Ahmedabad Bench (SMC) of the Income Tax Appellate Tribunal (ITAT) allowed the appeal of a co-operative credit society for AY 2019-20 and deleted the disallowance of ₹20.05 lakh under section 80P made through intimation under section 143(1) by CPC.
The CPC had denied deduction under section 80P while processing the return, and the disallowance was upheld in rectification proceedings under section 154 and by the CIT(A). The Revenue relied on the assessee’s delay in filing the return to justify the adjustment.
The Tribunal held that:
- The assessee was otherwise eligible for deduction under section 80P(2)(a)(i), as it was engaged in providing credit facilities to members.
- Interest earned on fixed deposits placed with a co-operative bank also qualified for deduction under section 80P.
- The power to disallow Chapter VI-A deductions at the processing stage under section 143(1)(a)(v) was introduced only by the Finance Act, 2021 w.e.f. 01.04.2021, and therefore could not be applied retrospectively to AY 2019-20.
Accordingly, the ITAT held that the CPC lacked jurisdiction to make such an adjustment for the year under consideration. The disallowance under section 80P was deleted, and the appeal was allowed in full.
