2024 (6) TMI 1482 - AT - Income Tax

Denial of deduction u/s 80P(2)(a)(i) - not having filed return within the due date u/s. 139(1) of the Act - CPC treated the same as apparent error u/s. 143(1)(a)(ii) - processing as an instance of incorrect claim if such incorrect claim is there from any information in the return - HELD THAT - We find that this tribunal s recent co-ordinate bench s order in M/s. Food Corporation of India Employees Co-op. Credit Society Limited 2024 (3) TMI 1123 - ITAT NAGPUR as held no merit in the Revenue s arguments in respect of impugned sec.80P deduction disallowance made in assessee s hands. This is for the precise reason that legislature has introduced such a disallowance provision in sec.143(1)(a)(v) dealing with deduction claim(s) provided in Chapter-VI-A of the Act by way of Finance Act 2021 w.e.f. 01.04.2021 with prospective effect whereas the assessment year herein is 2017-2018 only. So far as the Revenue s case quoting sec.80AC is concerned it would be very much relevant to observe that once the legislature itself has made the impugned provision in sec.143(1)(a)(v); the same could not have led to the assessee s 80P deduction disallowance in summary processing Ld lower authorities action disallowing the assessee s sec.80P deduction(s) claim(s) by way of sec.143(1)(a)(ii) or 143(1)(a)(v) processing has to be reversed. Assessee appeal allowed.

Summary

1. ISSUES:

1.1 Whether the claim for deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 can be disallowed by the CPC under section 143(1)(a)(ii) for non-filing of the return within the due date under section 139(1).

1.2 Whether the disallowance of deduction claims under Chapter VI-A can be made by summary "processing" under section 143(1)(a)(v) of the Act.

2. RULINGS / HOLDINGS:

2.1 The disallowance of the section 80P deduction claim by the CPC under section 143(1)(a)(ii) on the ground of non-filing of the return within the due date under section 139(1) is not sustainable, as section 143(1)(a)(ii) is a general provision and cannot be pressed into action for such disallowance.

2.2 The disallowance of deduction claims under Chapter VI-A by summary "processing" under section 143(1)(a)(v) is applicable only prospectively from 01.04.2021 and therefore not applicable to assessment years prior to that date.

2.3 The action of the lower authorities in disallowing the section 80P deduction claim by invoking sections 143(1)(a)(ii) or 143(1)(a)(v) "processing" is reversed.

3. RATIONALE:

3.1 The Court relied on the statutory scheme of the Income Tax Act, particularly the amendments introduced by the Finance Act, 2021 w.e.f. 01.04.2021, which inserted section 143(1)(a)(v) to deal specifically with disallowance of deduction claims under Chapter VI-A by summary "processing".

3.2 Since the assessment year in question predates the amendment, the Court held that section 143(1)(a)(v) cannot be applied retrospectively, and section 143(1)(a)(ii), being a general provision, does not empower the CPC to disallow the deduction claim on the basis of late filing alone.

3.3 The Court applied the principle of stricter interpretation of taxing statutes as laid down in precedent, emphasizing that general provisions cannot override specific provisions enacted subsequently by the legislature.

3.4 The Court distinguished the cited High Court decision on the basis of the assessment year and the legislative amendments applicable therein, thereby rejecting the Revenue's reliance on that precedent.