The Income Tax Appellate Tribunal (ITAT) Rajkot Bench has ruled that a cooperative society can claim a tax deduction under Section 80P even if it files its income tax return (ITR) after the due date — provided the return relates to an earlier year where newer rules don’t apply yet, according to reports.
The case involved Lunidhar Seva Sahkari Mandali, a cooperative credit society. It claimed a deduction of ₹2.22 lakh under Section 80P for Assessment Year (AY) 2019–20 but filed its return late — on November 30, 2020 — missing the original deadline under Section 139(1).
What is Section 80P?
Section 80P of the Income Tax Act gives cooperative societies a tax break on certain income — like profits from banking, credit facilities, or providing services to members. It’s a big benefit for small rural credit societies.
What is Section 139(1)?
This section sets the due date for filing income tax returns. Missing it can lead to penalties or denial of certain benefits. However, taxpayers can still file a belated return under Section 139(4) — usually with late fees.
Why was the deduction denied?
The CPC (Centralised Processing Centre) Bengaluru rejected the deduction when it processed the return under Section 143(1), which allows tax authorities to do an initial check and adjust mistakes or ineligible claims automatically.
The tax department argued that, under the amended Section 80AC, if you miss the due date under Section 139(1), you lose the right to claim certain deductions — including 80P.
Tribunal’s decision
The ITAT clarified that the automatic disallowance provision — Section 143(1)(a)(v) — only came into effect from April 1, 2021. Since the case related to AY 2019–20, the new rule couldn’t be applied retrospectively.
The tribunal also cited earlier cases — including Chirakkal Service Co-operative Bank — to say that just filing a return late does not make a claim “incorrect” by default.
What this means for cooperative societies
For older assessment years, a belated ITR does not automatically kill your Section 80P claim.
The tax department cannot adjust or reject these deductions under the newer rule for years before April 1, 2021.
Still, filing on time under Section 139(1) is best — late filing can invite extra scrutiny and delay refunds.
