ITAT Pune Remands Section 80P Deduction Claim of Credit Co‑operative Society for De Novo Assessment
Background of the Dispute
The Pune Bench of the Income Tax Appellate Tribunal in the case of Maharshi Karve Stree Shikshan Sansthas Employees Coop Society Ltd. Vs Income Tax Department (ITAT Pune) dealt with a dispute concerning the availability of deduction under Section 80P(2)(a)(i) of the Income Tax Act 1961 to a primary credit co‑operative society.
The assessee, a credit co‑operative society registered under the Maharashtra Co-operative Societies Act, was involved in:
- Providing credit and loan facilities exclusively to its members; and
- Accepting deposits from those members.
For the assessment year 2018-19, the assessee filed its return of income on 31.10.2018 declaring nil income, after claiming deduction under Section 80P(2)(a)(i) of the Income Tax Act on its income.
The case was selected for scrutiny, and assessment was completed under Section 143(3) on 12.04.2021. While completing the assessment, the Assessing Officer (AO):
- Relied on the judgment in Totgars Cooperative Sale Society Ltd. [2010] 322 ITR 283 (SC);
- Denied the deduction claimed under
Section 80P(2)(a)(i); and - Determined the total income at ₹43,35,622 as against the nil income originally returned by the assessee.
This addition of ₹43,35,622 represented the disallowance of the entire Section 80P(2)(a)(i) deduction.
Appeal Before CIT(A)/NFAC and Its Dismissal
Aggrieved by the AO’s order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre [CIT(A)/NFAC].
During the appellate proceedings, the assessee filed written submissions contending that its claim under Section 80P(2)(a)(i) was legally tenable and that the AO had incorrectly applied the decision in Totgars Cooperative Sale Society Ltd.
However, the CIT(A)/NFAC summarily dismissed the appeal, primarily on the basis that the assessee had not submitted:
- Copy of the society’s bye‑laws;
- Financial statements for the assessment year 2018-19; and
- Bank account statements reflecting interest income.
According to the CIT(A)/NFAC, in the absence of these documents, it was not possible to verify whether the assessee was eligible for deduction under Section 80P(2)(a)(i) or whether the restrictions under Section 80P(4) would apply. Consequently, the appeal was dismissed “for want of verification”, without a detailed adjudication on merits.
Delay in Filing Appeal Before ITAT and Its Condonation
The assessee thereafter approached the Income Tax Appellate Tribunal, Pune, challenging the order dated 12.12.2024 of the CIT(A)/NFAC. There was a delay in filing the appeal before the Tribunal.
The assessee filed an application for condonation of delay supported by an affidavit, explaining the circumstances that prevented filing the appeal within the prescribed limitation period.
After considering:
- The reasons stated in the condonation petition; and
- The submissions of the Departmental Representative (DR),
the Tribunal recorded its satisfaction that the assessee had demonstrated sufficient cause for the delay. Accordingly, the delay was condoned, and the appeal was admitted for adjudication.
Grounds Raised Before the ITAT
The assessee placed multiple grounds before the ITAT, broadly grouped into three main categories: