Section 80P deduction for late ITR filing: What cooperative societies need to know
A recent ITAT ruling has clarified that Section 80P deduction can’t be denied merely because of late ITR filing, giving relief to thousands of cooperative societies across India.
The focus keyphrase “Section 80P deduction” is central here — and if your society claimed deduction but missed the deadline under Section 139(1), this ruling may be your legal shield.
Let’s break down what this means, the legal background, and how your society can act smartly in upcoming filings.
What is Section 80P deduction?
Section 80P of the Income Tax Act, 1961 provides deduction to cooperative societies on income earned from activities such as:
- Banking or credit facility to members
- Cottage industries
- Marketing agricultural produce
- Supply of seeds, livestock, or other inputs
- Processing without power for members
- Collective disposal of labour
The section promotes the cooperative movement by exempting certain profits from tax.
The issue: Is Section 80P deduction allowed for belated returns?
As per Section 80AC, certain deductions under Chapter VI-A (including 80P) are allowed only if the return is filed within due date under Section 139(1).
Until now, the Income Tax Department has routinely rejected 80P claims in belated ITRs, citing this restriction.
The case that changed the game: ITAT Raipur Ruling
In ACIT vs. M/s Krishi Vipnan Sahakari Samiti Maryadit (ITA No. 04/RPR/2023), the Raipur ITAT held that:
- Deduction under Section 80P cannot be denied solely due to belated return
- The society was otherwise eligible on merits, and had declared full income
- Denial would be against the spirit of cooperative tax incentives
Key takeaway: If your cooperative is eligible, late filing alone shouldn’t disqualify your 80P claim.
Legal Basis: Clash between Section 80AC and judicial interpretation
| Legal Provision | What it says | ITAT Interpretation |
|---|---|---|
| Section 80AC | No deduction if return not filed under 139(1) | Applicable only where expressly required |
| Section 80P | Deduction for cooperative income | No condition about timely return filing |
| ITAT Ruling | Based on equity and purposive interpretation | 80P not auto-denied for late return |
Earlier, courts like Bombay HC (CIT v. Ghatge Patil Transport Co-op) and Karnataka HC had also favoured substance over form, allowing genuine claims despite technical defaults.
Practical tips for cooperative societies
- File on time: This ruling doesn’t give a free pass. Timely return is still ideal.
- Document eligibility: Maintain books, resolutions, and income records to prove 80P eligibility.
- File condonation request: If filing late, attach a detailed note with reasons and 80P claim.
- Cite this ruling: Use the ACIT v. Krishi Vipnan ITAT ruling in your reply if a notice is received.
- Don’t delay beyond 3 months from the deadline — it weakens your defence.
Expert View: Why this matters for tax planning
Tax consultant CA Dinesh Rao notes:
“This ruling helps genuine societies avoid unfair tax burden due to procedural delays. But they must still show they fulfil all material conditions under Section 80P.”
So don’t treat it as blanket relief — but a lifeline if you missed the ITR deadline for genuine reasons.
What Efiletax recommends
At Efiletax, we’ve helped multiple cooperative societies file revised claims or respond to scrutiny notices.
If your society filed a late return and your 80P claim was rejected:
✅ We can help draft a legal reply using the latest case laws
✅ We assist in re-filing or revision strategies
✅ We prepare representations and condonation requests
Frequently Asked Questions
Q1: Can all cooperatives claim 80P deduction even if they file late?
Only if they meet all eligibility conditions. The ITAT ruling provides relief, but not automatic approval.
Q2: What’s the due date to file ITR to claim 80P safely?
Generally 31st July (non-audit) or 31st October (audit), under Section 139(1).
Q3: Can rejection of 80P be appealed?
Yes. First appeal lies with CIT(A). You can cite ITAT rulings and seek relief.
Q4: Will the CBDT issue clarification?
Not yet. But rising litigation may force CBDT to clarify or amend provisions in future budgets.
Summary
Section 80P deduction can’t be denied just because your cooperative society filed a late ITR, says ITAT Raipur. Here’s what this means for tax compliance.
Conclusion
This ITAT ruling is a big win for cooperative societies that may have slipped on deadlines but remained compliant in spirit. But tax benefits are never automatic — ensure eligibility, maintain proper records, and file consciously.