A Mumbai co-operative housing society has won a significant income tax dispute before the Income Tax Appellate Tribunal (ITAT), after tax authorities wrongly denied it a deduction of over Rs 8 lakh by misreading the deadline for filing its annual return.
The Duru Mahal Cooperative Housing Society Limited, located at Marine Drive, had claimed a deduction of Rs 8,23,830 under Section 80P of the Income Tax Act for Assessment Year 2018-19. Section 80P provides co-operative societies with deductions on certain income, including interest earned from co-operative banks.
The society filed its income tax return on 29 September 2018. The Centralised Processing Centre (CPC) of the Income Tax Department, while processing the return under Section 143(1), denied the deduction entirely. The stated reason: the return was filed after the due date under Section 139(1) of the Act, triggering the bar under Section 80AC, which disallows deductions under certain provisions if the return is filed late.
The problem with this conclusion, as the society argued before the ITAT, was that the CPC had applied the wrong deadline.
Under the Income Tax Act, the due date for filing returns under Section 139(1) varies by the type of assessee. For entities whose accounts are required to be audited — which co-operative housing societies are — the applicable deadline for AY 2018-19 was 30 September 2018, not 31 August 2018. The CPC had applied the August deadline, which applies to assessees not required to get their accounts audited.
The society had filed on 29 September — one day before the correct deadline. Yet the CPC treated this as a late filing and denied the Rs 8.23 lakh deduction. The Commissioner of Income Tax (Appeals) upheld the CPC’s action, and the society approached the ITAT.
The Tribunal found no ambiguity in the facts. The assessee was a co-operative housing society with mandatory audit requirements. The correct deadline was 30 September. The return was filed on 29 September. It was, by any measure, an on-time filing.
The ITAT further noted that the deduction itself had not been challenged on merits — at no point did the department argue that the interest income was ineligible for deduction under Section 80P. The sole basis for denial was the alleged late filing, and once that premise collapsed, so did the entire disallowance.
The Tribunal set aside the CIT(A)’s order and directed the Assessing Officer and CPC to allow the Section 80P deduction and recompute the society’s income accordingly.
Parties: Duru Mahal Cooperative Housing Society Limited (Appellant) vs. Circle 19(3), Mumbai, Income Tax Department (Respondent)
Tribunal: Income Tax Appellate Tribunal, “H (SMC)” Bench, Mumbai
Coram: Smt. Beena Pillai (Judicial Member) and Shri Jagadish (Accountant Member)
Date of Hearing: 10 June 2026
Date of Pronouncement: 16 June 2026
ITA Number: ITA No. 1320/Mum/2026
Assessment Year: 2018-19
Key Aspects of the Order:
- The CPC and CIT(A) both incorrectly held that the due date for filing the return was 31 August 2018
- The correct due date for a co-operative housing society subject to audit under Section 139(1) for AY 2018-19 was 30 September 2018
- The society filed its return on 29 September 2018 — one day before the actual deadline
- Section 80AC bars deductions if a return is filed after the due date under Section 139(1); since the return was timely, this bar did not apply
- The department never challenged the eligibility of the deduction on substantive grounds — only the alleged delay
- The ITAT directed the CPC/AO to allow the Rs 8,23,830 deduction and recompute income
How the Society Was Saved by One Day: The society filed its return on 29 September 2018. Had it filed on 30 September or later, even the correct deadline would have been missed. The authorities had assumed a wrong deadline of 31 August, which would have made the September filing appear late by nearly a month. It was only on appeal before the ITAT that the correct legal position — an audit-mandatory entity gets until 30 September — was properly applied, vindicating the society’s timely compliance and restoring its full deduction.
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