My co-operative society filed its return late and lost section 80P because of section 80AC. If the delay is condoned under section 119(2)(b), does the deduction come back?
On this Karnataka view, yes. The Court held that section 80AC does not say in express terms that the deduction becomes inadmissible if the delay in filing the return is condoned, so an order under section 119(2)(b) condoning the delay clears the way for the claim. It adopted its earlier decision in Sullia Taluk Womens Multi Purpose Co-operative Society and read the Central Board's circular of 26 July 2023, which directs the authorities to admit and decide condonation applications from audited co-operative societies for assessment years 2018-19 to 2022-23 on the merits. The rejection of the society's application was quashed and the delay condoned, and the Court went on to quash the completed assessment as well and remit the claim for fresh consideration.
Decided by the High Court (High Court of Karnataka - S.R. Krishna Kumar, J.) on 2024-08-21, reported as [2024] 301 Taxman 193 (Karnataka); 2024:KHC:33550; Writ Petition No. 22423 of 2024 (T-IT) (assessment year 2018-19). It bears on section 80P, section 80AC, section 119(2)(b), section 139(1), section 143(3), section 144B of the Income Tax Act 1961, in Co-operative Societies and Deductions & Disallowances matters.
Section 80AC is a hard bar in form - no deduction under the relevant part of Chapter VI-A unless the return is furnished by the due date under section 139(1) - and co-operative societies are the class most often caught by it, because their returns wait on a statutory audit they do not control. This judgment reads the bar narrowly: it fixes on what section 80AC does not say, which is anything about the position after a condonation under section 119(2)(b). Two practical consequences follow. First, the condonation application is worth making, and the Board's own circular tells the authorities to entertain it on the merits rather than look for reasons to refuse. Second, the Court did not stop at reviving the claim in the abstract - it quashed the assessment that had already been completed without the deduction and sent the claim back, which is what makes the relief real when the assessment order has already gone out.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The petitioner is a co-operative society. For assessment year 2018-19 it filed its return on 10 November 2018, about eleven days after the due date. Because of section 80AC the deduction under section 80P was refused, and an assessment order under section 143(3) read with section 144B was passed on 9 September 2021 denying it. The society applied under section 119(2)(b) for condonation of the delay in filing the return, relying on the Central Board of Direct Taxes circular for co-operative societies. The Chief Commissioner rejected the application by order dated 4 July 2024. The society came to the High Court under Article 226.
The writ petition was allowed. The rejection order of 4 July 2024 was quashed and the delay in filing the return was condoned. The assessment order of 9 September 2021 was also quashed, and the matter was remitted to the respondents to reconsider the society's claim afresh in accordance with law.
The Court adopted the reasoning of its earlier decision in Sullia Taluk Womens Multi Purpose Co-operative Society. The starting point was the text of section 80AC: it makes the deduction depend on the return being furnished by the due date, but it does not stipulate in express terms that the deduction remains inadmissible once the delay in filing has been condoned. Read with the Board's circular of 26 July 2023, which tells the authorities to admit all pending and new condonation applications from co-operative societies audited under State law for assessment years 2018-19 to 2022-23 and to decide them on the merits in accordance with law, the position was that condonation restores the claim. Taking a justice-oriented approach and accepting the reasons the society had given as bona fide, the Court held the rejection order could not stand. Since the assessment completed without the deduction would otherwise have defeated the relief, it was quashed too and the claim remitted.
The provisions of Section 80AC of the I.T. Act do not stipulate in express terms that the deductions will be inadmissible if the delay in filing the ITR is condoned.
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Handle my notice → Ask a CA on WhatsAppOn this Karnataka view, yes. The Court held that section 80AC does not say in express terms that the deduction becomes inadmissible if the delay in filing the return is condoned, so an order under section 119(2)(b) condoning the delay clears the way for the claim. It adopted its earlier decision in Sullia Taluk Womens Multi Purpose Co-operative Society and read the Central Board's circular of 26 July 2023, which directs the authorities to admit and decide condonation applications from audited co-operative societies for assessment years 2018-19 to 2022-23 on the merits. The rejection of the society's application was quashed and the delay condoned, and the Court went on to quash the completed assessment as well and remit the claim for fresh consideration. This was decided by the High Court (High Court of Karnataka - S.R. Krishna Kumar, J.) and bears on section 80P, section 80AC, section 119(2)(b), section 139(1), section 143(3), section 144B of the Income Tax Act 1961. It is reported as [2024] 301 Taxman 193 (Karnataka); 2024:KHC:33550; Writ Petition No. 22423 of 2024 (T-IT) (assessment year 2018-19). Section 80AC is a hard bar in form - no deduction under the relevant part of Chapter VI-A unless the return is furnished by the due date under section 139(1) - and co-operative societies are the class most often caught by it, because their returns wait on a statutory audit they do not control. This judgment reads the bar narrowly: it fixes on what section 80AC does not say, which is anything about the position after a condonation under section 119(2)(b). Two practical consequences follow. First, the condonation application is worth making, and the Board's own circular tells the authorities to entertain it on the merits rather than look for reasons to refuse. Second, the Court did not stop at reviving the claim in the abstract - it quashed the assessment that had already been completed without the deduction and sent the claim back, which is what makes the relief real when the assessment order has already gone out. If it applies to you, the first step is this: Apply under s.119(2)(b) for condonation of the delay and set out the reason for it concretely - here an eleven-day delay with reasons the Court found bona fide.
The petitioner is a co-operative society. For assessment year 2018-19 it filed its return on 10 November 2018, about eleven days after the due date. Because of section 80AC the deduction under section 80P was refused, and an assessment order under section 143(3) read with section 144B was passed on 9 September 2021 denying it. The society applied under section 119(2)(b) for condonation of the delay in filing the return, relying on the Central Board of Direct Taxes circular for co-operative societies. The Chief Commissioner rejected the application by order dated 4 July 2024. The society came to the High Court under Article 226. The matter was decided on 2024-08-21 by the High Court (High Court of Karnataka - S.R. Krishna Kumar, J.). On those facts the High Court held as follows. The writ petition was allowed. The rejection order of 4 July 2024 was quashed and the delay in filing the return was condoned. The assessment order of 9 September 2021 was also quashed, and the matter was remitted to the respondents to reconsider the society's claim afresh in accordance with law.
The Court adopted the reasoning of its earlier decision in Sullia Taluk Womens Multi Purpose Co-operative Society. The starting point was the text of section 80AC: it makes the deduction depend on the return being furnished by the due date, but it does not stipulate in express terms that the deduction remains inadmissible once the delay in filing has been condoned. Read with the Board's circular of 26 July 2023, which tells the authorities to admit all pending and new condonation applications from co-operative societies audited under State law for assessment years 2018-19 to 2022-23 and to decide them on the merits in accordance with law, the position was that condonation restores the claim. Taking a justice-oriented approach and accepting the reasons the society had given as bona fide, the Court held the rejection order could not stand. Since the assessment completed without the deduction would otherwise have defeated the relief, it was quashed too and the claim remitted. In the words reproduced by the source cited on this page: "The provisions of Section 80AC of the I.T. Act do not stipulate in express terms that the deductions will be inadmissible if the delay in filing the ITR is condoned." The decision followed or applied Sullia Taluk Womens Multi Purpose Co-Operative Society Ltd. v. Dy. CIT [2024] 158 taxmann.com 177 (Karnataka).
It was decided by the High Court on 2024-08-21 and is reported as [2024] 301 Taxman 193 (Karnataka); 2024:KHC:33550; Writ Petition No. 22423 of 2024 (T-IT) (assessment year 2018-19). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 80P, section 80AC, section 119(2)(b), section 139(1), section 143(3), section 144B, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The writ petition was allowed. The rejection order of 4 July 2024 was quashed and the delay in filing the return was condoned. The assessment order of 9 September 2021 was also quashed, and the matter was remitted to the respondents to reconsider the society's claim afresh in accordance with law. It arises in Co-operative Societies and Deductions & Disallowances matters, on section 80P, section 80AC, section 119(2)(b), section 139(1), section 143(3), section 144B of the Income Tax Act 1961, and was decided by High Court of Karnataka - S.R. Krishna Kumar, J.. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Cite the CBDT circular of 26 July 2023 for audited co-operative societies for assessment years 2018-19 to 2022-23; it directs the authorities to admit pending and new applications and decide them on the merits. If an assessment has already been completed denying the deduction, ask for that order to be quashed too and the claim remitted - a bare condonation leaves the assessment standing. Note this is the Karnataka position. Check what your own High Court has said about s.80AC after condonation before relying on it.
Searched for later treatment; none was found. That is not the same as a source affirming it. A citator search on citedby:65626199 returns nothing. A second search for "Kanyakaparameshwari" with "80P" returns 3 documents. The judgment does appear in Shree Masnangai Souharda v PCIT (Karnataka High Court, 27 September 2024), but only in counsel's reliance at para 3; the Bench decided on its own view - 'In my view, the delay ought to have been condoned by the respondent but the same has not been done' - without adopting it. That is not an application. No Supreme Court matter was found. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment does not quantify the deduction under section 80P that was at stake, so no figure is given here. It records the delay as short - the return was filed on 10 November 2018 - but does not set out the cause of the delay in terms, saying only that the reasons assigned by the petitioner constituted bona fide reasons. The circular is identified in the text by its date, 26 July 2023, and is the CBDT circular on condonation for co-operative societies for assessment years 2018-19 to 2022-23; I have not read the circular itself. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was allowed. The rejection order of 4 July 2024 was quashed and the delay in filing the return was condoned. The assessment order of 9 September 2021 was also quashed, and the matter was remitted to the respondents to reconsider the society's claim afresh in accordance with law.
TaxSphere, “Kanyakaparameshwari Co-operative Society Ltd v CCIT”, https://taxnotice.vittsphere.com/caselaw/case/kanyakaparameshwari-co-operative-v-ccit-80ac-condonation/ (validity last checked 2026-09-01)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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