MANNUTHY TOWN CO OPERATIVE SOCIETY LIMITED NO R 1143,MANNUTHY V. INCOME TAX OFFICER WARD 2(1), THRISSUR

ITA 384/COCH/2025

AI Insights

The case involves Mannuthy Town Co-op. Society Ltd., a cooperative society engaged in providing credit facilities, which did not file a return of income for the Assessment Year 2015-16. The AO issued a notice under section 148 of the Income Tax Act, 1961, but the assessee failed to comply. Consequently, the AO made a best judgment assessment and denied the claim for deduction under section 80P, citing section 80A(5). The CIT(A) upheld this decision, leading to the current appeal before the Tribunal. The primary legal issue was whether the CIT(A) was correct in law in confirming the AO's action in denying the deduction under section 80P due to the absence of a valid return of income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712611 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2015-2016
• Other Referred Cases: Nileshwar Range Kallu Chethu Vyavasaya Thozihilali Sahararana Sangham [2023] 459 ITR 730 (Ker)
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: ALAN DEV
• Section: 147; 148; 142(1); 139

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM ITA Nos. 384 & 394/Coch/2025 Assessment Year: 2015-16 Mannuthy Town Co-op, Society .......... Appellant Ltd. No. R 1143, Post Office Road, Mannurthy, Thrissur [PAN: AAVFM 6154 A] vs. ITO, Ward-2(1), Thrissur .......... Respondent Appellant by: Shri Alan Dev, Advocate Respondent by: Smt. Leena Lal, Sr. DR Date of Hearing: 02.06.2025 Date of Pronouncement: .07.2025 O R D E R These appeals filed by the assessee are directed against the orders of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 26.03.2025 for Assessment Year (AY) 2015-16. 2. Brief facts of the case are that the assessee is a cooperative society duly registered under Kerala Societies Act 1969. It is classified as primary agricultural credit cooperative society, engaged in the business of accepting deposits from members and providing Printed from counselvise.com 2 ITA Nos. 384 & 394/Coch/2025 Mannuthy Town Co-op. Society Ltd. No. R 1143 credit facilities to its members. No return of income under the provisions of section 139(1) of the Act was filed by the assessee for the AY 2015-16. Therefore, the AO issued a notice u/s. 148 of the Act on 31/03/2021 requiring the assessee to file return of income. The assessee neither complied with the notice issued u/s. 148 nor 142(1) calling for certain details. Under these circumstances, the AO was constrained to pass the best judgment assessment vide order dated 24/03/2022 passed u/s. 147 r.w.s. 144 of the Act at a total income of Rs. 30,43,110/-. While doing so, the AO denied the claim for deduction u/s. 80P placing reliance on the provisions of section 80A(5) of the Act. 3. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order, confirmed the action of the AO. 4. Being aggrieved, the assessee is in appeal before the Tribunal in the present appeal. 5. I have heard the rival contentions of both the parties and perused the material available on record. The solitary issue that arises for my consideration is whether or not the CIT(A) was correct in law in confirming the action of the AO denying deduction u/s. 80P of the Act as no valid return of income was filed by the assessee. Admittedly, in the present case the assessee had not filed valid return of income either under the provisions of section 139 of Printed from counselvise.com 3 ITA Nos. 384 & 394/Coch/2025 Mannuthy Town Co-op. Society Ltd. No. R 1143 the Act or in response to the notice u/s. 142(1) issued by the AO. The provisions of sub-section 80A(5) mandates that in order to claim a deduction under the section specified under Chapter VI-A, a claim is required to be made in the return of income. The issue in the present case is settled against the assessee by the decision of the Hon'ble Jurisdictional High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozihilali Sahararana Sangham [2023] 459 ITR 730 (Ker) wherein it was held as under: - “11. On a consideration of the rival submissions and on a perusal of the statutory provisions, we find that a reading of Section 80A(5) and Section 80AC of the IT Act as they stood prior to 1.4.2018, when the latter provision was amended by Finance Act 2018, would reveal that the statutory scheme under the IT Act was to admit only such claims for deduction under Section 80P of the IT Act as were made by the assessee in a return of income filed by him. That return can be under Sections 139(1), 139(4), 142(1) or Section 148, and to be valid, had to be filed within the due date contemplated under those provisions. Under Section 80A(5), the claim for deduction under Section 80P could be made by an assessee in a return filed within the time prescribed for filing such returns under any of the above provisions. The amendment to Section 80AC with effect from 1.4.2018, however, mandated that for an assessee to get a deduction under Section 80P of the IT Act, he had to furnish a return of his income for such assessment year on or before the due date specified in Section 139(1) of the IT Act. In other words, after 1.4.2018, even if the assessee makes his claim for deduction under Section 80P in a return filed within time under Sections 139(4), 142(1) or Section 148, he will not be allowed the deduction, unless the return in question was filed within the due date prescribed under Section 139(1). Thus, it is clear that the statutory scheme permits the allowance of a deduction under Section 80P of the IT Act only if it is made in a return recognised as such under the IT Act, and after 1.4.2018, only if that return is Printed from counselvise.com 4 ITA Nos. 384 & 394/Coch/2025 Mannuthy Town Co-op. Society Ltd. No. R 1143 one filed within the time prescribed under Section 139(1) of the Act. As the return in these cases, for the assessment years 2009- 10 and 2010-11, were admittedly filed after the dates prescribed under Sections 139(1) and 139(4) or in the notices issued under Section 142(1) and Section 148, the returns were indeed non-est and could not have been acted upon by the Assessing Officer even though they were filed before the completion of the assessment. 12. There is yet another aspect of the matter. The requirement of making the claim for deduction in a return of income filed by the assessee can be seen as a statutory pre-condition for claiming the benefit of deduction under the IT Act. It is trite that a provision for deduction or exemption under a taxing Statute has to be strictly construed against the assessee and in favour of the Revenue. Thus viewed, a failure on the part of an assessee to comply with the precondition for obtaining the deduction cannot be condoned either by the statutory authorities or by the courts. 13. It is in the backdrop of the aforesaid discussion that we must consider the findings of a Division Bench of this Court in The Chirakkal Service Co-operative Bank Ltd. [supra]. The findings therein, that appear to suggest that a claim for deduction under Section 80P can be entertained even if it is made in a return filed beyond the time permitted under the IT Act, ignores the perspective that sees the requirement of the claim for deduction being made in a valid return as a pre-condition for obtaining the benefit of the statutory deduction. The said findings also fly in the face of the express statutory provisions that requires the claim to be made in a return filed by the assessee, by which term is meant a valid return under the Act, and therefore have necessarily to be seen as per incuriam. We also find that the subsequent amendments to Section 80AC by the Finance Act 2018 fortifies the view that we have taken for, it makes the claim for deduction under Section 80P conditional on filing a return within the due date prescribed under Section 139(1) of the IT Act. In other words, the pre-condition for claiming the deduction under Section 80P of the IT Act has now been made more stringent by reducing the time available to an assessee for making the claim.” Printed from counselvise.com 5 ITA Nos. 384 & 394/Coch/2025 Mannuthy Town Co-op. Society Ltd. No. R 1143 6. Respectfully following the decision of the Hon'ble Jurisdictional High Court, I hold that the assessee is not entitled for deduction u/s. 80P of the Act as no valid return of income was filed by the assessee society and the decision of the Hon'ble Jurisdictional High court prevails over the coordinate bench’s decision of this Tribunal. Thus, I do not find any merit in the appeal filed by the assessee. Accordingly the appeal stands dismissed. 7. The appeal filed by the assessee in ITA No.394/Coch/2025 is a duplicate to the appeal in ITA No.384/Coch/2025. Therefore, no separate adjudication is required in ITA No. 394//Coch/2025, the same is dismissed. 8. In the result, appeals filed by the assessee are dismissed. Order pronounced in the open court on 31st July, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 31st July, 2025 vr/- Printed from counselvise.com 6 ITA Nos. 384 & 394/Coch/2025 Mannuthy Town Co-op. Society Ltd. No. R 1143 Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order Assistant Registrar ITAT, Cochin Printed from counselvise.com "