PANANCHERY SERVICE COOPERATIVE BANK,THRISSUR V. INCOME TAX OFFICER, WARD 2(4), , THRISSUR

ITA 648/COCH/2024

AI Insights

The case involves the Pananchery Service Co-op. Bank Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, confirming the assessment made by the Income Tax Officer (AO) for the Assessment Year 2009-10. The AO had disallowed the deduction claimed under section 80P of the Income Tax Act, 1961, amounting to Rs. 21,31,184, due to the non-filing of a valid return of income. The CIT(A) upheld the AO's decision, leading to the present appeal before the Tribunal. The Tribunal, referencing a decision by the Hon'ble Kerala High Court, affirmed that the deduction under section 80P can only be claimed if the return is filed within the due date prescribed under section 139(1) of the Act, which was not complied with in this case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23431 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Other Referred Cases: Nileshwar Range Kallu Chethu Vyavasaya Thozihilali Sahararana Sangham [2023] 459 ITR 730 (Ker), Chirakkal Service Co-operative Bank Ltd. v. CIT[2016] 384 ITR 490 (Ker)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: AMALJITH
• Section: 143(3); 142(1); 139(1); 139; 80P; 139(4); 80(P)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM ITA No. 648/Coch/2024 Assessment Year: 2009-10 Pananchery Service Co-op. Bank Ltd. .......... Appellant Pattikad, Pananchery, Thrissur 680652 [PAN: AABAP5815A] vs. The Income Tax Officer, Ward - 2(4), Thrissur .......... Respondent Appellant by: Shri Amaljith, CA Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 12.03.2025 Date of Pronouncement: 27.03.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 24.05.2024 for Assessment Year (AY) 2009-10. 2. Brief facts of the case are that the assessee is a primary agricultural credit co-operative society registered under the provisions of the Kerala Co-operative Societies Act, 1969. The assessee had not filed return of income for AY 2009-10. The Income Tax Officer, Ward-2(4), Thrissur (hereinafter “the AO”) completed the assessment u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (the Act) vide order dated 15.12.2016 at a total income of Rs. 21,31,184/-. While doing so, the AO 2 ITA No. 648/Coch/2024 Pananchery Service Co-op. Bank Ltd. disallowed the claim of the assessee for deduction u/s. 80(P) of the Act of Rs. 21,31,184/-. 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, assessee is in appeal before this Tribunal in the present appeal. 5. The learned counsel for the assessee submitted that the CIT(A) is erred in arriving at a conclusion that the appellant is not eligible for deduction u/s. 80P as per the provisions of section 80A(5) of the Act. 6. On the other hand, the learned Sr. DR submits that the issue in the appeal is squarely covered against the assessee by the decision of the Hon'ble Kerala High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozihilali Sahararana Sangham [2023] 459 ITR 730 (Ker) overruling its earlier decision in the case of Chirakkal Service Co- operative Bank Ltd. v. CIT[2016] 384 ITR 490 (Ker). 7. I heard the rival contentions 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 has not filed valid return of income either under the provisions of section 139 of 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 3 ITA No. 648/Coch/2024 Pananchery Service Co-op. Bank Ltd. 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 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. 4 ITA No. 648/Coch/2024 Pananchery Service Co-op. Bank Ltd. 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.” 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. 5 ITA No. 648/Coch/2024 Pananchery Service Co-op. Bank Ltd. 8. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 27th March, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 27th March, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin "