SRI. KALABHAIRAWESHWARA MULTI-PURPOSE CO-OP SOCIETY LTD., ,CHIKKAMAGALURU V. INCOME TAX OFFICER, WARD-1, , CHIKKAMAGALURU

ITA 1344/BANG/2024

AI Insights

The case involves Sri Kalabhairaveshwara Multi-Purpose Co-operative Society Ltd., which appealed against the order of the CIT(A) that disallowed a deduction claimed under section 80P of the Income Tax Act, 1961, for the Assessment Year 2018-19. The society had not filed its return of income within the due date but filed it in response to a notice under section 148 of the Act. The Tribunal's decision was influenced by the statutory requirement that deductions under section 80P must be claimed in a return filed within the due date specified under section 139(1), as amended by the Finance Act 2018.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 32853 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-10-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 16-07-2024
• Other Referred Cases: Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. CIT, Madhu Souharda Pathina Sahakari Niyamitha Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MAHESH R. UPPIN
• Keywords: Question of law
• Section: 147; 148; 144; 142(1); 250; 139(1); 80P; 139(4); 10B; 10AA

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND MS. PADMAVATHI. S, ACCOUNTANT MEMBERR ITA No.1344/Bang/2024 Assessment Year : 2018-19 Sri Kalabhairaveshwara Multi-Purpose Co- operative Society Ltd., K. M. Road,Chikmagalur District Office S. O. 577 101, Karnataka. PAN : AAPAS 3058 L Vs. ITO, Ward Officer, Ward – 1, Chikmagaluru. APPELLANT RESPONDENT Assessee by : Shri. Mahesh R. Uppin, Advocate Revenue by : Ms. Neha Sahay, JCIT(DR)(ITAT), Bengaluru. Date of hearing : 16.10.2024 Date of Pronouncement : 17.10.2024 O R D E R Per George George K, Vice President: This appeal at the instance of the assessee is directed against the order of CIT(A) dated 16.05.2024, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2018-19. 2. Brief facts of the case are as follows: Assessee is a co-operative society registered under the Karnataka Co- operative Societies Act, 1959. For the Assessment Year 2018-19, assessee did not file any return of income. Information was available with the Department that assessee had made cash deposits of Rs.1,09,68,097/- in Chikmagalur District ITA No.1344/Bang/2024 Page 2 of 8 Central Co-operative Bank Ltd. Therefore, notice under section 148 of the Act, was issue on 24.03.2022. In response to the notice issued under section 148 of the Act, assessee filed its return of income on 25.04.2022 declaring Nil income. Assessment was completed under section 147 r.w.s. 144B of the Act, vide Order dated 16.03.2023. In the said Assessment Order, the source of cash deposit was accepted and no additions were made on that account. However, while computing the income, the AO disallowed deduction claimed by the assessee under section 80P of the Act. 3. Aggrieved by the disallowance of deduction claimed under section 80P of the Act, amounting to Rs.15,00,698/-, assessee filed appeal before the First Appellate Authority. The CIT(A) dismissed the appeal of the assessee. The CIT(A) held that assessee has not filed its return of income within the due date prescribed under section 139(1) of the Act and therefore as per section 80AC of the Act, the claim of deduction under section 80P of the Act cannot be allowed. 4. Aggrieved by the CIT(A)’s Order, assessee has filed the present appeal before the Tribunal. The grounds raised by the assessee read as follows: 1. The important question of law as to the belated filing of ITR after receipt of notice u/s. 148 of the Act and consequent disallowance of deduction claimed u/s. 80P of the Act by virtue of provision contained in Sec. 80AC of the Act was left out to be pleaded in the grounds of appeal before the First Appellate Authority due to oversight. The belated filing of ITR will not disentitle the appellant from claiming the benefit u/s. 80P of the Act as held in a good number of decisions of the Hon'ble High Courts and ITATs. 2. Whether CIT (A) was right in sustaining the addition even when the Respondent could not have invoked the power to make adjustments as provided u/s. 143(a)(i)(v) of the Act (which was inserted by Finance Act, 2021 w.e.f. 01-04-2021) after reopening the ITA No.1344/Bang/2024 Page 3 of 8 assessment for subject assessment year and adopting travel back in time theory to tax the appellant. 3. Both the authorities below passed the impugned Orders contrary to established principles laid down by the Hon'ble Supreme Court and jurisdictional High Court. 5. Assessee relied on the grounds raised. 6. The learned DR, on the other hand, submitted that the issue in question is covered in favour of the Department by the judgment of the Hon’ble Kerala High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. CIT reported in (2023) 459 ITR 730. 7. We have heard the rival submissions and perused the material on record. The solitary issue that is arising for our consideration is whether claim of deduction under section 80P of the Act can be allowed in the facts of this case. The claim of deduction under section 80P of the Act has been denied for the reason that assessee has not filed the return of income within the due date prescribed under section 139(1) of the Act. The issue is no longer res integra. The Hon’ble Kerala High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. CIT (supra) has decided the issue in favour of the Revenue. The relevant finding of the Hon’ble Kerala High Court reads as follows: “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 ITA No.1344/Bang/2024 Page 4 of 8 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. 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 pre-condition 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 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 ITA No.1344/Bang/2024 Page 5 of 8 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 precondition 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. 14. Before parting with these cases, we must also address the arguments of the learned counsel for the appellant/assessee relying on the provisions of section 139(8)/(9) and section 234A of the IT Act. A reading of the provisions of section 139(8) and (9) of the IT Act clearly reveals that even under those provisions, the restrictions placed with regard to the accrual of interest on amounts assessed on an assessee is with regard to the date of filing of a return within the time prescribed under the IT Act. Under section 234A of the IT Act, however, although the provision suggests that even a return filed beyond the time prescribed under any of the provisions of the IT Act can have the effect of limiting the accrual of interest on the amounts assessed against an assessee, we have to see the said provision as permitting a filing of a belated return for the limited purpose of conferring a specific benefit of limiting the accrual of interest, on an assessee, and for no other purpose. We cannot accept the contention of the appellant/assessee that the said provisions which are intended for a specific purpose and are not general in nature, have to be seen as manifesting a statutory scheme that enables the Department to act upon a belated return for allowing the claim of an assessee for deduction under section 80P of the IT Act. In the light of the aforesaid discussion, we find that the above questions of law have to be answered in favour of the Revenue and against the assessee, and we do so. Thus, these I.T. Appeals are disposed by answering the substantial questions of law raised therein, in favour of the Revenue and against the assessee. ITA No.1344/Bang/2024 Page 6 of 8 8. On identical facts, the Bangalore Bench of the Tribunal in the case of Madhu Souharda Pathina Sahakari Niyamitha Vs. ITO in ITA No.969/Bang/2023 (Order dated 02.01.2024), by following the judgment of Hon’ble Kerala High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham Vs. CIT (supra) has decided the issue in favour of the Revenue. The relevant finding of the Bangalore Bench of the Tribunal reads as follows: “7. Considering the rival submissions, we note that the during the impugned assessment year, the assessee has received interest of Rs.3,57,185 on deposits with DCC and earned profit at Rs.26,00,809 inclusive of interest income, but did not file return of income u/s. 139(1) or 139(4). Notice u/s. 142(1) was issued by the AO to the assessee for filing return of income on 09.03.2018 within 08.04.2018. Further notice u/s. 142(1) and show cause notice was issued to the assessee, but the assessee did not file the return of income except written submissions. Accoridngly the AO denied deduction u/s. 80P as per section 80A(5) and completed the assessment u/s. 144 of the Act. 8. Section 80A(5) of the Act reads as under:- \"(5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading \"C.--Deductions in respect of certain incomes\", no deduction shall be allowed to him thereunder.\" 9. It is clear from the above section that for claiming deduction under Chapter VIA under the head, \"Deductions to be made in computing total income\", which covers section 80P also, the assessee has to file return of income. However, the assessee did not file return of income at all and therefore the assessee is not eligible for deduction u/s. 80P of the Act. The Hon'ble Kerala High Court in the case of Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. CIT [2023] 152 taxmann.com 347 (Kerala) has 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, ITA No.1344/Bang/2024 Page 7 of 8 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. 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 pre- condition for obtaining the deduction cannot be condoned either by the statutory authorities or by the courts.\" 10. Respectfully following the above judgment, we hold that the assessee is not eligible for deduction u/s. 80P of the Act.” ITA No.1344/Bang/2024 Page 8 of 8 9. In light of the aforesaid judicial pronouncements, we reject the grounds raised by the assessee. It is ordered accordingly. 10. In the result, appeal filed by the assessee is dismissed. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- Sd/- (PADMAVATHY S) (GEORGE GEORGE K) Accountant Member Vice President Bangalore. Dated: 17.10.2024. /NS/* Copy to: 1. Appellants 2. Respondent 3. DRP 4. CIT 5. CIT(A) 6. DR, ITAT, Bangalore. 7. Guard file By order Assistant Registrar, ITAT, Bangalore. "