TaxTMI 
TaxTMI 
2013 (2) TMI 208
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....ard to deduction u/s 80P of the Act. 2.1 Shri R Krishna Iyer, the ld. representative for the taxpayer submitted that the taxpayers have not filed the returns of income u/s 139(1) of the Act. According to the ld. representative, the income of the co-operative society was exempt u/s 80P of the Act, therefore, the taxpayers were under the bona fide belief that the returns need not be filed. Notice was also issued u/s 142(1) of the Act calling for the return of income. However, the taxpayers could not file the return of income within the time limit prescribed u/s 142(1) of the Act. The ld. representative further submitted that subsequently, the taxpayers have filed the return of income belatedly. The assessing officer ignored the returns filed by the taxpayers and rejected the claim of the taxpayers for deduction u/s 80P of the Act by referring to section 80A(5) of the Act. The assessing officer computed the taxable income u/s 144 of the Act. Referring to provisions of section 80A(5), the ld. representative submitted that section 80A(5) does not say that the return of income has to be filed within the due date for claiming deduction u/s 80P of the Act. What the section says is that ....
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....s not justified. The ld. representative further submitted that sub sections (4) & (5) of section 80A were inserted with effect from 01-04-2003. The object of the provision is that the deduction claimed for any assessment year shall not be allowed under any other provisions of the Act and shall in no case exceed the profits and gains of the undertaking or enterprise or eligible business, as the case may be. According to the ld. representative, it is not the case of the assessing officer that the taxpayer has made any claim for deduction under any other provisions of the Act. Therefore, according to the ld. representative, the claim of deduction u/s 80P which was made in the return of income, though filed belatedly, has to be allowed. 4. Referring to the judgment of the Madras High Court in the case of Commissioner of Income-tax v. Geo Industries & Insecticides (I) Pvt Ltd [1998] 234 ITR 541 (Mad), the ld. representative submitted that, in this case the Madras High Court directed the Income-tax Officer to consider the statutory claim even though the taxpayer has not made any such claim in the return of income. He further submitted that the Madras High Court further observed that t....
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.... 88 ITR 192 (SC) and CBDT v. Aditya V Birla 170 ITR 137 (SC), the ld. senior counsel submitted that if the stand of the assessing officer that the filing of a valid return is a condition precedent for claiming deduction u/s 80P as provided in section 80A(5), then, there will be a contradiction between section 80A(5) and sections 10A and 10B of the Act. Referring to provisions of sections 10A and 10B, the ld. senior counsel submitted that Proviso to section 10A(1A) and section 10B(1A) provides for filing of return within the time limit provided u/s 139(1) for claiming deduction u/s 10A and 10B of the Act. Therefore, if the interpretation of the assessing officer was correct, then even the return filed u/s 139(4) or 139(5) will be sufficient to claim deductions u/s 10A and 10B whereas the Proviso to sections 10A and 10B clearly says that the return has to be filed within the time specified u/s 139(1) of the Act. Therefore, the interpretation of the assessing officer resulted in an anomalous situation. According to the ld. senior counsel, the only possible and correct interpretation of section 80A(5) is that there must be a claim in case the return was filed and not that the return sh....
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....ince the return of income was not filed. According to the ld. representative, the taxpayer has filed the return of income on 07-12-2011. Even though the return filed was beyond the time limit provided u/s 139(1) and 139(4) but was filed before the completion of the assessment. The assessing officer ignored the return of income and completed the assessment as if the return was not filed. The ld. representative submitted that the notice u/s 142(1) was received on 31-03-2011 asking the taxpayer to file the return of income for the assessment year 2009-10. Therefore, it was impossible to comply with the notice u/s 142(1). According to the ld. representative, the notice itself is invalid, therefore, the consequential assessment order passed u/s 144 by the assessing officer also cannot be held to be valid. The ld. representative further submitted that this co-operative society is functioning in the remote village of the state and fulfils the financial needs of the poor and needy people in the villages. Therefore, a sympathetic view needs to be taken to safeguard the rural economy and the rural mass. If the deduction claimed is denied for any reason, the taxpayers' co-operative societ....
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....side. The question arises for consideration is when the taxpayers have not filed the returns of income within the time limit provided u/s 139(1) or 139(4) or within the time specified in the notice u/s 142(1) of the Act, whether such taxpayers are entitled for deduction u/s 80P of the Act. 12. To answer the above question, let us first examine whether the cooperative societies are liable to file the return of income under the Income-tax Act or not. This issue needs to be considered since some of the taxpayers under appeal claimed that they were under the bona fide impression that return need not be filed. We have carefully gone through the provisions of section 139 of the Act. Section 139(1) reads as follows: "139(1) Every person,- (a) Being a company or a firm; or (b) Being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed f....
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....ed the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed." 13. In view of the above, unless the Central Government by a notification in the official gazette exempts the co-operative societies from filing the returns, they have to file the return of income. Therefore, it may not be correct to say that the co-operative societies were under the impression that they need not file their returns of income since their income was exempted. A statutory liability of filing the return under the Income-tax cannot be disowned on the ground that they were under a bona fide impression. Furthermore, section 276CC of the Income-tax Act, 1961 makes it a punishable offence in case the return of income which is required to be filed u/s 139(1) or on issuance of a notice u/s 142(1), etc. is not filed. Therefore, it is obvious that the return has to be filed within the time limit prescribed u/s 139(1) or atleast within the time specified in the notice u....
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....thin the time in terms of sub-section (1) or indicated in the notice given under sub-section (2) of section 139. There is no condonation of the said infraction, even if a return is filed in terms of sub-section (4). Accepting such a plea would mean that a person who has not filed a return within the due time as prescribed under sub-section (1) or (2) of section would get benefit by filing the return under section 139(4)much late. This cannot certainly be the legislative intent." 14. The Apex Court has also considered the scope of interpretation of the statutory provisions. The Apex Court found that when the language employed in the statute is plain and unambiguous, court cannot read anything into the statutory provisions. While interpreting the provisions the court only interprets the law and cannot legislate it. If a provision of law is misused and subjected to the abuse of process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. In fact, the Apex Court has observed as follows at page 9 of the ITR: "It is a well settled principle in law that the court cannot read anything into a statutory provision which is plain and unambiguous. A state ....
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...."C.-Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder." This section 80A(5) was introduced by Finance Act, 2009 along with sub section (4) of section 80A. While introducing the section, the intention of the legislature was to avoid multiple deductions in respect of the same profit. In order to avoid multiple deductions in respect of the same profit, the legislature has imposed three conditions for claiming deduction u/s 10A or section 10AA or section 10B or section 10BA or under any provisions of Chapter VIA under the head "C.-Deductions in respect of certain incomes". The three conditions are as follows: (i) If a deduction in respect of any amount was allowed under section 10A, 10AA or 10B or 10BA or under provisions of Chapter VIA under the head "C.-Deductions in respect of certain incomes" in any assessment year, then the same deduction in respect of the same profit & gains shall not be allowed under any other provisions of the Act for such assessment year; (ii) The aggregate deduction under various provisions shall not exceed the profit and gains of the undertaking or unit or enterprise or the business profit, as the....
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....limit provided u/s 139(1) was considered as return of income, then the taxpayer may claim that they have already filed a return of income. The Apex Court had an occasion to examine this issue in the case of Prakash Nath Khanna & Anr (supra). While considering the scope and ambit of section 276CC, the Apex Court while interpreting the words "in due time" which are found in section 276CC observed that the time within which return is to be furnished is indicated only in sub section (1) of section 139 and not in sub section (4) of section 139. That being so, even if a return is filed in terms of sub section (4) of section 139 would not dilute the infraction in not furnishing the return in due time as prescribed in section (1) of section 139. In section 80A(5) the legislature obviously omitted to mention the words "in due time". What it says is where the taxpayer fails to make a claim in the return of income, no deduction shall be allowed. It does not say that the return of income shall be furnished in due time. Therefore, it is obvious that for the purpose of section 276CC, the return has to be filed in due time, i.e. within the time limit prescribed u/s 139(1). However, for the purpos....
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.... 1987 with effect from 01-04-1989. As the law stands for now, no loss which has not been determined in pursuance of a return filed within the time provided u/s 139(1) shall be carried forward and set off but before amendment of section 80 by Taxation Laws Amendment Act, 1984 with effect from 01-04-1985 there was no requirement for filing the return of income within the time limit provided u/s 139(1) of the Act. This issue has been examined by the Kerala High Court in the case of C.I.T. v. R Chandran [1991] 191 ITR 328 (Ker). After considering the judgment of the Apex Court in Kulu Valley Transport Co P Ltd (supra), the Kerala High Court found that in view of the law stood for the assessment year 1976-77 the taxpayer was entitled to carry forward loss. After referring to Direct Taxes (Amendment) Act, 1987, the Kerala High Court observed that as the section stands at present, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of section 139(3) of the Act shall be carried forward and set off is to be permitted. Therefore, it is obvious that the legislature made it mandatory for filing the return of income within the due date prescrib....
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....ble offence u/s 276CC of the Act. Therefore, it is obvious that it is mandatory to file the return of income as required u/s 139(1) of the Act if the total income exceeds the maximum amount which is not chargeable to income-tax before grant of deductions u/s 10A, 10B and under Chapter VIA of the Act. When it is mandatory for the taxpayer to file the return of income, the taxpayer cannot claim that they are entitled for the benefit available under the Act when the return itself was not filed. Under section 80A(5), the legislature made it mandatory that the claim under Chapter VIA under the heading "C.- Deductions in respect of certain income" has to be made in the return. If the contention of the ld. senior counsel is accepted, then the person, who files the return of income and fails to make a claim of deduction in the return of income either by ignorance or otherwise may not get the benefit, but a person who has not filed the return of income may be in a better position to claim the benefit. This Tribunal is of the considered opinion that this is not the intention of the legislature at all. The persons, who complied with the provisions of the Income-tax Act by filing the return, h....
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....tive society for claiming deduction u/s 80P to file the return of income and to make a claim of deduction u/s 80P of the Act in the return itself. In view of the above discussion, if the return was not filed either u/s 139(1) or 139(4) or in pursuance of notice issued u/s 142(1) or u/s 148, the taxpayer is not entitled for any deduction under section 80P of the Act. 26. The next contention of the taxpayer is that when the return was filed before completion of the assessment proceedings, the assessing officer ought to have issued notice u/s 148 of the Act for regularizing the returns. We have carefully gone through the provisions of section 147 & 148 of the Act. Section 148 enables the assessing officer to serve a notice on the tax payer to furnish a return of income. Section 147 provides for condition for assessment of the income which escaped assessment. As per the provisions of section 147, when the assessing officer has a reason to believe that any income chargeable to tax has escaped assessment for any assessment year, then subject to provisions of sections 147 to 153 he may assess or reassess the income which escaped assessment. The question arises for consideration is - at....
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....ngineering Works P Ltd [1992] 198 ITR 297, 320 (SC) examined the scope of sections 147 and 148 and found that proceedings u/s 147 are for the benefit of the revenue. In view of the above, this Tribunal finds no merit in the contention of the taxpayer. 28. The taxpayers in ITA Nos.251, 253 & 254/Coch/2012 claim to have filed the returns on 07-12-2011; in ITA No. 255/coch/2012 on 30-09-2011. The taxpayers in ITA Nos.267 & 268/Coch/2012 have not filed the returns. The assessment year under consideration is 2009-10. One year from the end of the relevant assessment year expires on 31-03-2011. Admittedly, all the returns were filed beyond 31-03-2011. Therefore, the returns said to be filed by the taxpayer cannot be treated as returns filed u/s 139(4) of the Act. Therefore, the assessing officer has rightly disallowed the claim of the taxpayers u/s 80P of the Act. 29. The next contention of the ld. taxpayers is that all these taxpayers being a co-operative societies functioning in the remote villages in the state of Kerala. Therefore, the ld. representative for the taxpayers prayed that a sympathetic view may be taken. We are conscious that sympathy is essential for justice. We are ....
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....g to section 80P(4) of the Act, the ld. DR submitted that co-operative bank and primary agricultural credit society shall have the meanings as described in the Banking Regulations Act. Since the taxpayer societies are neither primary credit societies nor primary agricultural credit societies, according to the ld. DR, the provisions of section 194A(3)(viia) are not applicable. Therefore, the taxpayers have to deduct tax as required u/s 194A of the Act. 33. We have considered the rival submissions on either side and also perused the material available on record. The main contention of the taxpayers is that the taxpayer was registered as co-operative societies under the Kerala Co-operative Societies' Act and classified as primary agricultural co-operative societies. We find that this issue was considered by the Kerala High Court in the case of Moolamattom Electricity Board Employees' Co-operative Bank Ltd, In Re & Ors [1999]238 ITR 630 (Ker). The Kerala High Court, after considering the provisions of section 194A of the Income-tax Act found that for the purpose of understanding the cooperative society, the meaning that is given in section 2(19) of the Income-tax Act has to ....
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....0A of the State Co-operative Societies' Act. Therefore, according to the ld. representative, the approval of the Commissioner is not required when the funds were established by the State Government. According to the ld. representative, the funds established by the State Government under its own pension scheme have to be treated on par with General Provident Fund of Government of India. Therefore, the approval of the Commissioner is not required. 36. On the contrary, the ld. DR submitted that unless and until the pension fund was approved by the Chief Commissioner or Commissioner, the taxpayers are not entitled for deduction u/s 36(1)(iv) of the Act. Since admittedly, the pension fund is not approved, the taxpayers are not eligible for deduction u/s 36(1)(iv) of the Act. Referring to the argument of the ld. representative for the taxpayer, Shri Krishna Iyer in the case of The Cherukunnu Service Co-operative Bank Ltd, the ld. DR submitted that the evidence for payment of group gratuity fund was produced only before the Commissioner of Income-tax(A) and not before the assessing officer. Therefore, the Commissioner of Income-tax(A) has rightly rejected the additional evidence. M....
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.... be considered as provident fund. 38. In the case of Cherukunnu Service Co-operative Bank Ltd, the contribution was made to LIC group Gratuity Scheme. The Commissioner of Income-tax(A) confirmed the disallowance on the ground that evidence for payment was not produced before assessing officer. However, it was not examined whether such scheme was framed under the scheme of Employees Provident fund Act or not. In the case of Mavilayi Service Cooperative Bank Ltd, the contribution was made to the fund established by the State Government in exercise of executive powers u/s 80A of the Kerala Co-operative Societies' Act. When the contributions are made to group gratuity fund established by the LIC of India and the funds established by the State government and if it could not be considered as recognized fund within the meaning of section 2(38) of the Act, such payment has to be allowed u/s 37(1) of the Act since it relates to the business expenditure as found by the Madras High Court in the case of Kattabomman Transport Corporation Ltd (supra). Therefore, the orders of lower authorities are set aside and the issue is remitted back to the file of the assessing officer. The assessing....