TaxTMI 
TaxTMI 
2023 (1) TMI 606
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....ct. 3. The Learned Appellate Commissioner erred in upholding the Assessing Officer's action of impugned disallowance of deduction claimed u/s 80P(2)(a)(i) of the Act, assuming authority u/s 80AC of the Act, when in fact the Appellant is deemed to have filed its return of income u/s 139(1) of the Act. 4. deduction claimed u/s 80P(2)(a)(i) of the Act on account of a mere technical ground of belated filing, without considering that section 80P is a benevolent provision and the deduction has to be liberally construed as held in the case of Mavilayi Service Cooperative Bank Ltd. & Others v. CIT 431 ITR 1 (SC). 5. The Learned Appellate Commissioner erred in upholding the disallowance of deduction claimed u/s 80P(2)(a)(i) of the Act disregarding the principles laid down by the Jurisdictional High Court of Karnataka in ITA No.435 of 2004 in the case of FATHIMA BAI v. ITO. 6. The Learned Appellate Commissioner erred in upholding the levy of fee u/s 234F at Rs.5,000/- even when the Appellant is only liable to pay Rs.1,000/- for the said delay in filing the return well within the relevant assessment year. 7. That the impugned order is liable to....
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.... such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139."._ Thus, it is clearly evident that deductions u/s 80P is not allowable if the return is not filed within the stipulated time mentioned in section 139(1) of the Act. Reliance is placed in the case of Bal Kishan Dhawan (HUF) Vs. ITO reported in [2012] 18 Taxmann.com 234 (in which the claim was made u/s 139(4) of the Act), Hon'ble Amritsar Bench of the Tribunal had categorically held that Sec.80AC not only contains the time limit for claiming deduction u/s 80IB but also indicates the consequences that would follow if return of income containing the claim of deduction is not furnished before the due date specified in sec.139(1) of the I.T. Act. Every provision in the statute has a purpose and the parliament in its wisdom has introduced the Sec.80AC and proviso to sec.139(1) to specify that the appellant's claiming certain deduction have to file their returns within the due date specified u/s 139(1) of the Act. Any decision to say that it is only directory and the appellant are entitled to ....
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....case of doubt or ambiguity, benefit of it must go to the state". 5.2 In view of the above Supreme Court observations, it is held that there is no ambiguity in Sec. 80AC of the Act. Therefore, in view of the clear cut provisions of section 80AC of the Act, deduction u/s 80P of the Act cannot be allowed to the appellant as the return of income was filed beyond the due date as specified u/s 139(1) of the Act. In view of this, the disallowance made by the CPC is upheld. Therefore, ground no 3 of the appeal is dismissed. Ground - 7 6. Before proceeding on to adjudicate the ground of appeal raised by the appellant in this appeal, it is pertinent to mention here that "The due date for filing the Return by the Appellant being 30.9.2018 the AO erred in levying the Fee of Rs.5,000/- u/s 234F of the Act." I have carefully considered the submission of the appellant. On verification of details filed by the appellant it is found that the appellant has filed its return of income u/s 139(4) of the I. T. Act, 1961 on 31.12.2018 for the A.Y. 2018-19. However, section 271 F clearly states that "If a person who is required to furnish a return of his income,....
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....he Act reads thus:- '143.( ) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:- (a) the total income or loss shall be computed after making the following adjustments, namely:- (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under sections 10AA, 80- IA, 80-IAB, 80-IB, 80-IC, 80-IDorsection 80-1E, if the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return: ....
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....iced that the assessee is a co-operative society. It filed its return of income belatedly u/s 139(4) of the Act on 31.12.2018 claiming deduction u/s 80P(2)(a)(i) of the Act on income earned by it. But while processing the return u/s 143(1), the deduction was denied and in appeal before the ld. CIT(A), the ld. CIT(A) has also denied the deduction claimed u/s 80P(2)(a)(i) of the Act by observing that the assessee did not file return of income within the due date as is specified u/s 139(1) of the Act, therefore, as per amended provisions of section 80AC (ii) of the Act, the assessee is not eligible to claim deduction. 5. The assessee has relied on the judgment of Hon'ble Supreme Court in the case of Mavilayi Service Cooperative Bank Ltd. & Others v. CIT 431 ITR 1 (SC). The relevant part is as under :- 20. We now come to the judgment of this Court in Citizen Cooperative Society Ltd. (supra). This judgment was concerned with an assessee who was established initially as a mutually aided cooperative credit society, having been registered under section 5 of the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995. As operations of the assessee began to spread over Stat....
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....perative sector in the economic life of the country and in pursuance of the declared policy of the Government. The correct way of reading the different heads of exemption enumerated in the section would be to treat each as a separate and distinct head of exemption. Whenever a question arises as to whether any particular category of an income of a cooperative society is exempt from tax what has to be seen is whether income fell within any of the several heads of exemption. If it fell within any one head of exemption, it would be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is not free from tax under that head of exemption." 21. In CIT v. Punjab State Coop. Bank Ltd. [2008 SCC OnLine P&H 2042], while dealing with an identical issue, the High Court of Punjab and Haryana held as follows: "8. The provisions of section 80-P were introduced with a view to encouraging and promoting the growth of the cooperative sector in the economic life of the country and in pursuance of the declared policy of the Government. The different heads of exemption enumerated in the section are separate and distinct h....
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....om Reserve Bank of India, which the appellant does not possess. Not only this, as noticed above, Reserve Bank of India has itself clarified that the business of the appellant does not amount to that of a cooperative bank. The appellant, therefore, would not come within the mischief of sub-section (4) of section 80-P. 24. So far so good. However, it is significant to point out that the main reason for disentitling the appellant from getting the deduction provided under section 80-P of the Act is not sub-section (4) thereof. What has been noticed by the assessing officer, after discussing in detail the activities of the appellant, is that the activities of the appellant are in violation of the provisions of MACSA under which it is formed. It is pointed out by the assessing officer that the assessee is catering to two distinct categories of people. The first category is that of resident members or ordinary members. There may not be any difficulty as far as this category is concerned. However, the assessee had carved out another category of "nominal members". These are those members who are making deposits with the assessee for the purpose of obtaining loans, etc. and, in fact....
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.... to satisfy the test of mutuality at the time of making the payments the number in referred as members may not be the member of the Society as such the AOP body by the Society is not covered by concept of mutuality at all." 26. These are the findings of fact which have remained unshaken till the stage of the High Court. Once we keep the aforesaid aspects in mind, the conclusion is obvious, namely, the appellant cannot be treated as a cooperative society meant only for its members and providing credit facilities to its members. We are afraid such a society cannot claim the benefit of Section 80-P of the Act." 21. An analysis of this judgment would show that the question of law that was reflected in paragraph 5 of the judgment was answered in favour of the assessee. The following propositions may be culled out from the judgment: (I) That section 80P of the IT Act is a benevolent provision, which was enacted by Parliament in order to encourage and promote the growth of the co-operative sector generally in the economic life of the country and must, therefore, be read liberally and in favour of the assessee; (II) That once the assessee is entitled to ....
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...., therefore, once section 80P(4) is out of harm's way, all the assessees in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i), notwithstanding that they may also be giving loans to their members which are not related to agriculture. Also, in case it is found that there are instances of loans being given to non-members, profits attributable to such loans obviously cannot be deducted. As per above judgment it has been stated that the section 80P is a benevolent provision, but above decision is before the amendment brought in the section 80AC, therefore the above decision cited by the assessee in its appeal set will not support to the assessee's case. 6. Before deciding the issue, it is necessary to refer to section 80AC of the Act, which was amended w.e.f. 1.4.2018, which reads as under: "80AC: Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after - (i) the 1st day of April, 2006 but before the 1st day of April, 2018 any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or sect....
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....might suffice in the case of a directory rule. 26. Whenever the statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non-compliance with the same must result in cancelling the concession made in favour of the grantee, the respondent herein." This was also reaffirmed in a number of judgments, such as CIT v. Ace Multi Axes Systems Ltd. [2017] 88 taxmann.com 69/[2018] 252 Taxman 274/400 ITR 141 (SC)/[2018] 2 SCC 158. 50. The Constitution Bench, in Commissioner of Customs v. Dilip Kumar & Co. [2018] 95 taxmann.com 327/69 GST 239 (SC)/[2018] 9 SCC 1 endorsed as following: "24. In construing p....
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....re to express itself clearly.'" The above judgment was rendered in respect of disallowance of employees' contribution to P.F. & ESI for not complying as per the provisions of section 36(1)(va) r.w.s. 2(24)(x) and 43B of the I.T.Act, but the ratio decided in regard to interpretation of exemption & deduction compliance provisions will apply in this case also. 7.1. After reading of the above recent judgment, the assessee was required to file its return of income for claiming the deduction u/s 80P(2)(a)(i) of the Act within the due date as per amendment made in the section 80AC of the Act., whereas the assessee has filed return of income on 31.12.2018, which is beyond the due date, therefore the assessee is not eligible for claiming benefit of deduction u/s 80P(2)(a)(i) of the Act. The assessee has relied on judgments, which have been quoted in its grounds of appeal, which are not applicable in the present facts of the case. My view is supported by the judgment of the Hon'ble Madras High Court, cited supra, in which it has been observed that the adjustment can be made u/s 143(1) of the Act. while processing the return of income and the provisions of section 80AC(ii) make it c....