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TaxTMI 
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TaxTMI 
2023 (1) TMI 606
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....lding 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 set aside in so far as the Appellate Commissioner erred in upholding the levy of Interest o....
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....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 make claims of deduction even if returns are filed u/s 139(4) would only make the provision redundant. 5.1 The appellant further relied on various judicial....
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....erefore, 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, as required under sub-section (1) of section 139 or by the provisos to that sub-section, fails to furnish such return before the end of the relevant assessment year, the Assessing Officer may direct that such person sha....
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.... 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: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no ....
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.... 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 States outside the State of Andhra Pradesh, the assessee got registered under the Multi-State Cooperative Societies Act, 2002 as well. The question that the Court posed to itself was as to whether the appellant was barred from claiming deduction in view of Section 80P(4) of the Income-tax Act - see paragraph 5. After setting out the find....
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....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 heads of exemption and are to be treated as such. Whenever a question arises as to whether any particular category of an income of a cooperative society is exempt from tax, then it has to be seen whether such income fell within any of the several heads of exemption. If it fell within any one head of exemption...It means that a cooperative society engaged in carrying on the business of banking and a....
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....nt 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, they are not members in real sense. Most of the business of the appellant was with this second category of persons who have been giving deposits which are kept in fixed deposits with a motive to earn maximum returns. A portion of these deposits is utilised to advance gold loans, etc. to the members of the first category. It is found, as a matter of fact, that the depositors and borrowers are quite distinct. In reality, such activit....
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.... 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 avail of deduction, the entire amount of profits and gains of business that are attributable to any one or more activities mentioned in subsection (2) of section 80P must be given by way of deduction; (III) That this Court in Kerala State Cooperative Marketing Federation Ltd. (supra) has construed section 80P widely and liberally, holding that if a society were to avail of several heads of deduction, and if it fell within any one head of deduction, it would be free from tax notwithstanding that the conditio....
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....dment 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 section 80-IE; (ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C-Deductions in respect of certain incomes." 7. On going through the above inserted clause (ii) in section 80AC of the Act, the assessee has to comply the section 80AC of the Act, if it wants to claim deduction under Chapter VIA under the heading "C-Deductions in respect of certain incomes". The assessee has claimed deduction U/s 80P(2)(a)(i) on profits earned during the year and filed return of income on 31.12.2018, which is beyond the due date a....
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....nt 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 penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocents might become victims of discretionary decision-making. Insofar as taxation statutes are concerned, Article 265 of the Constitution [ "265. Taxes not to be imposed save by authority of law.-No tax shall be levied or collected except by authority of law."] prohibits the State from extracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because the St....
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....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 clear that any deduction that is claimed under Part C of Chapter VI-A would be admissible only if the return of income in that case were filed within the prescribed due date. Thus, no claim under any of the provisions of Part C of Chapter VIA would be admissible in the case of a belated return. Respectfully following the above judgments relied by me and the ld. DR & considering the entire facts of the case and grounds of appeal taken by the assessee, I hold that the assessee is not eligible to claim deduction as per section 80P(2)(a)(i) of the Act. Accordingly, the grounds raised by the assessee in this regard is dismissed. 8. The next ground is with regard to levy of fee u/s 23....