AIS SHIVAJI MEMORIAL SOCIETYS EMPLOYEES COOP CREDIT SOCIETY,PUNE vs. INCOME TAX OFFICER, WARD 2(1), PUNE, PUNE

He accordingly submitted that when the return was processed on 17.11.2020 the CPC had no power to make any such adjustment by rejecting the claim of deduction u/s 80P on account of belated filing of the return.

Referring to the decision of Hon’ble Supreme Court in the case of Bajaj Tempo Ltd. vs. CIT (1992) 196 ITR 188 (SC), he submitted that the Hon’ble Supreme Court in the said decision has held that a provision in a taxing statute granting incentives for promoting growth and development should be construed liberally and since a provision intended for promoting economic growth has to be interpreted liberally the restriction on it too has to be construed so as to advance the objective of section and not to frustrate it.

Referring to the decision of Hon’ble Supreme Court in the case of Kerala State Co-operative Marketing Federation Ltd. & Others vs. CIT [1998] 5 SCC 48, he submitted that the Hon’ble Supreme Court in the said decision has held that while interpreting the eligibility of deduction under section 80P of the Act, a Three-Judge bench of the Hon'ble Supreme Court observed that the section was enacted for "encouraging and promoting growth of co-operative sector in the economic life of the country" and in light thereof, preferred to read the exemption provision in a wider sense rather than cutting down its scope.

Referring to the decision of Hon’ble Supreme Court in the case of CIT vs. B. C. Srinivasa Setty, (1981) 128 ITR 0294 (SC), he submitted that the Hon’ble Supreme Court in the said decision has held that the charging section and the computation provision are integral parts of the taxing machinery and both must be considered together to determine the tax liability.

Referring to the following decisions, he submitted that the amended provisions cannot be applied retrospectively:

He accordingly submitted that order of the Ld. Addl / JCIT(A) being not in accordance with law should be reversed and the grounds raised by the assessee be allowed.

The Ld. DR on the other hand referring to the provisions of section 143(1)(a)(ii) of the Act drew the attention of the Bench to the same and submitted that the CPC is empowered to make adjustment if an incorrect claim is made which is apparent from the information in the return filed. He submitted that admittedly in the instant case the return was filed belatedly, therefore, in view of the provisions of section 80AC, the CPC has rightly made the adjustment. He submitted that the Hon’ble Madras High Court has also decided the issue in favour of the Revenue and against the assessee which has been relied on by the Ld. Addl / JCIT(A). He accordingly submitted that the order of the Ld. Addl / JCIT(A) should be upheld and the grounds raised by the assessee be dismissed.

We have heard the rival arguments made by both the sides, perused the orders of the CPC / Assessing Officer and the Ld. Addl / JCIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case has filed its return of income on 29.09.2020 as against the due date of 30.09.2019 which was extended upto 31.10.2019. We find the CPC vide intimation dated 17.11.2020 proposed certain adjustments to which the assessee made its submissions. Rejecting the various explanations given by the assessee the CPC in the order passed u/s 143(1) of the Act on 03.01.2021 made adjustment by rejecting the claim of deduction u/s 80P which has been upheld by the Ld. Addl / JCIT(A).

We do not find any infirmity in the order of the Ld. Addl / JCIT(A) on this issue. We find the provisions of section 80AC read as under:

We find the provisions of section 143(1)(a)(ii) of the Act read as under: “Assessment. 143. (1) 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) ….. (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii)……..”

A perusal of the above shows that for claiming the deduction u/s 80P of the Act, the assessee is required to furnish its return of income in time as prescribed u/s 139(1). Since the return was filed belatedly, the claim of deduction u/s 80P made by the assessee is incorrect which is apparent from the information in the return itself. Therefore, the CPC, in our opinion is empowered to make the adjustment.

We find the Hon’ble Madras High Court in the case of Veerappampalayam Primary Agricultural Cooperative Credit Society Limited vs. DCIT & Ors. (supra) while adjudicating an identical issue has observed as under: “3. The challenge to the intimations is on the ground that they do not confirm to the prescription of Section 143(1)(a) of the Act. Mr.Sudhakar and Mr.Prakasam, Mr.Karthikeyan not being present before the Court, would argue that the provisions of Section 143(1)(a) of the Act can only be invoked in cases where there are (i) patent arithmetical errors, (ii) an incorrect claim, such incorrect claim being apparent from any information/entry contained in the return, (iii) disallowance of loss claimed if the returns were filed beyond the due date, (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing total income (v) disallowance of deduction claimed under specified provisions of the Act if the return was filed beyond due date or (vi) additional income appearing in Form 26AS or 16A or 16, which has not been taken into account in computing total income. According to them, there is no error as aforesaid that emanates from the returns of income filed by the petitioners and as such, the invocation of Section 143 (1)(a) of the Act is itself flawed. 4. Per contra, Mrs. Hema Muralikrishnan, learned Senior Standing Counsel for the Revenue would argue that the error arises from the fact that the returns of income have been filed belatedly and beyond the dates stipulated under Section 139 of the Act. There is no doubt or dispute in this regard. Hence, the claim under Section 80P could not have been putforth in the light of provisions contained in Section 80AC(ii) as it stood post amendment with effect from 01.04.2018. 5. Learned counsel for the petitioners would then argue that the Explanation under Section 143(1)(a) of the Act explains ‘an incorrect claim' for the purpose of Clause (ii) of Section 143 (1) (a) of the Act, as meaning a claim based on an entry in a return of income. According to them, the date of return does not constitute an 'entry' and hence no adjustment is called for on this score.

Section 143 (1) (a) of the Act reads thus:- '143 (1) Where a return has been made undersection 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) ofsection 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 undersections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE, 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 response is received within thirty days of the issue of such intimation, such adjustments shall be made: 7. The scope of an 'intimation' under Section 143 (1) (a) of the Act, extends to the making of adjustments based upon errors apparent from the return of income and patent from the record. Thus to say that the scope of 'incorrect claim' should be circumscribed and restricted by the Explanation which employs the term 'entry' would, in my view, not be correct and the provision must be given full and unfettered play. The explanation cannot curtail or restrict the main thrust or scope of the provision and due weightage as well as meaning has to be attributed to the purposes of Section 143(1)(a) of the Act.

The provisions of Section 80AC(ii) make it clear that any deduction that is claimed under Part C of Chapter VIA 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. There is no dispute on this position. The date of filing of a return of income would be apparent on the face of return and upon a perusal thereof, it would be clear as to whether the return is a valid return, having been filed within the statutory time limit, or a belated one. This is mechanical exercise and one that can be carried out by the CPC, very much within the scope of Section 143 (1) (a) (ii) of the Act.”

Since as per the provisions of section 80AC the assessee was required to file the return of income for claiming the deduction and since as per the provisions of section 143(1)(a)(ii) the CPC is empowered to make adjustment if an incorrect claim is made which is apparent from the return of income, therefore, respectfully following the decision of the Hon’ble Madras High Court in the case of Veerappampalayam Primary Agricultural Cooperative Credit Society Limited vs. DCIT & Ors. (supra), we hold that there is no infirmity in the order of the Ld. Addl / JCIT(A) confirming the adjustment made by the CPC. The decision of the Co-ordinate Benches of the Tribunal as well as the various other decisions relied on by the Ld. Counsel for the assessee cannot come to the rescue of the assessee in view of the decision of the Hon’ble Madras High Court in the case of Veerappampalayam Primary Agricultural Cooperative Credit Society Limited vs. DCIT & Ors. (supra) which is a higher forum. The argument of the Ld. Counsel for the assessee that it was the decision of a non-jurisdictional High Court or it was under a Writ Petition etc also cannot be accepted. Since the Ld. Addl / JCIT(A) while adjudicating the issue has relied on the decision of Hon’ble Madras High Court cited (supra) and no other decision of any other Hon’ble High Court or Hon’ble Supreme Court was brought to our notice on this issue, therefore, respectfully following the decision of Hon’ble Madras High Court we uphold the order of Ld. Addl / JCIT(A). The grounds raised by the assessee are accordingly dismissed.

In the result, the appeal filed by the assessee is dismissed.