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Facts
The assessee, a co-operative society, filed its return for AY 2016-17 disclosing a loss, but made a claim for deduction under Section 80P of the Act during assessment proceedings or in a revised return. The AO denied the claim on the ground that it was not made in the original return of income. The CIT(A) upheld the AO's action, leading to the present appeal.
Held
The Tribunal, following the Jurisdictional High Court's decision, held that the assessee was not entitled to the Section 80P deduction because a valid return of income, with the claim made therein, was not filed within the due date prescribed under Section 139(1) of the Act. The original return filed was considered 'non-est' as it was beyond the due date, making any subsequent claim invalid.
Key Issues
Whether a co-operative society is entitled to a deduction under Section 80P if the claim was not made in an original return filed within the due date prescribed under Section 139(1), and whether a claim made in a revised return or during assessment proceedings can be considered valid.
Sections Cited
80P, 143(3), 139(1), 80A(5), 80AC, 139(4), 142(1), 148
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 12.01.2024 for Assessment Year (AY) 2016-17.
Brief facts of the case are that the appellant is co-operative society duly co-operative society duly registered under the Kerala State Co- operative Societies Act, 1969. The appellant filed the return of income for AY 2016-17on 30.12.2017 disclosing a loss of Rs. 5,27,00,890/-. Against the said return of income, the assessment was completed by the DCIT, Kannur (hereinafter called "the AO") vide order dated 27.12.2018 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total income of Rs. 3,48,071/-. During the course of assessment proceedings Taliparamba Primary Co-operative Agricultural and the appellant made a claim for deduction u/s. 80P of the Act. The same was denied by the AO on the ground that no claim was made in the return of income.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO by holding that failure of the assessee to make a claim for deduction u/s. 80P in the return of income disentitle the assessee for deduction u/s. 80P of the Act.
Being aggrieved, the appellant is in appeal before me in the present appeal.
The learned A.R. submits that a claim for deduction u/s. 80P of the Act cannot be denied on the ground that no claim was made in the return of income as the assessee filed the original return of income disclosing loss. In the absence of positive income, the question of making a claim for deduction u/s. 80P does not arise. He further submit that the appellant made the claim for deduction u/s. 80P in the revised return of income filed during the course of assessment proceedings.
On the other hand, the learned Sr. DR submits that the appellant had neither filed the return of income under the provisions of section 139(1) of the Act nor made any claim in the return of income for deduction u/s. 80P of the Act. In view of the decision of the Hon'ble Jurisdictional High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozihilali Sahararana Sangham [2023] 459 ITR 730 (Ker) the claim for deduction u/s. 80P cannot be entertained.
Taliparamba Primary Co-operative Agricultural and 7. I heard the rival contentions of both the parties and perused the material available on record. The solitary issue that arise for my consideration is whether the appellant co-operative society is entitled for deduction u/s. 80P of the Act in the facts and circumstances of the case. Admittedly, the appellant co-operative society neither filed the return of income u/s. 139(1) of the Act nor made a claim in the return of income for deduction u/s. 80P of the Act. The revised return of income, if any, become, non est in the eyes of law, as the original return of income was not filed within the due date prescribed u/s. 139 of the Act. It is equally true that the occasion for making a claim for deduction u/s. 80) does not arise, inasmuch as, the appellant co-operative society returned loss. However, section 80A(5) of the Act mandates that in order to make a claim for deduction u/s. 80P, it is mandatory that the claim should be made in the return of income. The decision of the Hon'ble Jurisdictional High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozihilali Sahararana Sangham (supra) is applicable with full force to the facts of the present case wherein it was 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, 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 Taliparamba Primary Co-operative Agricultural and 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.
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 precondition for obtaining the deduction cannot be condoned either by the statutory authorities or by the courts.
It is in the backdrop of the aforesaid discussion that we must consider the findings of a Division Bench of this Court in The 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 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 pre-condition for claiming the deduction under Taliparamba Primary Co-operative Agricultural and Section 80P of the IT Act has now been made more stringent by reducing the time available to an assessee for making the claim.” Respectfully following the decision of the Hon'ble Jurisdictional High Court I hold that the assessee is not entitled for deduction u/s. 80P of the Act as no valid return of income was filed by the assessee society and the decision of the Hon'ble Jurisdictional High court prevails over the coordinate bench’s decision of this Tribunal. Thus, I do not find any merit in the appeal filed by the assessee.
In the result, the appeal filed by the assessee stands dismissed.