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HC-KAR NC: 2026:KHC:1855-DB ITA No. 207 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF JANUARY, 2026 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE K. V. ARAVIND INCOME TAX APPEAL No. 207 OF 2024 BETWEEN: 1. MADHU SOUHARDA PATHINA SAHAKARI NIYAMITHA, REP. BY PUTTAIAH, OKKALIGARA SAMUDAYA BHAVANA OPP. KSRTC BUS STAND, MADHUGIRI - 572132, PAN AADAM1667P …APPELLANT (BY SRI HEMANTH PAI, ADVOCATE FOR SRI LOCHANA S. BABU, ADVOCATE)
AND:
THE INCOME TAX OFFICER, WARD -1 & TPS, TUMKUR AAYAKAR BHAVAN, RAMAKRISNANAGAR, KUNIGAL ROAD, TUMKURU 572103. (AY 2017-18) …RESPONDENT (BY SRI SUSHAL TIWARI, ADVOCATE)
Digitally signed by VALLI MARIMUTHU Location: HIGH COURT OF KARNATAKA
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HC-KAR NC: 2026:KHC:1855-DB ITA No. 207 of 2024
THIS ITA / INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 02/01/2024 PASSED IN ITA No.969/BANG/2023, FOR THE ASSESSMENT YEAR 2017-2018 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED ABOVE AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT ETC.
THIS APPEAL, COMING ON FOR ADMISSION THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and HON'BLE MR. JUSTICE K. V. ARAVIND
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE K.V. ARAVIND)
Heard Sri.Hemant Pai, learned counsel for Sri. Lochana S. Babu, learned counsel for the appellant and Sri. Sushal Tiwari, learned counsel for the respondent.
This appeal is filed by the assessee challenging the order passed by the Income Tax Appellate Tribunal, “B” Bench, Bengaluru (for short, “the Tribunal”) in ITA No. 969/Bang/2023 dated 02.01.2024, relating to the Assessment Year 2017–18. The assessee is assessed in the status of an Association of Persons (AOP).
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HC-KAR NC: 2026:KHC:1855-DB ITA No. 207 of 2024
2.1 The assessee did not file a return of income for the Assessment Year 2017–18. A notice under Section 142(1) of the Income Tax Act, 1961 (for short, “the Act”) was issued calling upon the assessee to file the return of income. Though the notice was duly served, the assessee failed to comply with the same. Consequently, the Assessing Officer completed the assessment under Section 144 of the Act and assessed the income at ₹26,00,810/-. 2.2 Aggrieved by the order of assessment, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [for short, “CIT(A)”]. The CIT(A), by order dated 27.09.2023, dismissed the appeal. 2.3 The Tribunal, by the impugned order dated 02.01.2024, dismissed the appeal and rejected the assessee’s claim for deduction under Section 80P of the Act in view of the bar contained under Sections 80A(5) and 80AC of the Act.
Sri Hemant Pai, learned counsel appearing for Sri Lochana S. Babu, learned counsel for the appellant–assessee, submits that, it is undisputed that the assessee has not filed a
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HC-KAR NC: 2026:KHC:1855-DB ITA No. 207 of 2024
return of income for the year 2017-18. It is contended that the assessee is nevertheless entitled to the benefit of deduction under Section 80P of the Act. 3.1 It is further submitted that when the income of the assessee is computed under Section 144 of the Act, the Assessing Officer is duty-bound to extend the benefit of deduction under Section 80P of the Act. Learned counsel submits that Section 80A(5) of the Act applies only in cases where a return of income is filed but no claim for deduction under Section 80P of the Act is made therein. 3.2 It is contended that disallowance of deduction under Section 80P of the Act, on the ground of non-filing of return of income, can be made only by invoking Section 80AC of the Act. However, Section 80AC has been made applicable to Section 80P of the Act by the Finance Act, 2018 with effect from 01.04.2018, i.e., from the Assessment Year 2018–19. Since the assessment year involved in the present case is 2017–18, Section 80AC of the Act is not applicable.
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HC-KAR NC: 2026:KHC:1855-DB ITA No. 207 of 2024
3.3 It is further submitted that Sections 80A(5) and 80AC of the Act operate in distinct fields. Therefore, learned counsel contends that the Tribunal committed an error in denying the deduction under Section 80P of the Act by applying Section 80A(5) of the Act.
Sri Sushal Tiwari, learned Standing Counsel appearing for the respondent, submits that sub-section (5) of Section 80A of the Act, mandates that a claim for deduction under Section 80P of the Act must be made in the return of income. It is further submitted that Section 80AC of the Act mandates the filing of a return of income claiming deduction under Section 80P within the due date specified under sub- section (1) of Section 139 of the Act. 4.1 Learned counsel contends that sub-section (5) of Section 80A disentitles an assessee from claiming deduction under Section 80P of the Act if the return of income is not filed. It is therefore submitted that the order passed by the Tribunal is in conformity with the provisions of Section 80A(5) of the Act. Accordingly, learned counsel prays that the appeal be dismissed.
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HC-KAR NC: 2026:KHC:1855-DB ITA No. 207 of 2024
Considered the submissions of learned counsel for the parties and perused the appeal papers.
The assessee did not file a return of income for the Assessment Year 2017–18. When a notice under Section 142(1) of the Act, was issued calling upon the assessee to file the return of income, though the notice was duly served, the assessee failed to comply. Consequently, the Assessing Officer completed the assessment under Section 144 of the Act. 6.1 While completing the assessment under Section 144 of the Act, the Assessing Officer is required to allow such deductions as are warranted on the basis of the material available on record. However, such obligation cannot be extended to all claims irrespective of statutory mandates. 6.2 In the present case, sub-section (5) of Section 80A of the Act mandates that a claim for deduction under Section 80P of the Act must be made by filing a return of income. Where the statute expressly conditions the grant of deduction upon the assessee making a claim in the return of income, the
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HC-KAR NC: 2026:KHC:1855-DB ITA No. 207 of 2024
Assessing Officer is not required to extend such benefit in the absence of a return of income. 6.3 In this context, it is relevant to extract the provisions of Sections 80A(5) and 80AC of the Act. "80A(5). Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading "C- Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder".
"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",
no 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."
6.4 On a plain reading of sub-section (5) of Section 80A of the Act, it is clear that where an assessee fails to make a claim in the return of income for any deduction under the
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HC-KAR NC: 2026:KHC:1855-DB ITA No. 207 of 2024
provisions of Chapter VI-A, under the heading “C.—Deductions in respect of certain incomes”, no deduction shall be allowed thereunder. 7. The contention of learned counsel for the appellant– assessee that sub-section (5) of Section 80A is not attracted in cases where no return of income is filed is too far-fetched and cannot be accepted. When sub-section (5) of Section 80A disentitles an assessee from claiming deduction under Chapter VI-A in the absence of such claim being made in the return of income, it would be impermissible to interpret the provision to mean that the statutory bar would not apply where no return of income is filed at all. 8. An assessee who has failed to file a return of income claiming deduction cannot be placed in a better position than an assessee who has filed a return of income but has failed to make such a claim therein.
Section 80AC of the Act, in continuation of the mandate under sub-section (5) of Section 80A, requires that the return of income be filed within the due date specified
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HC-KAR NC: 2026:KHC:1855-DB ITA No. 207 of 2024
under sub-section (1) of Section 139 of the Act. A conjoint reading of Sections 80A and 80AC mandates that a claim for deduction under Chapter VI-A must be made in the return of income and that such return must be filed within the due date prescribed under sub-section (1) of Section 139 of the Act. 9.1 If the claim for deduction under Section 80P of the Act is to be extended without filing a return of income, the very mandate of sub-section (5) of Section 80A would be defeated and the provision would be rendered otiose. 9.2 The Kerala High Court, in Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. Commissioner of Income Tax reported in [2023] 152 taxmann.com 347 (Kerala), has held that the statutory scheme permits the allowance of deduction under Section 80P of the Act only if such claim is made in a return of income recognized under the Act and that, after 01.04.2018, such return must be filed within the time prescribed under Section 139 of the Act.
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HC-KAR NC: 2026:KHC:1855-DB ITA No. 207 of 2024
9.3 The Tribunal has applied the law laid down by the Kerala High Court in the aforesaid decision. This Court, for the reasons recorded hereinabove, is in complete agreement with the findings of the Kerala High Court in Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham (supra), and holds that the Tribunal was justified in concluding that the assessee is not entitled to deduction under Section 80P of the Act.
In the light of the aforesaid findings, this Court is of the considered view that no substantial question of law arises for consideration. Accordingly, the appeal stands dismissed.
Sd/- (S.G.PANDIT) JUDGE
Sd/- (K. V. ARAVIND) JUDGE
VBS List No.: 1 Sl No.: 1