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Facts
The assessee is challenging the denial of deduction under section 80P(2) for assessment year 2012-13, amounting to Rs. 10,56,058. The assessee filed a belated return under section 139(4). The lower authorities denied the deduction based on the interpretation of Section 80AC and a Kerala High Court judgment.
Held
The Tribunal held that the assessee is eligible for deduction under section 80P before April 1, 2018, if the return of income is filed under section 139(4). The Tribunal agreed with the assessee's argument regarding the misinterpretation of the Kerala High Court judgment by the lower authorities.
Key Issues
Whether the assessee is eligible for deduction under section 80P when the return of income was filed belatedly under section 139(4) for assessment year 2012-13, prior to the amendment of section 80AC.
Sections Cited
250, 254, 80P(2), 80AC, 139(4), 139(1), 80A(5), 148, 142(1), 144, 139(8), 139(9), 234A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
Per Laxmi Prasad Sahu, Accountant Member This appeal by the assessee is in second round of proceedings before the ITAT against the order passed u/s. 250 r.w.s. 254 of the Act dated 09.02.2024 passed by the Addl./Jt.CIT(Appeals)-2, Mumbai challenging the denial of deduction u/s. 80P(2) of the Act of Rs.10,56,058 for the assessment year 2012-13.
The ld. CIT(Appeals) following the judgment of the Hon’ble Kerala High Court judgment dated 14.03.2023 in the case of Nileshwar
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Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham noted that the provisions of section 80AC(ii) of the Act is clear that deduction u/s. Part C of Chapter VIA would be admissible only if the return of income is filed within the prescribed due date. Since in this case the assessee has filed return of income u/s. 139(4) for the AY 2012-13 belatedly on 28.03.2013, deduction u/s. 80P was denied to the assessee. He also observed that even on merits this deduction was rejected to the assessee in a subsequent assessment year. Hence the CIT(Appeals) dismissed the appeal of the assessee.
The ld. AR of the assessee submitted that the ld. CIT(Appeals) has wrongly interpreted the judgment of Hon’ble Kerala High Court noted supra and submitted that this is a case for AY 2012-13 and the amendment is made w.e.f. 01.04.2018. Before 01.04.2018 even if the assessee files return of income belatedly, the assessee is eligible for deduction under Part C of the Chapter VIA of the Act, which is clear from para 11 of the above judgment. Accordingly, she requested that the order of the CIT(Appeals) should be reversed.
The ld. DR relied on the order of lower authorities and submitted that the assessee has not provided any details for computing deduction u/s. 80P.
Considering the rival submissions, we note that assessee has admitted gross total income of Rs.10,56,058 and claimed the same as deduction u/s. 80P and filed return of income on 28.03.2013. The assessment was completed ex-parte u/s. 144 of the Act. The
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CIT(Appeals) denied the deduction u/s. 80P for the reason that the return was not filed by the assessee within the due date as prescribed in section 139(1) of the Act. We are in agreement with the argument of the ld. AR of the assessee regarding the wrong interpretation of the Kerala High Court judgment (supra) by the ld. CIT(Appeals). The case of the assessee is for AY 2012-13 and the provision of section 80AC was amended by the Finance Act, 2018 which is as under:-
“ For section80AC of the Income-tax Act, the following section shall be substituted, namely:— '80AC. Deduction not to be allowed unless return furnished.— 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. We have also gone through the judgment relied on by the ld. CIT(Appeals) on the amendment before 01.04.2018 in which it has been 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
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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 01-04-2018, however, mandated that for an assessee to get a deduction under section 80P of the IT Act, he had to furnish a 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 01-04-2018, 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 01-04-2018, 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. 12. 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 pre- condition for obtaining the deduction cannot be condoned either by the statutory authorities or by the courts. 13. It is in the backdrop of the aforesaid discussion that we must consider the findings of a Division Bench of this Court in 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
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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 section 80P of the IT Act has now been made more stringent by reducing the time available to an assessee for making the claim. 14. Before parting with these cases, we must also address the arguments of the learned counsel for the appellant/assessee relying on the provisions of section 139(8)/(9) and section 234A of the IT Act. A reading of the provisions of section 139(8) and (9) of the IT Act clearly reveals that even under those provisions, the restrictions placed with regard to the accrual of interest on amounts assessed on an assessee is with regard to the date of filing of a return within the time prescribed under the IT Act. Under section 234A of the IT Act, however, although the provision suggests that even a return filed beyond the time prescribed under any of the provisions of the IT Act can have the effect of limiting the accrual of interest on the amounts assessed against an assessee, we have to see the said provision as permitting a filing of a belated return for the limited purpose of conferring a specific benefit of limiting the accrual of interest, on an assessee, and for no other purpose. We cannot accept the contention of the appellant/assessee that the said provisions which are intended for a specific purpose and are not general in nature, have to be seen as manifesting a statutory scheme that enables the Department to act upon a belated return for allowing the claim of an assessee for deduction under section 80P of the IT Act. In the light of the aforesaid discussion, we find that the above questions of law have to be answered in favour of the Revenue and against the assessee, and we do so. Thus, these I.T. Appeals are disposed by answering the substantial questions of law raised therein, in favour of the Revenue and against the assessee.” 7. It is clear from the above judgment that if the assessee filed return of income u/s. 139(4), the assessee is eligible for deduction u/s.
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80P before 01.04.2018. The facts of the case as relied by the CIT(A) are that for the assessment year 2009-10, the appellant did not file any return of income. Believing that the appellant had income chargeable to tax that had escaped assessment, the Department issued a notice under section 148 of the IT Act to the appellant on 06-02-2012 requiring the appellant to furnish a return of income within 30 days of receipt of the notice. The appellant failed to file the return of income in response to the notice under section 148. A return was however filed by the appellant on 05-07-2012, which was much beyond the date for filing of return in terms of section 139(4) of the IT Act. The return of income for the assessment year 2009-10 should have been filed on or before 31-03-2011 in terms of section 139(4) of the IT Act. Since the return of income was filed after the expiry of the time allowed under section 139(4) and much after the due date mentioned in the notice under section 148, the Assessing Officer treated the same as invalid and proceeded to complete the assessment in terms of section 144 of the IT Act after hearing the representative of the appellant and verifying the books of account and other details called for by the Department. While completing the assessment, the claim of the appellant for deduction under section 80P was disallowed on the ground that the claim for deduction had not been made in a valid return filed by the appellant in terms of the IT Act. It was the stand of the Assessing Officer that in view of the provisions of section 80A(5) of the IT Act, the claim for deduction could not be considered.
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7.1 .From the facts as noted above in the case relied by the CIT(A) are different. Since, the case at hand assessee filed return within the time allowed u/s. 139(4), accordingly we hold that assessee is eligible for deduction u/s. 80P on the income earned for the impugned assessment year. Since the assessee has not filed any details regarding the deduction claimed, we remit the issue to AO for fresh consideration and decision as per law, after reasonable opportunity to the assessee. The assessee is directed to furnish all the necessary details in support of its claim before the AO and not seek unnecessary adjournment for early disposal of the case.
In the result, the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on this 03rd day of July, 2024. Sd/- Sd/- ( KESHAV DUBEY) (LAXMI PRASAD SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore, Dated, the 03rd July, 2024. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. Pr.CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order
Assistant Registrar ITAT, Bangalore.