KADAVATHUR SERVICE CO-OPERATIV BANK LTD ,KADAVATHUR vs. ACIT, WARD-2, KANNUR

The present appeal of the assessee is arising from the order of the learned Commissioner of Income-tax (Appeals) having DIN& Order No.ITBA/APL/S/250/2023- 24/1060637248(1) dated 08th February, 2024 and relates to assessment year 2015-2016.

The short facts giving rise to the filing of the present appeal are that the assessee is a primary agricultural credit cooperative society. The assessee filed its return of income claiming deduction of section 80P of the Act. The deduction claimed by the assessee has been disallowed by the Assessing Officer /CPC on the ground that the assessee has filed the return of income u/s.139(4) of the Act, meaning thereby the

Aggrieved with the order of the CPC, the assessee filed an appeal before the learned CIT(A) and contended that the 80P deduction may kindly be granted to the assessee. However, the ld.CIT(A) relying upon the provisions of sec.80AC of the Act, dismissed the appeal of the assessee.

Now the assessee has come up in appeal before us. At the outset, the learned Counsel for the assessee has contended that the assessee is entitled for deduction u/s.80P of the Act in view of the judgment of the Hon’ble Kerala High Court in Chirakkal Service Co-operative Bank Ltd. v. CIT [(2016) 384 ITR 490 (Ker.)]. The learned Counsel for the assessee further argued that provisions of sec.80AC are applicable with effect from 1st April, 2018 and since the impugned assessment year is A.Y. 2015-2016, the provisions of sec.80AC are not applicable.

The learned Departmental Representative appearing on behalf of the Revenue relied upon the judgment of the Hon’ble Kerala High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. CIT reported in (2023) 459 ITR 730 (Ker.).

We have heard the rival submissions and perused the material available on record. We are of the view that the assessee is not entitled for deduction of 80P in the light of the . Kadavathur SCB Limited judgment of the Hon’ble jurisdictional High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham (supra), wherein the High Court has observed as under:

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 . Kadavathur SCB Limited 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.

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 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.

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, . Kadavathur SCB Limited 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."

Perusal of the above judgment of the Hon’ble jurisdictional High Court in Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham (supra)would show that the Hon’ble jurisdictional High Court has declared the judgment of Chirakkal Service Co-operative Bank Ltd. (supra) as per incuriam. However the entire decision of Nileshwar is rendered in a case where the return of income had been filed after the expiry of dates prescribed under 139(4) of the Act. However, in the present case the assessee has filed the ROI within the time prescribed in section 139(4). Therefore, the facts of the present case are on different footing with that of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham (supra), accordingly we restore the matter to the file of AO with a direction that if the return of income has been filed with in the time allowed under section 139(4), as applicable to the impugned year then the deduction of section 80P is to be allowed to the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes.