M/S. MARARIKULAM SERVICE CO-OP BANK LTD,ALAPPUZHA vs. THE ITO, WD-2, ALAPPUZHA, ALAPPUZHA

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA No. 168/Coch/2021 Assessment Year : 2019-20 M/s. Mararikulam Service Co-operative Bank Ltd. No. 1509, The Income Tax Mararikulam North Officer, P.O., Ward – 2, Cherthala, Alappuzha. Alappuzha – 688 549. Vs. Kerala. PAN: AACAM9305P APPELLANT RESPONDENT Assessee by : Shri Amaljith P J, CA : Smt J M Jamuna Devi, Sr. Revenue by AR Date of Hearing : 15-09-2022 Date of Pronouncement : 15-09-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against order dated 13/08/2021 passed by NFAC, Delhi for A.Y. 2019-20 on following grounds of appeal: Tax effect relating to Grounds of Appeal each Ground of appeal (see note below) Intimation order u/s. 1. 143(1) is against the law Rs.7,36,849/- and facts of the case

Page 2 of 6 ITA No. 168/Coch/2021 Appellant is eligible for deduction u/s. 80P for the whole of profits and gains 2. Rs. 7,36,849/- received from the business of providing credit facilities to our members. Total tax effect (see note below) Rs. 7,36,849/- 2. Brief facts of the case are as under: 2.1 Assessee is a co-operative bank registered under Kerala Co- operative Societies Act, 1869. It filed its return of income on 12/03/2020 claiming deduction u/s. 80P of Rs.18,22,113/- which was disallowed by the CPC while passing intimation u/s. 143(1) of the Act. 2.2 The reason for doing so was that the assessee did not file the return of income before the due date as per section 139(1) of the Act. 2.3 Against the said intimation u/s. 143(1), assessee filed appeal before the Ld.CIT(A). The Ld.CIT(A) upheld the disallowance made by the CPC by observing as under: “4. Decision: I have carefully considered the facts on record, intimation order and the written submission of the appellant. The sole issue relates to disallowance of deduction u/s 80P of the Act. The said disallowance has been made since return of income has not been filed within the due date as specified Ws 139(1) of the Act and not- complied with the provision of section 80AC of the Act. In fact, the return of income was filed belatedly u/s 139(4) of the Act i.e. beyond the due date for filing of return. The appellant reliance of Hon'ble Supreme Court in the case of Mavilayi Service Cooperative Bank (Civil Appeal No. 7343- 7350 of 2019) dated 12/01/2021 is totally misplaced in the present facts of the cpse.ln this context, it is pertinent to note that Explanation 2 under section 139(1) of the Act defined the 'due date' for filing of return, wherein it is provided that in case of assessee other than company, whose accounts are required to be audited under IT Act or any other law, shall be 30th September of the assessment year.

Page 3 of 6 ITA No. 168/Coch/2021 It is pertinent to note that the Finance Act, 2018 was passed on 29.03.2018 wherein amendment was made to section 80AC of the Act inter alia other amendments to various other sections of the I.T.Act, 1961. The said amendment is as per below, which is produced from Explanatory notes to the provisions of The Finance Act 2018 issued by the Central Board of Direct Taxes, New Delhi vide Circular No. 8/2018 dated 26/12/2018: Deductions in respect of certain incomes not to be allowed unless return is filed by the due date 22.1 Before amendment by the Act, section 80AC of the Income-tax Act provided that no deduction would be admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-1D or section 80-1E, unless the return of income by the assessee is furnished on or before the due date specified under sub-section (1) of section 139 of the Income-tax Act. However, this burden was not cast upon the assessee claiming deduction under other similar provisions contained in Chapter VIA of the Income-tax Act under the heading "C.-Deductions in respect of certain incomes" (appellant's income applicable for deduction u/s 80P of the Act included). 22.2 In order to ensure timely filing of return by the assessee for claiming deductions under the provisions contained in Chapter VIA of the Income-tax Act under the heading "C- Deductions in respect of certain incomes", section 80AC has been amended to provide that the benefit of deduction under the entire class of deductions under the heading "C.-Deductions in respect of certain incomes" in Chapter VIA of the Income-tax Act shall not be allowed unless the return of income is filed on or before the due date. In light of the above amendment made to section 80AC .of the Act vide the Finance Act, 2018 applicable for A.Y. 2018-19 onwards, the disallowance of deduction u/s 80P made by the A.O. is upheld, since the appellant failed to file its return of income within the due date for filing of return under section 139(1) of the Act. In view of the factual position of the case, the appeal is hereby dismissed.” 2.4 Aggrieved by the order of Ld.CIT(A), assessee is in appeal before this Tribunal. 3. At the outset, the Ld.AR submitted that identical issue has been considered in the following decisions.

Page 4 of 6 ITA No. 168/Coch/2021 a) Decision of Hon’ble Supreme Court in case of Madras Co-operative Central Land vs. CIT reported in 1968 AIR 55. b) Decision of Coordinate Bench of Cochin Tribunal in case of Mararikulam Service Co-operative Bank Ltd. vs. ITO in ITA Nos. 146 & 147/Coch/2018 for A.Ys. 2012-13 & 2013-14 by order dated 05/07/2018. c) Decision of Coordinate Bench of Cochin Tribunal in case of The Adhyapaka Cooperative Bank Ltd. vs. DCIT in ITA No. 48/Coch/2021 for A.Y. 2018-19 by order dated 07/02/2022. 4. The Ld.AR submitted that the order passed by the CPC disallowing the claim of deduction u/s. 80P is not in accordance with the provisions of the Act. The Ld.AR also placed reliance on decision of Hon’ble Kerala High Court in case of Chirakkal Service Co-op Bank Ltd. vs. CIT reported in 384 ITR 490 has held that even if return of income was filed before the appellate authority claiming deduction u/s. 80P(2), the same has to be acted upon. On the contrary, the Ld.DR relied on orders passed by NFAC. We have perused the submissions advanced by both sides in the light of records placed before us. 5. Hon’ble Kerala High Court in case of Chirakkal Service Co-op Bank Ltd. vs. CIT (supra) has observed and held as under: “19. Section 80A(5) provides that where the assessee fails to make a claim in his return of income for any deduction, inter alia, under any provision of Chapter VIA under the heading "C.- Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder Therefore, in cases here no returns have been filed for a particular assessment year, no deductions shall be allowed. This embargo in section 80A(5) would apply, though section 80P is not included in section 80AC. This is so because, the inhibition against allowing deduction is worded in quite similar terms in sections 80A(5) and 80AC, of which section 80A(5) is a provision inserted through the Finance Act 33/2009 with effect from 1.4.2013 after the insertion of section 80AC as per the Finance Act of 2006 with effect from 1.4.2006. This clearly evidences the legislative intendiment that the inhibition contained in subsection 5 of section 80A would operate by itself. In

Page 5 of 6 ITA No. 168/Coch/2021 cases where returns have been filed, the question of exemptions or deductions referable to section 80P would definitely have to be considered and granted if eligible. 20. Here, questions would arise as to whether belated returns filed beyond the period stipulated under section 139(1) or section 139(4) as well as following sections 142(1) and 148 proceedings could be considered for exemption. If those returns are eligible to be accepted in terms of law, going by the provisions of the statute and the governing binding precedents, it goes without saying that the claim for exemption will also stand effectuated as a claim duly made as part of the returns so filed, for due consideration. 21. When a notice under section 142(1) is issued, the person may furnish the return and while doing so, could also make claim for deduction referable to section 80P. Not much different is the situation when pre-assessment enquiry is carried forward by issuance of notice under section 142(1) or when notice is issued on the premise of escaped assessment referable to section 148 of the IT Act. This position notwithstanding, when an assessment is subjected to first appeal or further appeals under the IT Act or all questions germane for concluding the assessment would be relevant and claims which may result in modification of the returns already filed could also be entertained, particularly when it relates to claims for exemptions. This is so because the finality of assessment would not be achieved in all such cases, until the termination of all such appellate remedies. Under such circumstances, the Tribunal was not justified in denying exemption under section 80P of the IT Act on the mere ground of belated filing of return by the assessee concerned. A return filed by the assessee beyond the period stipulated under section 139(1) or 139(4) or under section 142(1) or section 148 can also be accepted and acted upon provided further proceedings in relation to such assessments are pending in the statutory hierarchy of adjudication in terms of the provisions of the IT Act. In all such situations, it cannot be treated that a return filed at any stage of such proceedings could be treated as non est in law and invalid for the purpose of deciding exemption under section 80P of the IT Act. We thus answer substantial questions of law Band C formulated and enumerated above."

Page 6 of 6 ITA No. 168/Coch/2021 6. Similar is the situation in the present facts of the case. Respectfully following the above view, we direct the Ld.AO to consider the claim of assessee u/s. 80P in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee. Accordingly, the grounds raised by assessee stands allowed for statistical purposes. In the result, the appeal filed by assessee stands allowed for statistical purposes. Order pronounced in open court on 15th September, 2022.

Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 15th September, 2022. /MS / Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Cochin 3. CIT 6. Guard file By order

Assistant Registrar, ITAT, Cochin