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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal
आदेश/ORDER PER BENCH:- These three appeals filed by the assessee for A.Y. 2012-13, 2013-14 & 2014-15 arise from order of the CIT(A)-3, Rajkot dated 03-10-2017 & 06-10-2017 , in Appeal Nos. CIT(A)-3/0019/2015-16, CIT(A)-3/0568/2015- 16 & CIT(A)-3/0186/2015-16.
The assessee has raised the following grounds of appeals:-
I.T.A Nos. 472, 473 & 474/Rjt/2017 A.Y. 2012-13, 2013-14 & 2014-15 Page No 2 Aliadar Seva Sahakari Mandli Ltd. vs. ITO
ITA No. 472/Rjt/2017 For A.Y. 2012-13
“1. The Grounds mentioned hereunder are without prejudice to one another.
The ld. Commissioner of Income Tax (Appeals) -3 Rajkot has erred in law dismissing appeals ex-parte by alleging that the appellant is not interested in put suit the appeal, though the appellant filed written submission on 26/09/2017 in the office of the ld. CIT(A)-3 Rajkot. The deduction u/s.80P of the Act totally disallowing unjustified on facts as also in law my kindly be deleted.
Though the appellant has taken single grounds of appeal viz., the ld. CIT(A)-3 has erred in confirming the disallowance of exemption available to the appellant under section 80P on the interest income amounting to Rs. 39,11,617/- received from providing credit facilities to its farmers member.
Such income does not qualify for grant of deduction under section 80P of the Income Tax Act, 1961. Accordingly, he disallowed deduction under section 80P on interest income of Rs. 39,11,617/-. Appeal to the CIT(A)-3 did not bring any relief to the appellant.
The Ld. CIT (A) has erred in charging interest u/s. 234 in absence of the specific instruction under the Assessment order, my kindly be deleted
The Ld. CIT (A) erred in initiating penalty proceeding u/s. 254 rws 271 (1)( c) of the Act. my kindly be deleted
Your Honor's appellant craves leave to add, alter, amend, or withdraw any or more grounds of appeal on or before the hearing of appeal.”
ITA No. 473/Rjt/2017 For A.Y. 2013-14
I.T.A Nos. 472, 473 & 474/Rjt/2017 A.Y. 2012-13, 2013-14 & 2014-15 Page No 3 Aliadar Seva Sahakari Mandli Ltd. vs. ITO
“1. The Grounds mentioned hereunder are without prejudice to one another.
The ld. Commissioner of Income Tax (Appeals) -3 Rajkot has erred in law dismissing appeals ex-parte by alleging that the appellant is not interested in put suit the appeal, though the appellant filed written submission on 26/09/2017 in the office of the ld. CIT(A)-3 Rajkot. The deduction u/s.80P of the Act totally disallowing unjustified on facts as also in law. my kindly be deleted.
Though the appellant has taken single grounds of appeal viz., the ld. CIT(A)-3 has erred in confirming the disallowance of exemption available to the appellant under section 80P on the interest income amounting to Rs. 39,85,298/- received from providing credit facilities to its farmers member.
Such income does not qualify for grant of deduction under section 80P of the Income Tax Act, 1961. Accordingly, he disallowed deduction under section 80P on interest income of Rs. 39,85,298/- Appeal to the CIT(A)-3 did not bring any relief to the appellant.
The Ld. CIT (A) has erred in charging interest u/s. 234 in absence of the specific instruction under the Assessment order, my kindly be deleted
The Ld. CIT (A) erred in initiating penalty proceeding u/s. 254 rws 271(1)(c) of the Act. my kindly be deleted
Your Honor's appellant craves leave to add, alter, amend, or withdraw any or more grounds of appeal on or before the hearing of appeal.”
ITA No. 474/Rjt/2017 For A.Y. 2014-15
“1. The Grounds mentioned hereunder are without prejudice to one another.
I.T.A Nos. 472, 473 & 474/Rjt/2017 A.Y. 2012-13, 2013-14 & 2014-15 Page No 4 Aliadar Seva Sahakari Mandli Ltd. vs. ITO
The ld. Commissioner of Income Tax (Appeals) -3 Rajkot has erred in law dismissing appeals ex-parte by alleging that the appellant is not interested in put suit the appeal, though the appellant filed written submission on 26/09/2017 in the office of the ld. CIT(A)-3 Rajkot. The deduction u/s.80P of the Act totally disallowing unjustified on facts as also in law. my kindly be deleted.
Though the appellant has taken single grounds of appeal viz., the ld. CIT(A)-3 has erred in confirming the disallowance of exemption available to the appellant under section 80P on the interest income amounting to Rs. 42,28,962/- received from providing credit facilities to its farmers member.
Such income does not qualify for grant of deduction under section 80P of the Income Tax Act, 1961. Accordingly, he disallowed deduction under section 80P on interest income of Rs. 42,28,962/- Appeal to the CIT(A)-3 did not bring any relief to the appellant.
The Ld. CIT (A) has erred in charging interest u/s. 234 in absence of the specific instruction under the Assessment order, my kindly be deleted
The Ld. CIT (A) erred in initiating penalty proceeding u/s. 254 rws 271(1)(c) of the Act. my kindly be deleted
Your Honor's appellant craves leave to add, alter, amend, or withdraw any or more grounds of appeal on or before the hearing of appeal.”
Since the issues involved in all the years are identical, the appeals are being disposed of by a common order.
Assessment year 2012-13
The brief facts of the case are that the assessee is a cooperative Society registered under the Gujarat Cooperative Societies Act. The main
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object of the assessee is to provide credit facilities to its members, accepting deposits from its members, sale of petrol, pesticides, fertilisers and providing other services. During the course of assessment proceedings, the AO noticed that in the original return of income filed by the assessee, it did not claim deduction under section 80P of the Act. It was on receipt of show cause notice issued by the assessing officer during the course of assessment proceedings, that the assessee filed revised computation claiming deduction under section 80P of the Act (during the course of assessment proceedings). However, the AO declined the assessee’s claim for deduction under section 80P of the Act by holding that deduction under section 80P of the Act claimed by the assessee after issuance of show cause notice is not acceptable and therefore assessee’s claim under section 80P is rejected. The AO further held that the assessee is also running a petrol pump and since the sale of petrol and diesel is not restricted exclusively to its members but also to the general public at large, therefore the assessee has not fulfilled all the conditions as laid down under section 80P of the Act. Accordingly, the AO rejected the assessee’s claim for deduction under section 80P of the Act. In appeal, Ld. CIT(Appeals) dismissed the appeal of the assessee with the following observations:
“7. Decision: 7.1. It is apparent from the Assessment order (para 5 of the Assessment order) as well as the submissions that there is not dispute in the fact that appellant had not made any claim of deduct u/s. 80P in the return of income. It is apparent that A.O. had denied claim of deduction u/s.80P in accordance with provision of the section 80A(5) r.w.s.139 as no claim of deduction was made in the return. Alternatively A.O. had also noted that the petrol pump being run by the appellant cooperative society is selling not only to the members
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but also to the general public & hence the conditions as laid down in the Section 80P are not fulfilled & thus on this count also appellant is not eligible for the deduct u/s. 8OP.
7.2. The submission made by the appellant could not rebut both the above observations of A.O. The AO's comment obtained during the appellate proceeding (para 6 of this order) are very focused and they were communicated to the appellant in its reply (para 7 of this order) the appellant had repeated its earlier arguments but could not answer to the basic question as to how can it escape the mischief of Section Considering the clear and unambiguous provision of Section 820A(5), the AO's action of denying deduction u/s. 8OP is confirmed.
7.3. The appellant had also failed to respond to the AO's alternate observation of petrol pump being open to entire public (& thus conditions as prescribed u/s. 80P not being fulfilled), however this aspect doesn't require elaboration in lieu of decision already given in respect of main observation of A.O.
The issue for consideration before us is that if the assessee has not claimed deduction under section 80P of the Act in the return of income, can it be permitted to claim the same during the course of assessment proceedings by way of filing a revised computation in response to notice issued by the assessing officer. At this stage, it would be useful to refer to the language of section 80A(5) of the Act, which reads as under:
Deductions to be made in computing total income. 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.]
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5.1 A plain reading of section 80A(5) of the Act shows that the Statute is categorical in its language that in order to make claim for deduction under section 80P of the Act (forming part of Chapter-VI of the Act), the same has to be done in the return of income. The Gujarat High Court in the case of Rachna Infrastructure (P.) Ltd. [2022] 138 taxmann.com 416 (Gujarat) has held that where assessee, engaged in development of infrastructural facilities, had not made a claim under section 80-IA in its return of income and raised claim for first time in revision application filed under section 264, by virtue of section 80A(5), said claim could not be granted. While passing the order, the Gujarat High Court made the following observations:
However, the Petitioners are faced with the statutory provision contained in sub-section (5) of section 80A of the Act. The Petitioners' claim cannot therefore be accepted de hors the said statutory provision and ordinary principle of the wide powers of the CIT exercising revisional jurisdiction under section 264 of the Act cannot be imported. What sub-section (5) of section 80A of the Act mandates is that, if the assessee fails to make a claim in his return of income for any deduction under the provisions specified therein, the same would not be granted to the assessee. This condition or restriction is not relatable to the Assessing Officer or the Income-tax Authority. This condition attaches to the claim of the assessee and has to be implemented by the Assessing Officer, CIT or the Appellate Tribunal as the case may be. There is no indication in sub- section (5) of section 80A of the Act as to why the restriction
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contained therein amounts to limiting the power of Assessing Officer but not that of Commissioner.
5.2 The Cochin ITAT in the case of Kadachira Service Co-op. Bank Ltd. [2013] 30 taxmann.com 32 (Cochin - Trib.) held that filing of return of income and making a claim therein in respect of deduction under section 80P is mandatory. The Bombay High Court in the case of EBR Enterprises [2019] 107 taxmann.com 220 (Bombay) held that where assessee was engaged in development of housing projects and it in return of income filed for assessment year 2008-09 had not claimed deduction under section 80- IB(10) and subsequent to assessment framed by Assessing Officer it filed an application under section 264 before Commissioner and raised claim of deduction under section 80-IB(10) and Commissioner rejected revision application holding that since assessee had not made a claim under section 80-IB(10) in return of income, by virtue of section 80A(5), claim could not be granted, Commissioner was justified in his view. The Madras High Court in the case of Satyamangalam Agricultural Producer's Co-operative Marketing Society Ltd. [2013] 40 taxmann.com 45 (Madras) has held that Fresh claims made by assessee relating to deduction under section 80P in response to notice under section 148 cannot be entertained. Again, the Mumbai ITAT in the case of Shree Datta Prasad Sahakari Patsanstha Ltd. [2022] 134 taxmann.com 324 (Mumbai - Trib.) has held that where assessee had not claimed deduction under section 80P(2)(a)(i) in its return of income, it could not be allowed such deduction in view of condition imposed under section 80A(5) even though it was otherwise eligible for such deduction. While passing the order, the Tribunal observed as under:
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Though, it may be a fact that the assessee is otherwise eligible to claim deduction under section 80P(2)(a)(i) of the Act; however, the provision contained in section 80A(5) of the Act stands as a bar in allowing such deduction to the assessee. For the sake of completeness, we must observe, having carefully gone through the decisions cited by learned authorized representative of the assessee, we are of the view that in none of these decisions, the provision contained in section 80A(5) of the Act was taken note of. We are conscious of the fact that in case of MSEB Employees Co-operative Credit Society Ltd. (supra), the coordinate bench has held that even if the assessee has not claimed a deduction in the return of income, the appellate authorities have power to allow deduction which is allowable under the provisions of the Act. However, as it appears form a reading of the said decision, provision contained in section 80A(5) was not brought to the notice of the Tribunal. Further, the Tribunal did not have the benefit of the decision of the Hon'ble jurisdictional High Court in case of EBR Enterprises (supra) which was subsequently rendered.
It may be a fact that the Tribunal has allowed assessee's claim of deduction under section 80P(2)(a)(i) of the Act in assessment years 2010-11 and 2012-13. However, there is nothing on record to suggest that there was any violation of section 80A(5) of the Act. Therefore, the factual position based on which the decisions were rendered in assessment year 2010-11 and 2012-13 are different from the impugned assessment year. Thus, respectfully following the ratio
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laid down in the decision of the Hon'ble jurisdictional High Court in EBR Enterprises case (supra), we hold that the assessee cannot be allowed deduction under section 80P(2)(a)(i) of the Act, insofar as, the impugned assessment year is concerned due to non fulfillment of conditions contained in section 80A(5) of the Act.
5.3 In our considered view, it is well-settled law and when the language of the Statute is plain and unambiguous, the same represents the legislative intent. In the instant case, the language of section 80A(5) of the Act is plain and unambiguous in its wordings and the same is not open to interpretation. It is an undisputed fact, that the assessee did not make a claim for deduction under section 80P of the Act in its return of income. The said claim was made by way of filing revised computation during the course of assessment proceedings. Without prejudice to the above, Ld. CIT(Appeals) has also observed that the assessee was engaged in selling petrol to outside parties, not forming part of the society and was unable to provide any explanation during the course of assessment/appellate proceedings as to how it is eligible to claim benefit of section 80D of the Act. While we are aware of the fact that in various cases it has been held that beneficial provisions should be construed liberally and legitimate claim of the assessee should be allowed, even if the assessee has failed to claim the same in its return of income. However, in our considered view, if the language of the Statute is plain and unambiguous and is not open to interpretation so that two views may be possible, then the same represents the legislative intent. Here, section 80A(5) of the Act states that for an assessee to be able to make a claim under Chapter -VI of the Act, such a claim has to be made in the return of income.
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In view of the plain language of the Statute, and respectfully following the decision of the Gujarat High Court in the case of Rachna Infrastructure (P.) Ltd. [2022] 138 taxmann.com 416 (Gujarat), we are of the view that Ld. CIT(Appeals) has not erred in facts and in law in confirming the order of the assessing officer. In the result, appeal of the assessee is dismissed. The other grounds of the assessee’s appeal are consequential in nature and hence do not require any specific adjudication.
In the result, the appeal of the assessee is dismissed.
In the combined result, all the three appeals for assessment years 2012-13, 2013-14 & 2014-15 of the assessee are dismissed.
Order pronounced in the open court on 13-07-2022
Sd/- Sd/- (WASEEM AHMED) (SIDHHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 13/07/2022 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order,
Assistant Registrar, Income Tax Appellate Tribunal, Rajkot