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2014 (11) TMI 902 - AT - Income TaxDenial of deduction u/s 80P by invoking section 80A(5) Taxpayers have not filed the returns of income within the time limit provided u/s 139(1) or 139(4) or within the time specified in the notice u/s 142(1) - Whether such taxpayers are entitled for deduction u/s 80P - Held that - Following the decision in Kadachira Service Co-op. Bank Ltd. Versus Income-tax Officer, Ward-1, Kannur 2013 (2) TMI 208 - ITAT COCHIN - Section 139(1) make it mandatory for every taxpayer whose total income exceeds the maximum amount which is not chargeable to income-tax before grant of deductions u/s 10A, 10B and deduction under Chapter VIA of the Act to file the return of income - all the taxpayers income exceeded the maximum amount which is not chargeable to income-tax before grant of deduction under Chapter VIA therefore, it is not only mandatory but also statutory requirement that all the taxpayers have to file the return of income before the due date prescribed u/s 139(1). Whether filing of return of income and making a claim in respect of deduction u/s 80P is mandatory or discretionary Held that - If the contention of the assessee is accepted, then the person, who files the return of income and fails to make a claim of deduction in the return of income either by ignorance or otherwise may not get the benefit, but a person who has not filed the return of income may be in a better position to claim the benefit - in order to avail benefits under the beneficial provision, the conditions provided by the legislature has to be complied with - the mandatory provisions contained in section 139(1) r.w.s. 80A(5) it is mandatory for every cooperative society for claiming deduction u/s 80P to file the return of income and to make a claim of deduction in the return itself Decided against assessee. Whether the return could be treated as return of income or not Held that -No loss which has not been determined in pursuance of a return filed within the time provided u/s 139(1) shall be carried forward and set off but before amendment of section 80 by Taxation Laws Amendment Act, 1984 with effect from 01-04-1985 there was no requirement for filing the return of income within the time limit provided u/s 139(1) - the legislature made it mandatory for filing the return of income within the due date prescribed in section 139(1) as far as carry forward of loss u/s 80 is concerned - the return of income filed within the time limit provided in section 139(1) or 139(4) or time specified in the notice u/s 142(1) or 148 can be considered as return of income - However, the belated return filed beyond the time limit provided u/s 139(1) or 139(4) or time specified in notice u/s 142(1) or 148 of the Act cannot be considered as return of income for deduction u/s 80P of the Act. Whether the taxpayer is entitled for deduction u/s 80P Held that - All the taxpayers income exceeded the maximum amount which is not chargeable to income-tax before grant of deduction under Chapter VIA of the Act - Therefore, it is not only mandatory but also statutory requirement that all the taxpayers have to file the return of income before the due date prescribed u/s 139(1) of the Act - in order to avail benefits under the beneficial provision, the conditions provided by the legislature has to be complied with - in view of the mandatory provisions contained in section 139(1) r.w.s. 80A(5) of the Act it is mandatory for every cooperative society for claiming deduction u/s 80P to file the return of income and to make a claim of deduction u/s 80P of the Act in the return itself - if the return was not filed either u/s 139(1) or 139(4) or in pursuance of notice issued u/s 142(1) or u/s 148, the taxpayer is not entitled for any deduction u/s 80P decided against assessee.
Issues Involved:
1. Denial of deduction under section 80P of the Income Tax Act by invoking section 80A(5). 2. Whether the cooperative societies are liable to file the return of income under the Income Tax Act. 3. The applicability of the principle of mutuality to the income of the cooperative societies. 4. The requirement to file a return of income within the specified time for claiming deductions under section 80P. 5. The consideration of belated returns for the purpose of deduction under section 80P. 6. The jurisdiction of the Assessing Officer to issue notice under section 148 for regularizing belated returns. Detailed Analysis: 1. Denial of Deduction under Section 80P by Invoking Section 80A(5): The common issue in these appeals is the denial of deduction under section 80P by invoking section 80A(5). The assessee, a cooperative bank, failed to file a return of income for the assessment year 2010-11. The Assessing Officer issued a notice under section 142(1), but the assessee did not comply, leading to a best judgment assessment under section 144. The Assessing Officer disallowed the deduction under section 80P by invoking section 80A(5). The CIT(A) upheld this decision, relying on a previous ITAT Cochin Bench decision, which stated that deductions under section 80P are not allowed if the return is not filed within the prescribed time. 2. Liability of Cooperative Societies to File Return of Income: The Tribunal examined whether cooperative societies are liable to file returns under the Income Tax Act. Section 139(1) mandates that every person whose total income exceeds the maximum amount not chargeable to tax must file a return. The Tribunal concluded that cooperative societies are not exempt from this requirement unless notified by the Central Government. The statutory liability to file returns cannot be disowned on the grounds of a bona fide impression that returns are not needed. 3. Applicability of Principle of Mutuality: The assessee argued that its income should be exempt based on the principle of mutuality, as it lends money only to its members. The Tribunal referred to the Supreme Court's decision in CIT vs. Kumbakonam Mutual Benefit Fund Ltd., which held that the principle of mutuality is not satisfied if profits are distributed to shareholders as shareholders. The Tribunal concluded that the assessee's position is similar to an ordinary bank, and the mutuality principle does not apply. 4. Requirement to File Return of Income within Specified Time: The Tribunal analyzed section 80A(5), which mandates that a claim for deduction must be made in the return of income. The Tribunal noted that the legislative intent is clear from the plain language of the statute, and the return must be filed within the time specified under section 139(1) or 139(4) or in response to a notice under section 142(1) or 148. The Tribunal emphasized that filing a return within the specified time is mandatory for claiming deductions under section 80P. 5. Consideration of Belated Returns: The Tribunal considered whether belated returns can be treated as returns of income for the purpose of deduction under section 80P. It concluded that returns filed beyond the time limit provided under section 139(1) or 139(4) or the time specified in a notice under section 142(1) or 148 cannot be considered as returns of income for claiming deductions under section 80P. The Tribunal emphasized that the legislative intent is to prevent misuse and avoid multiple deductions. 6. Jurisdiction to Issue Notice under Section 148: The Tribunal addressed the contention that the Assessing Officer should have issued a notice under section 148 to regularize the belated returns. It concluded that the Assessing Officer had no jurisdiction to issue such a notice as the assessment proceedings were already pending. The Tribunal noted that section 147 and 148 are for the benefit of the revenue and cannot be used to compel the Assessing Officer to regularize belated returns. Conclusion: The Tribunal upheld the denial of deduction under section 80P, emphasizing the mandatory requirement to file returns within the specified time. The appeals filed by the assessees were dismissed. The Tribunal also rejected the alternative plea based on the principle of mutuality, citing relevant case law. The decision reinforces the importance of complying with statutory requirements for claiming tax deductions.
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