2015 (3) TMI 1351 - AT - Income Tax

Deduction u/s 80P - returns of income were not filed by the assessee either u/s 139(1) or u/s 139(4) or within the time limit provided u/s 142(1) - HELD THAT - This Tribunal examined the issue elaborately in the case of Kadachira Service Co-operative Bank 2013 (2) TMI 208 - ITAT COCHIN , M/s Kunnamangalam Co-operative Bank 2014 (10) TMI 350 - ITAT COCHIN and M/s Pinarayi Service Cooperative Bank Ltd 2014 (7) TMI 1176 - ITAT COCHIN and found that if the assessee failed to file the return of income within the prescribed time and claim deduction u/s 80P, then the assessee is not entitled for deduction u/s 80P. Disallowance u/s 40(a)(ia) - interest was paid to non members without deducting tax - HELD THAT - Assessee is carrying on banking activity. Therefore, deduction of tax at source either at the time of credit or payment of interest is a mandatory requirement. Hence, this Tribunal do not find any infirmity in the order of the lower authority. Accordingly, the orders of the CIT(A) on this issue are also confirmed. Assessee's appeal dismissed.

Summary

Issues: Appeals against CIT(A) orders, failure to file returns of income within prescribed time, entitlement to deduction u/s 80P, disallowance u/s 40(a)(ia) for not deducting tax on interest paid to non-members.

Issue 1: Failure to file returns of income within prescribed time

The Tribunal noted that the assessees in all appeals did not file income tax returns within the specified time limits. Referring to previous cases, the Tribunal highlighted that failure to file returns within the prescribed time and claim deductions under section 80P would result in the assessee being ineligible for such deductions. The Tribunal specifically mentioned cases like Kadachira Service Co-operative Bank and others to establish this principle. It was observed that the CIT(A) in one case had issued an order before the Tribunal's decision in Kadachira Service Co-operative Bank but had followed the same principle in another case. Consequently, the Tribunal upheld the CIT(A)'s decision in all appeals, confirming the disallowance of deductions under section 80P due to late filing of returns.

Issue 2: Disallowance u/s 40(a)(ia) for not deducting tax on interest paid to non-members

Regarding disallowance under section 40(a)(ia) for failure to deduct tax on interest paid to non-members, the Tribunal emphasized that tax deduction at source is mandatory for banking activities. Since the assessee had not deducted tax on interest payments to non-members, the Tribunal found no fault in the lower authority's decision. Consequently, the Tribunal confirmed the CIT(A)'s orders on this issue as well.

In conclusion, all appeals filed by the assessees were dismissed by the Tribunal. The judgment highlighted the importance of timely filing of income tax returns to claim deductions under section 80P and reiterated the mandatory nature of tax deduction at source for banking activities to comply with section 40(a)(ia). The Tribunal's decision was based on established principles and previous rulings, ensuring consistency in tax assessments and compliance with relevant tax laws.