2023 (3) TMI 1055 - HC - Income Tax

Deduction u/s 80 P (2) (a) (vi) - whether appellant society cannot be considered as Co-operative Societies engaged in the collective disposal of labour of its members as contemplated under section 80P(2) (a) (vi) and therefore not eligible for deduction under section 80 P of the Act? - appellant society having granted registration under the Kerala Co-operative Societies Act, 1969 and the Rules as a Miscellaneous Society , thus cannot be treated as a society engaged in collective disposal of labour of its members and therefore is not eligible/entitled for the deduction under section 80 P (2) (a) (vi) - HELD THAT - By a judgment reported in Peravoor Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham 2015 (9) TMI 506 - KERALA HIGH COURT a Division Bench of this Court has, in the assessee's own case for a previous assessment year, answered the issues in favour of the Revenue and against the assessee. Deduction u/s 80P - claim for deduction had not been made in a valid return filed by the appellant in terms of the IT Act - HELD THAT - 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 u/s 139(1) - 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. 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, 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. Decided in favour of revenue.

Issues Involved:
1. Validity of the rejection of the claim under Section 80P due to the belated return.
2. Entitlement to deduction under Section 80P of the IT Act.
3. Classification of the appellant society under Section 80P(2)(a)(vi).
4. Eligibility for deduction under Section 80P(2)(a)(iii).
5. Remanding the matter back to the assessing officer for reconsideration.

Summary:

Issue 1: Validity of the Rejection of Claim under Section 80P Due to Belated Return

The appellant/assessee did not file returns for the assessment years 2009-10 and 2010-11 within the prescribed time limits under Section 139(4) of the IT Act. Consequently, the Assessing Officer treated the returns as invalid and disallowed the claim for deduction under Section 80P, citing Section 80A(5) of the IT Act. The Tribunal upheld this view, and the High Court agreed, stating that the statutory scheme permits the allowance of a deduction under Section 80P only if it is made in a return recognized as such under the IT Act. The returns filed beyond the due date were non-est and could not be acted upon by the Assessing Officer.

Issue 2: Entitlement to Deduction under Section 80P of the IT Act

The appellant's claim for deduction under Section 80P was disallowed by the Assessing Officer and upheld by the Tribunal and the High Court. The High Court noted that the statutory scheme under the IT Act admits only such claims for deduction as are made in a valid return of income filed within the due date prescribed under Sections 139(1), 139(4), 142(1), or 148. The return filed by the appellant was beyond these dates, making it invalid for the purposes of claiming the deduction.

Issue 3: Classification of the Appellant Society under Section 80P(2)(a)(vi)

The High Court referred to a previous judgment in Peravoor Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham, which had already decided against the appellant/assessee on this issue. Following this precedent, the High Court answered the questions of law in favor of the Revenue, stating that the appellant society could not be considered as a Co-operative Society engaged in the collective disposal of labor of its members under Section 80P(2)(a)(vi).

Issue 4: Eligibility for Deduction under Section 80P(2)(a)(iii)

The High Court did not find merit in the appellant's argument for eligibility under Section 80P(2)(a)(iii). The statutory provisions and previous judgments indicated that the claim for deduction under Section 80P had to be made in a valid return filed within the time prescribed. Since the returns were filed beyond the due dates, the appellant was not eligible for the deduction.

Issue 5: Remanding the Matter Back to the Assessing Officer for Reconsideration

The appellant argued for remanding the matter back to the Assessing Officer to consider the issue on merits. However, the High Court found that the statutory scheme and the requirement of filing a valid return within the prescribed time limits were clear. Therefore, there was no need to remand the matter back for reconsideration.

Conclusion:

The High Court dismissed the appeals, answering all substantial questions of law in favor of the Revenue and against the appellant/assessee. The returns filed beyond the due dates were non-est and invalid, and the appellant was not entitled to any deduction under Section 80P of the IT Act.

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