2024 (10) TMI 1644 - AT - Income Tax

Deduction u/s 80P - assessee has not filed its return of income within the due date prescribed u/s 139(1) - HELD THAT - The issue is no longer res integra. As decidedin the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham. 2023 (3) TMI 1055 - KERALA HIGH COURT has decided the issue in favour of the Revenue. On identical facts the Bangalore Bench of the Tribunal in the case of Madhu Souharda Pathina Sahakari Niyamitha 2024 (1) TMI 1452 - ITAT BANGALORE by following the judgment of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham supra has decided the issue in favour of the Revenue.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issue considered in this judgment is whether the claim for deduction under section 80P of the Income Tax Act, 1961, can be allowed when the return of income is filed after the due date prescribed under section 139(1) of the Act. The Tribunal also examined whether the CIT(A) was correct in sustaining the disallowance of the deduction claimed under section 80P due to the belated filing of the income tax return.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework central to this issue includes sections 80P, 80AC, 80A(5), and 139(1) of the Income Tax Act. Section 80P provides deductions for income earned by cooperative societies. Section 80AC, as amended by the Finance Act 2018, mandates that for an assessee to claim deductions under section 80P, the return must be filed within the due date specified under section 139(1). Section 80A(5) stipulates that deductions under Chapter VIA, which includes section 80P, can only be claimed if included in a return filed within the prescribed time limits.

The Tribunal referenced the judgment of the Kerala High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. CIT, which held that claims for deductions under section 80P must be made in a return filed within the due date under section 139(1). This position was further supported by the Bangalore Bench of the Tribunal in Madhu Souharda Pathina Sahakari Niyamitha Vs. ITO.

Court's Interpretation and Reasoning

The Tribunal interpreted the statutory provisions to mean that the filing of a return within the due date specified in section 139(1) is a precondition for claiming deductions under section 80P. The Tribunal emphasized that the statutory scheme under the Income Tax Act requires strict adherence to the timelines prescribed for filing returns to avail of deductions.

Key Evidence and Findings

The Tribunal noted that the assessee, a cooperative society, did not file its return of income within the due date prescribed under section 139(1). The return was filed only after receiving a notice under section 148, which is beyond the due date. The Tribunal found that this delay in filing the return resulted in the disallowance of the deduction claimed under section 80P.

Application of Law to Facts

Applying the legal framework to the facts, the Tribunal concluded that since the assessee did not file the return within the due date prescribed under section 139(1), the claim for deduction under section 80P could not be allowed. The Tribunal held that the statutory provisions are clear in requiring the return to be filed within the specified time to claim deductions.

Treatment of Competing Arguments

The assessee argued that the belated filing of the return should not disentitle it from claiming the deduction under section 80P, citing decisions from various High Courts and ITATs. However, the Tribunal dismissed these arguments, relying on the Kerala High Court's judgment, which was found to be directly applicable to the facts of the case. The Tribunal also noted that the statutory language and legislative intent behind the amendments to section 80AC were clear and unambiguous.

Conclusions

The Tribunal concluded that the assessee's failure to file the return within the due date prescribed under section 139(1) precluded it from claiming the deduction under section 80P. The Tribunal upheld the CIT(A)'s decision to disallow the deduction, affirming that the statutory requirements were not met.

SIGNIFICANT HOLDINGS

The Tribunal's significant holding is that the statutory scheme under the Income Tax Act mandates the filing of a return within the due date specified in section 139(1) as a precondition for claiming deductions under section 80P. The Tribunal quoted the Kerala High Court's reasoning that the statutory provisions must be strictly construed against the assessee and in favor of the Revenue in matters of deductions and exemptions.

The Tribunal also reinforced the principle that legislative amendments, such as those to section 80AC, serve to clarify and fortify the statutory requirements, making the filing of a return within the prescribed time even more stringent for claiming deductions.

In conclusion, the Tribunal dismissed the appeal filed by the assessee, affirming the disallowance of the deduction under section 80P due to the late filing of the return, thus ruling in favor of the Revenue.