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TMI Blog2014 (11) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... onary – 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 retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. However, the assessee neither complied with this notice nor filed return of income in terms of sec. 139 or in terms of notice u/s. 142(1) of the Act and hence, the Assessing officer proceeded to initiate best judgment assessment u/s. 144 of the Act as per the notice issued u/s. 142(1) of the Act. Accordingly, the Assessing officer called for details by issuing notice u/s. 142(1)(ii) of the Act. During the course of assessment proceedings, the assessee filed return of income 0n 20-03-2013, which was beyond the time limit prescribed u/s. 139 of the Act and the time limit prescribed in notice u/s. 142(1) and, therefore, the Assessing officer treated the same as invalid. On the basis of materials gathered during the course of assessment, the Assessing officer worked out the total income of the assessee from business at ₹ 8,79,044/-. While completing the assessment, the Assessing officer disallowed the claim of deduction u/s. 80P by invoking the provisions of section 80A(5). 4. On appeal, the CIT(A) relied on the decision of the ITAT, Cochin Bench in the case of Kadachira Service Co-op Bank Ltd. vs. ITO reported in (2013) 153 TTJ (Cochin) 129 for the assessment year 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) of the Act, whether such taxpayers are entitled for deduction u/s 80P of the Act. 12. To answer the above question, let us first examine whether the cooperative societies are liable to file the return of income under the Income tax Act or not. This issue needs to be considered since some of the taxpayers under appeal claimed that they were under the bona fide impression that return need not be filed. We have carefully gone through the provisions of section 139 of the Act. Section 139(1) reads as follows: 139(1) Every person,- (a) Being a company or a firm; or (b) Being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. 13. In view of the above, unless the Central Government by a notification in the official gazette exempts the co-operative societies from filing the returns, they have to file the return of income. Therefore, it may not be correct to say that the co-operative societies were under the impression that they need not file their returns of income since their income was exempted. A statutory liability of filing the return under the Income-tax cannot be disowned on the ground that they were under a bona fide impression. Furthermore, section 276CC of the Income-tax Act, 1961 makes it a punishable offence in case the return of income which is required to be filed u/s 139(1) or on issuance of a notice u/s 142(1), etc. is not filed. Therefore, it is obvious that the return has to be filed within the time limit prescribed u/s 139(1) or atleast within the time specified in the notice u/s 142(1). If the return was not filed by the taxpayers, then the consequential penal provisions as provided in section 276CC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o condonation of the said infraction, even if a return is filed in terms of sub-section (4). Accepting such a plea would mean that a person who has not filed a return within the due time as prescribed under sub-section (1) or (2) of section would get benefit by filing the return under section 139(4)much late. This cannot certainly be the legislative intent. 14. The Apex Court has also considered the scope of interpretation of the statutory provisions. The Apex Court found that when the language employed in the statute is plain and unambiguous, court cannot read anything into the statutory provisions. While interpreting the provisions the court only interprets the law and cannot legislate it. If a provision of law is misused and subjected to the abuse of process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. In fact, the Apex Court has observed as follows at page 9 of the ITR: It is a well settled principle in law that the court cannot read anything into a statutory provision which is plain and unambiguous. A state is an edict of the Legislature. The language employed in a statute is the determinative factor of legislature intent. The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced by Finance Act, 2009 along with sub section (4) of section 80A. While introducing the section, the intention of the legislature was to avoid multiple deductions in respect of the same profit. In order to avoid multiple deductions in respect of the same profit, the legislature has imposed three conditions for claiming deduction u/s 10A or section 10AA or section 10B or section 10BA or under any provisions of Chapter VIA under the head C.- Deductions in respect of certain incomes . The three conditions are as follows: (i) If a deduction in respect of any amount was allowed u/s. 10A, 10AA or 10B or 10BA or under provisions of Chapter VIA under the head C.-Deductions in respect of certain incomes in any assessment year, then the same deduction in respect of the same profit gains shall not be allowed under any other provisions of the Act for such assessment year; (ii) The aggregate deduction under various provisions shall not exceed the profit and gains of the undertaking or unit or enterprise or the business profit, as the case may be; and (iii) There shall be a claim made in the return of income. 17. The legislature, in their wisdom thought it fit that imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court had an occasion to examine this issue in the case of Prakash Nath Khanna Anr (supra). While considering the scope and ambit of section 276CC, the Apex Court while interpreting the words in due time which are found in section 276CC observed that the time within which return is to be furnished is indicated only in sub section (1) of section 139 and not in sub section (4) of section 139. That being so, even if a return is filed in terms of sub section (4) of section 139 would not dilute the infraction in not furnishing the return in due time as prescribed in section (1) of section 139. In section 80A(5) the legislature obviously omitted to mention the words in due time . What it says is where the taxpayer fails to make a claim in the return of income, no deduction shall be allowed. It does not say that the return of income shall be furnished in due time. Therefore, it is obvious that for the purpose of section 276CC, the return has to be filed in due time, i.e. within the time limit prescribed u/s 139(1). However, for the purpose of claiming deduction u/s 80P, in view of the language employed in section 80A(5) what is required is to make a claim in the return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) of the Act. This issue has been examined by the Kerala High Court in the case of C.I.T. vs R Chandran (1991) 191 ITR 328 (Ker). After considering the judgment of the Apex Court in Kulu Valley Transport Co P Ltd (supra), the Kerala High Court found that in view of the law stood for the assessment year 1976-77 the taxpayer was entitled to carry forward loss. After referring to Direct Taxes (Amendment) Act, 1987, the Kerala High Court observed that as the section stands at present, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of section 139(3) of the Act shall be carried forward and set off is to be permitted. Therefore, it is obvious that 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. While introducing section 80A(5) the legislature well aware that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total income exceeds the maximum amount which is not chargeable to income-tax before grant of deductions u/s 10A, 10B and under Chapter VIA of the Act. When it is mandatory for the taxpayer to file the return of income, the taxpayer cannot claim that they are entitled for the benefit available under the Act when the return itself was not filed. Under section 80A(5), the legislature made it mandatory that the claim under Chapter VIA under the heading C.- Deductions in respect of certain income has to be made in the return. If the contention of the ld. senior counsel 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. This Tribunal is of the considered opinion that this is not the intention of the legislature at all. The persons, who complied with the provisions of the Income-tax Act by filing the return, however, failed to make a claim in the return either by ignorance or otherwise cannot be put in a worse position than a person who has not filed ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussion, 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 under section 80P of the Act. 26. The next contention of the taxpayer is that when the return was filed before completion of the assessment proceedings, the assessing officer ought to have issued notice u/s 148 of the Act for regularizing the returns. We have carefully gone through the provisions of section 147 148 of the Act. Section 148 enables the assessing officer to serve a notice on the tax payer to furnish a return of income. Section 147 provides for condition for assessment of the income which escaped assessment. As per the provisions of section 147, when the assessing officer has a reason to believe that any income chargeable to tax has escaped assessment for any assessment year, then subject to provisions of sections 147 to 153 he may assess or reassess the income which escaped assessment. The question arises for consideration is at what point of time the income would be considered to be escaped assessment. To consider any income chargeable to tax as escaped assessment, the assessment proceedings sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the above, this Tribunal finds no merit in the contention of the taxpayer. 28. The taxpayers in ITA Nos.251, 253 254/Coch/2012 claim to have filed the returns on 07-12-2011; in ITA No. 255/coch/2012 on 30-09- 2011. The taxpayers in ITA Nos.267 268/Coch/2012 have not filed the returns. The assessment year under consideration is 2009-10. One year from the end of the relevant assessment year expires on 31-03- 2011. Admittedly, all the returns were filed beyond 31-03-2011. Therefore, the returns said to be filed by the taxpayer cannot be treated as returns filed u/s 139(4) of the Act. Therefore, the assessing officer has rightly disallowed the claim of the taxpayers u/s 80P of the Act. 29. The next contention of the ld. taxpayers is that all these taxpayers being a co-operative societies functioning in the remote villages in the state of Kerala. Therefore, the ld. representative for the taxpayers prayed that a sympathetic view may be taken. We are conscious that sympathy is essential for justice. We are also conscious that sympathy cannot replace or substitute the provisions of the Act. Therefore, even though we have sympathy with the taxpayers, in view of the specific ..... 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