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TMI Blog2014 (11) TMI 902X 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 return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since the assessee had failed to file return of income for the assessment year 2010-11, the Assessing officer issued notice u/s. 142(1) requiring the assessee to file the return of income. 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 in order to complete the assessment u/s. 144 of the Act. 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 ₹ 3,70,054/-. 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) dismissed this ground of the assessees by relying on the decision of the ITAT, Cochin Bench in the case of M/s. Kadachira Service Co-operative Bank Ltd. vs. ITO for assessment year 2009-10 (2013) 153 TTJ (Cochin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as may be prescribed: Provided that a person referred to in clause (b) who is not required to furnish a return under this sub-section and residing in such area as may be specified by the Board in this behalf by notification in the Official Gazette, and who during the previous year incurs an expenditure of fifty thousand rupees or more towards consumption of electricity or at any time during the previous year fulfils any one of the following conditions, namely:- (i) Is in occupation of an immovable property exceeding a specified floor area, whether by way of ownership, tenancy or otherwise, as may be specified by the Board in this behalf; or (ii) Is the owner or the lessee of a motor vehicle other than a twowheeled motor vehicle, whether having any detachable side car having extra wheel attached to such two-wheeled motor vehicle or not; or (iii) Omitted by the Finance Act, 2005 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. 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 of the Act would follow. We find that the Apex Court in the case of Prakash Nath Khanna Anr vs C.I.T. (2004) 266 ITR 1 (SC) had an occasion to consider the scope and ambit of section 276CC of the Act. After examining various judgments on the subject and the provisions of section 139(1), the Apex Court found that the time limit for filing the return of income is indicated only in sub section (1) of section 139 and not in sub section (4) of section 139. Therefore, even if the return was filed in terms of sub section (4) of section 139, that will not dilute the infraction in not furnishing the return within the time as prescribed under sub section (1) of section 139. The Apex Court further found that accepting the plea of the taxpayer that the return can be filed under sub section (4) of section 139 would mean that a person who has not filed the return within the due time as prescribed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 first and primary rule of construction is that the intention of the legislation must be found in the words used by the Legislature itself. The question is not what may be supposed and has been intended but what has been said. Statutes should be construed, not as theorems of Euclid . Judge Learned Hand said, but words must be construed with some imagination of the purposes which lie behind them . (see Lenigh Valley Coal Co. v. Yensavage (218 FR 547). The view was reiterated in Union of India v. Filip Tiago De Gama of Vedem Vasco De Gama, AIR 1990 SC 981 and Padma Sundara Rao v. State of Tamil Nadu [2002] 3 SCC 533; [2002] 255 ITR 147 (SC). In D.R. Venkatachalam v. Deputy Transport Commissioner [1977] 2 SCC 273 it was observed that courts must avoid the danger if a priori determination of the meaning of a provision based on their own preconceived notions of ideological structure of scheme into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 implementation of these three conditions would prevent misuse and to avoid multiple claim of deduction u/ss 10A, 10AA, 10B or 10BA or under any provisions of Chapter VIA under the head C.- Deductions in respect of certain incomes . Condition No.(iii) is also manifest in provisions of section 80A(5) of the Act. Therefore, a plain reading of the language of section 80A(4) and 80A(5) makes it clear the purpose and intent of the legislature. It does not require any further interpretation. 18. The question now arises for consideration is whether filing of return of income and making a claim therein in respect of deduction u/s 80P is mandatory or discretionary? 19. Let us now examine the other provisions of the Income-tax Act, 1961 where such a deduction is provided to appreciate the provisions of section 80A(5) of the Act. By Finance Act, 2005 with effect from 01-04-2006 a proviso was inserted in sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 income. The return may be filed either u/s 139(1) or 139(4) or in pursuance of a notice issued u/s 142(1) or 148 of the Act. In view of the absence of the words in due time in section 80A(5), this Tribunal is of the considered opinion that the return filed u/s 139(1) or 139(4) or within the time limit specified in section 142(1) or 148 can also be considered as return of income within the meaning of section 80A(5) of the Act. 21. The next question follows is when there is a failure on the part of the taxpayer to file return 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) or 148 but files the return of income belatedly, whether such return could be treated as return of income or not? 22. As we have already discussed, wherever it is necessary for the taxpayer to file the return of income within a specified date, the legislature has made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not only for carry forward of losses but also for deductions u/s 10A, 10B the taxpayer has to file the return of income within the time limit prescribed u/s 139(1) of the Act. In spite of that the legislature omitted to mention the words within due time in section 80A(5) of the Act. Therefore, this Tribunal is of the considered opinion that 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. 23. The next question follows for consideration is when the taxpayer has not filed any return of income either u/s 139(1) or u/s 139(4) or in pursuance of notice issued u/s 142 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the intention of the legislature at all. The persons, who complied with the provisions of the Incometax 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 return as required u/s 139 of the Income-tax Act. The intention of the legislature in enacting section 80A(4) and 80A(5) is to avoid multiple deduction in respect of the same profit. The legislature prescribed three conditions in sections 80A(4) and 80A(5) which 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. 24. The legislature in their wisdom th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 shall have to come to an end either by order u/s 143(3) or otherwise by operation of law. In the case before us, admittedly, the taxpayer has not filed any return of income within the time limit specified u/s 139(1) or 139(4) of the Act. Moreover, no return was filed in compliance to the notice issued u/s 142(1) of the Act either. The contention of the taxpayer is that the return was filed belatedly but before completion of the assessment proceedings. In the case before us, admittedly, the notice u/s 142(1) was issued and the assessing officer directed the taxpayer to file the return of income. Since the return was not filed, the assessing officer proceeded further to assess the income u/s 144 of the Act. Therefore, when the so-called return said to be filed by the taxpayers, the assessment proceedings were already pending. When the assessment proceedings are admittedly pending on the date of filing of belated r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayed 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 and mandatory provisions of section 139 r.w.s. 80A(5) of the Act, this Tribunal do not find any merit in the claim of the taxpayer. 8. To be consistent with the view taken by the Tribunal, we are inclined to dismiss this ground of the assessees. 9. The Ld. AR also made an alternative plea that the assessee is lending money only to its members. Being so, applying the concept of mutuality, the total income of the assessee has to be exempt from tax. However, we find that this argument of the assessee is also devoid of merits. The Hon ble Supreme Court had an occasion to consider this mutuality concept. Similar issue came up for consideration of the Hon ble Supreme Court in the case of CIT vs. Kumbakonam Mutual Benefit Fund Ltd., 53 ITR 241 (SC) wherein it was held that if the profits are distributed to shareholders as shareholders, the principle of mutuality is not satisfied. A shareholder in the assessee-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, to the extent mentioned. Clause(c) of section 80P(2) provides that in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b) either independently of, or in addition to, all or any of the activities so specified, so much of its profits and gains attributable to such activities as does not exceed ₹ 20,000 shall be deducted in computing the total income. The co-operative society engaged in carrying on the business of banking or providing credit facilities to its members falls under clause (a) of section 80P(2). The claim for exemption under clause (c) is in addition to the exemption provided under clause (a). The provisions are cumulative and mutually supplementing. The limits specified in clause(c) are in relation to the profits and gains attributable to the activity other than that specified in clause (a). If the rental income received by the society is attributable to any activity of the society, clause (c) would be attracted. It is then necessary that the co-operative society must prove that it has engaged itself in carrying on the activity giving rise to profits or gains. Such activity of the assessee must have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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