Income Tax Appellate Tribunal - Cochin
Mayyil Service Co-Op Bank Ltd, Kannur vs Assessee on 12 February, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN
BEFORE S/SHRI N.R.S.GANESAN, JM and CHANDRA POOJARI, AM
I.T.A. Nos. A.Y. Appellant Respondent
1. 328/Coch/2012 2009-10 The Mayyil Service Co- I.T.O., Ward-4,
operative Bank, Mayyil, Kannur
Kannur
[PAN:AACAT 3967C]
2. 329/Coch/2012 2009-10 The Naduvil Co-op Bank I.T.O., Ward-4,
Ltd., Naduvil, Kannur
Taliparamba, Kannur.
[PAN:AAABT 3029N]
3. 498/Coch2014 2010-11 M/s. Muttathody Service I.T.O., Ward-1,
Co-operative Bank Ltd., Kasargod.
Naimarmoola, P.O.
Vidyanagar,
Kasargod-671 123.
PAN:AAAJM 1442Q]
s4. 515- 2007-08, M/s. Kodiyeri Service Co- I.T.O., Ward-2,
517/Coch/2014 2008-09 & operative Bank Ltd., Kannur.
2010-11 Kallithazhe, P.O. Paral,
Thalassery,
Kannur-670 671.
[PAN: AAABK 0213F]
S.P. Nos. 80-82/Coch/2014
(Arising out of I.T.A. Nos. 515-517 /Coch/2014)
Assessment Years : 2007-08, 2008-09 & 2010-11
M/s. Kodiyeri Service Co- Vs. I.T.O., Ward-2, Kannur.
operative Bank Ltd., Kallithazhe,
P.O. Paral, Thalassrey,
Kannur-670 671.
[PAN: AAABK 0213F]
(Assessee-Appellant) (Revenue-Respondent)
2 I.T.A. Nos.328&329/Coch/2012
and 516-517 & 498/Coch/2014
& S.P. Nos.80-82 /Coch/2014
Assessee by Smt. Divya Ravindran, Adv.,
Shri Arun Raj S., Adv.,
Revenue by Shri K.K. John, Sr. DR
Date of hearing 05/02/2015
Date of pronouncement 12/02/2015
ORDER
Per CHANDRA POOJARI, Accountant Member:
The appeals in I.T.A. Nos. 328 &329/Coch/2012, 498/Coch/2014 and 515- 517/Coch/2014 filed by different assessees and Stay Petitions in S.P. Nos. 80- 82/Coch/2014 arising out of I.T.A. Nos. 515-517/Coch/2014 filed in the case of M/s. Kodiyeri Service Bank Co-op Bank Ltd. are directed against the different orders of the CIT(A), Kozhikode for the assessment years 2007-08, 2008-09 2009-10 and 2010-11.
2. The first common ground in I.T.A. Nos. 328 &329/Coch/2012 is with regard to disallowance of deduction u/s. 80P of the I.T. Act by invoking the provisions of sec. 80P(5) of the I.T. Act.
3. The brief facts of the case as narrated by the CIT(A) in I.T.A. No. 328/Coch/2014 are that the assessee is a co-operative Bank registered under the Kerala Co-operative Societies Act, 1969. Since the assessee had failed to file return of income for the assessment years 2008-09 and 2009-10, the 3 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 Assessing officer issued a notice u/s. 142(1) requiring the assessee to file the return of income. The assessee neither complied with this notice nor filed return of income in terms of section 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 which were required by him to complete the assessment u/s. 144 of the Act. The assessee filed a return of income on 29-08-2011 which was beyond the time allowed u/s. 139(4) and therefore, the Assessing officer treated the same as invalid. On the basis of materials gathered in the course of assessment, the Assessing officer worked out the total income of the assessee at Rs.91,46,250/-. While completing the assessments, 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 his own order dated 21-09-2012 in the case of Karivellur Service Co-operative Bank Ltd. for the assessment year 2009- 10 and dismissed this ground of the appeal of the assessees as the factual matrix was same in both cases. Against this, the assessee is in appeal before us.
5. The Ld. AR submitted that the assessee is registered as "Primary Agricultural Co-op Credit Society" engaged in the business of banking with the 4 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 primary object of providing agricultural credits and the money lend to the agriculturists are for agricultural purposes. The Ld. AR submitted that the gold loans are for the purpose of agriculture only. The Ld. AR submitted that the usage of terms, Bank, Banker, Banking etc. does not deprive the assessee from the deduction eligible under the Income Tax Act because the RBI has granted the use of the terms. Hence, the Ld. AR submitted that the assessee is a Primary Agricultural Co-op Credit Society as defined under the Act and Banking Regulations Act. The Ld AR also submitted that the assessee has filed the return of income and the assessment has been completed based on the return of income and other details filed by it and therefore, the assessee is eligible for deduction under section 80P of the Act.
6. The Ld. DR relied on the order of the lower authorities.
7. We have heard both the parties and perused the record. We find that a similar came up for consideration before the Tribunal in the case of Kadachira Service Co-op Bank Ltd. vs. ITO reported in (2013) 153 TTJ (Cochin) 129.
The relevant portion of the observations of the Tribunal is extracted below:
11. We have given our thoughtful consideration to the submissions made on either side. The question arises for consideration is when the taxpayers have 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.5 I.T.A. Nos.328&329/Coch/2012
and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014
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 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.e.f. 1.4.2006
(iv) Has incurred expenditure for himself or any other person on travel to any foreign country;
(v) Is the holder of a credit card, not being an "ädd-on" card issued by any bank or institution; or
(vi) Is a member of a club where entrance fee charged is twenty five thousand rupees or more, Shall furnish a return, of his income during any previous year ending before the 1st day of April, 2005, on or before the due date in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed:6 I.T.A. Nos.328&329/Coch/2012
and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 Provided further that the Central Government may, by notification in the Official Gazette, specify the class or classes of persons to whom the provisions of the first proviso shall not apply:
Provided also that every company or a firm shall furnish on or before the due date the return in respect of its income or loss in every previous year:
Provided also that every person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, 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, without giving effect to the provisions of section 10A or section 10B or section 10BA or Chapter VI-A 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."
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 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 7 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 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 sub section (1) and sub section (2) of section 139 would benefit by filing return of income under sub section (4) of section 139 filed much later. The Apex Court observed, that was not the legislative intent. For convenience, we are reproducing the observations made by the Apex Court at pages 10 & 11 of the ITR:
"One of the significant terms used in section 276CC is in due time".
The time within which the 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 that would not dilute the infraction in not furnishing the return in due time as prescribed under sub-section (1) of section 139. Otherwise, the use of the expression "in due time" would lose its relevance and it cannot be said that the said expression was used without any purpose. Before substitution of the expression "clause (i) of sub-section (1) of section 142"by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989, the expression used was "sub- section (2) of section 139". At the relevant point of time the Assessing Officer was empowered to issue a notice requiring furnishing of a return within the time indicated therein. That means the infractions which are covered by section 276CC relate to non-furnishing of return within the time in terms of sub-section (1) or indicated in the notice given under sub-section (2) of section 139. There is no 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 8 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 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 which the provision to be interpreted is somewhat fitted. They are not entitled to usurp legislature function under the disguise of interpretation. While interpreting a provision 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. (see Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd [2005] 5 SCC 515; [2000] 101 Comp Cas 284). The legislature causu omissus cannot be supplied by judicial interpretative process."
15. In view of the above, it is obvious that when the language of the provision is plain and unambiguous, the language employed in the statute is the determinative factor of the legislative intent. As observed by the Apex Court, the legislative intention must be found in the words used by the legislature itself.
16. With the above background, let us now examine the provisions of section 80A(5) of the Act. Section 80A(5) of the Act was introduced by Finance (No.2) Act of 2009 with retrospective effect from 01-04-2003. Section 80A(5) reads as follows:
"80A(5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the head "C.-Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder."9 I.T.A. Nos.328&329/Coch/2012
and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 This section 80A(5) was introduced 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 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 section 10A(1A) of the Act which reads as follows:
10 I.T.A. Nos.328&329/Coch/2012and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 "Provided that no deduction under this section shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified under sub-section (1) of section 139."
A similar proviso was introduced to section 10B(1) of the Act. However, such a proviso was not incorporated in section 10AA and section 10BA of the Act. Subsequently by way of Finance Act, 2009, a comprehensive provision was introduced as section 80A(5) requiring the taxpayer to make a claim in the return of income for the purpose of deductions u/s 10A, 10B, 10AA, 10BA and other provisions of Chapter VIA under "C.-Deductions in respect of certain incomes". While introducing section 80A(5) the legislature was conscious that for the purpose of claiming deductions u/s 10A and 10B the taxpayer has to file a return of income within the time prescribed u/s 139(1) of the Act. In spite of that in section 80A(5), the time limit provided in section 139(1) was not mentioned. The legislature simply says that the claim for deduction shall be made in the return of income.
20. The next question follows is what is return of income. Whether a return filed beyond the time limit provided u/s 139(1) can be considered to be a return of income. If the return of income filed beyond the time limit provided u/s 139(1) was considered as return of income, then the taxpayer may claim that they have already filed a return of income. The 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 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 11 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 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 it clear by inserting the words "before the due date specified" or "in due time" or "within the time limit". In section 80A(5) the legislature expressly omitted to include the words "within the time limit" or "before the due date specified" or "in due time". Therefore, for the purpose of Chapter VIA, the legislature intended not to make it compulsory the filing of return of income within the specified time or in due time as provided in section 139(1) of the Act. In fact, section 80 r.w.s. 139(3) of the Income-tax Act which provides for carry forward of losses makes the taxpayer to file the return of income within the time within the time allowed u/s 139(1) as the law stood as of now. However, as section 80 stood earlier there was no time limit provided in section 80 for filing the return of income to make a claim for carry forward of losses. The Apex Court, after considering the provisions of section 80 as it stood at the relevant point of time in the case of C.I.T. vs Kulu Valley Transport Co P Ltd (1970) 77 ITR 518 (SC) found that the return filed u/s 139(4) before completion of the assessment has to be considered for carry forward of losses. Subsequently, the legislature amended section 80 by Taxation Laws Amendment Act, 1984 with effect from 01-04-1985 and another amendment was made by Direct Tax Laws amendment Act, 1987 with effect from 01-04-1989. As the law stands for now, 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) 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 12 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 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 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 or 148 whether the taxpayer is entitled for deduction u/s 80P of the Act. The contention of the taxpayers, more particularly, the ld.senior counsel, Shri T.M. Sreedharan is that law requires to make a claim when the return was filed. When the return was not filed, the taxpayer cannot be expected to make a claim. Therefore, when the return was not filed, irrespective of the fact that the taxpayer has not made any claim, the deduction has to be allowed. This submission of the ld.senior counsel is very attractive. However, this Tribunal do not find any substance. Section 139(1) of the Act, as we discussed earlier, make it mandatory for every taxpayer whose total income exceeds the maximum amount which is not chargeable to income-tax before grant of deductions u/s 10A, 10B and deduction under Chapter VIA of the Act to file the return of income. In the case before us, admittedly, all the taxpayers' income exceeded the maximum amount which is not chargeable to income-tax before grant of deduction under Chapter VIA of the Act. Therefore, it is not only mandatory but also statutory requirement that all the taxpayers have to file the return of income before the due date prescribed u/s 139(1) of the Act. If there was any failure on the part of the taxpayer to furnish the return of income, the legislature has made it a punishable offence u/s 276CC of the Act. Therefore, it is obvious that it is mandatory to file the return of income as required u/s 139(1) of the Act if the total income exceeds the maximum amount which is not chargeable to income-tax before grant of 13 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 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 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 thought that the above three conditions would avoid multiple deductions in respect of same profit. One of the conditions prescribed by legislature in section 80A(5) is to make a claim in the return of income. Therefore, accepting the plea of the learned senior counsel would mean that a person who has not filed a return would get benefit, but a person who filed the return but failed to make a claim either by ignorance or otherwise may not get the benefit at all. This Tribunal is of the considered opinion that this cannot certainly be the legislative intent.
25. Moreover, economic measures are implemented on trial and error basis. The legislature, in their wisdom resolved to grant deduction in 14 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 respect of income of the co-operative societies. To regulate / streamline the deduction, the legislature enacted sections 80A(4) and 80A(5) and one of the conditions is to make a claim in the return of income. Section 80P is admittedly a beneficial provision. It is settled principles of law that in order to avail benefits under the beneficial provision, the conditions provided by the legislature has to be complied with. Therefore, this Tribunal is of the considered opinion that in view of the mandatory provisions contained in section 139(1) r.w.s. 80A(5) of the Act 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 u/s 80P of the Act in the return itself. In view of the above discussion, 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 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 15 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 of belated return no one could say that any income chargeable to tax has escaped assessment. Unless and until, the assessment proceedings initiated by the assessing officer by issuing notice u/s 142(1) culminated either by an assessment order or otherwise by operation of law, we may not be able to say that any part of income chargeable to tax has escaped assessment. Therefore, the assessing officer had no jurisdiction at all to issue notice u/s 148 for assessing the income of the taxpayer. In other words, no income could be said to be escaped assessment at that point of time. Therefore, the contention of the ld. representative for the taxpayer that notice ought to have been issued u/s 148 for regularizing the returns filed u/s 139(4) has no merit at all.
27. Furthermore, a bare reading of section 147, clearly shows that, the assessing officer has to believe that the income chargeable to tax has escaped assessment. Section 148(2) makes it mandatory to record reason for such belief. Therefore, the jurisdiction to issue notice u/s 147 is the belief of the assessing officer with regard to escapement of income from assessment. Therefore, the taxpayer cannot compel the assessing officer to issue notice u/s 148 for regularization of the return filed belatedly. The Apex Court in the case of CIT vs Sun Engineering Works P Ltd (1992) 198 ITR 297, 320 (SC) examined the scope of sections 147 and 148 and found that proceedings u/s 147 are for the benefit of the revenue. In view 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 and mandatory 16 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 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 in I.T.A. Nos.328&329/Coch/2012.
9. The next common ground of appeal in I.T.A. Nos. 515-517/Coch/2014 and 498/Coch/2014 is with regard to disallowance of deduction u/s. 80P of the I.T. Act.
10. The brief facts of the case as narrated by the CIT(A) in I.T.A. No.515/Coch/2014 are that the assessee is a Co-operative Bank mainly engaged in the banking business. While completing the scrutiny assessment, the Assessing officer disallowed the claim of deduction u/s. 80P of the I.T. Act.
11. On appeal, the CIT(A) relied on the decision of the ITAT, Cochin Bench in the case of Kunnmangalam Co-operative Bank vs. ITO in I.T.A. No. 156/coch/2014 dated 25/07/2014 for the assessment year 2009-10 and M/s.
Pinarayi Service Co-operative Bank Ltd. vs. ITO in I.T.A. No. 123/Coch/2012 dated 31/07/2014 for the assessment year 2009-10 and dismissed this ground as the factual matrix is the same in both the cases.
17 I.T.A. Nos.328&329/Coch/2012and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014
12. We have heard both the parties and perused the material on record. It is not a dispute that the assessees are accepting deposits from general public, maintaining savings account, providing cheque facilities, etc. as a banking business. The question arises for our consideration whether the assessees providing banking services to the general public and their members are eligible for exemption u/s. 80P of the Act. This Tribunal has discussed this issue elaborately in Kunnamangalam Co-operative Bank Ltd. and Pinarayi Services Co-
oprative Bank Ltd. cited supra and also followed by the CIT(A) wherein it was held that the assessees are not eligible for exemption u/s. 80P of the Act.
Therefore, we do not find any infirmity in the order of the CIT(A). Accordingly, the same is confirmed. This ground in I.T.A. Nos. 515-517/Coch/2014 and 498/Coch/2014 is dismissed.
13. The next common ground of appeal in I.T.A. Nos. 328&329/Coch/2014 and 498/Coch/2014 is with regard to disallowance made u/s. 40(a)(ia) of the Act. The contention of the assessee before the lower authorities was that section 40(a)(i) is applicable only for the amount remaining to be paid as at the accounting year end and it is not applicable to the amounts already paid. The CIT(A) followed the order of this Tribunal in the case of Karivelloor Service Co-
operative Bank Ltd. vs. ITO in I.T A. No. 311/Coch/2012 vide order dated 22-03- 2013 and Smt. Prasanna Radhakrishnan Dawson vs. ITO in I.T.A. No. 153/Coch/2014 vide order dated 08-08-2014 and found that the decision of the 18 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 Special Bench of the Visakhapatnam Bench of this Tribunal in Merilyn Shipping & Transports 136 ITD 23 (SB) is not applicable in these cases. In fact, this Tribunal in the case of Orchid Marine Vs. ITO in I.T.A. No. 802/Coch/2013 dated 24/09/2014 by following the judgment of the Gujarat High Court in the case of CIT vs. Sikandarkhan N Tunvar reported in 33 Taxman.com.133 found that the provisions of section 40(a)(ia) are applicable not only in respect of the amount paid but also the amounts remain to be paid as on the last day of the financial year. The CIT(A) has followed the order of this Tribunal. Therefore, we do not find any infirmity in the order of the lower authorities. Accordingly, the same is confirmed. Accordingly, this ground in I.T.A. Nos. 328&329/Coch/2014 and 498/Coch/2015 is dismissed.
14. The next common ground of appeal in I.T.A. Nos. 328&329/Coch/2014, is with regard to disallowance made under 36(1)(viia) of the Act.
15. The Ld. AR submitted that the disallowance made u/s. 36(1)(viia) is not justified. The Ld. AR submitted that even though the judgment of the Jurisdictional High Court in Lord Krishna Bank Ltd. vs. CIT 195 Taxman 57 is against the assessee, the assessee is eligible for exemption. The CIT(A) has followed the binding decision of the Jurisdictional High Court in Lord Krishna Bank (supra). We are of the opinion that the judgment of the Kerala High Court is binding on all authorities including this Tribunal. We find that similar issue 19 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014 came up for consideration in the case of Kannur Co-operative Bank Ltd. in I.T.A. Nos. 182&183/Coch/2014 dated 27/06/2014 wherein the Tribunal decided the issue against the assessee. Therefore, we do not find any infirmity in the order of the lower authorities. Accordingly, the same is confirmed. This ground in I.T.A. Nos. 328&329/Coch/2014 is dismissed.
16. In view of our above decisions on the above appeals, the Stay Petitions in S.P. Nos. 80-82/Coch/2014 in the case of Kodiyeri Service Co-op Bank Ltd. have become infructuous and hence dismissed.
17. In the result, all the appeals and three Stay Petitions filed by the assessee are dismissed.
Pronounced in the open court on 12-02-2015
sd/- sd/-
(N.R.S.GANESAN) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Place: Kochi
Dated: 12th February, 2015
GJ
Copy to:
1. The Mayyil Service Co-operative Bank, Mayyil, Kannur
2. The Naduvil Co-op Bank Ltd., Naduvil, Taliparamba, Kannur.
3. M/s. Muttathody Service Co-operative Bank Ltd., Naimarmoola, P.O. Vidyanagar, Kasargod-671 123.
4.M/s. Kodiyeri Service Co-operative Bank Ltd., Kallithazhe, P.O. Paral, Thalassery, Kannur-670 671.
5. The Income Tax Officer, Ward-2, Kannur 20 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014
6. The Income Tax Officer, Ward-4, Kannur.
7. The Income Tax Officer, Ward-1, Kasargod.
8. The Commissioner of Income-tax(Appeals), Kozhikode.
9. The Commissioner of Income-tax, Kozhikode.
10. D.R., I.T.A.T., Cochin Bench, Cochin.
11 Guard File.
By Order (ASSISTANT REGISTRAR) I.T.A.T., Cochin 21 I.T.A. Nos.328&329/Coch/2012 and 516-517 & 498/Coch/2014 & S.P. Nos.80-82 /Coch/2014