TMI Blog2015 (2) TMI 1311X X X X Extracts X X X X X X X X Extracts X X X X ..... income may be in a better position to claim the benefit. 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,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. Exemption u/s 80P - HELD THAT:- 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. [ 2014 (10) TMI 350 - ITAT COCHIN] and Pinarayi Services Cooprative Bank Ltd. [ 2014 (7) TMI 1176 - ITAT COCHIN] and also followed by the CIT(A) wherein it was held that the assessee are not eligible for exemption u/s. 80P of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch/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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade 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. 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 prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction 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. 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 dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 section stands at present, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 chargeab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard 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-op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 Cooperative 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 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 applicabl ..... 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