TMI Blog2023 (1) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) TMI 617 - SUPREME COURT The assessee was required to file its return of income for claiming the deduction u/s 80P(2)(a)(i) of the Act within the due date as per amendment made in the section 80AC of the Act., whereas the assessee has filed return of income on 31.12.2018, which is beyond the due date, therefore the assessee is not eligible for claiming benefit of deduction u/s 80P(2)(a)(i) - The assessee has relied on judgments, which have been quoted in its grounds of appeal, which are not applicable in the present facts of the case. Our view is supported by the judgment of Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. 2021 (4) TMI 1169 - MADRAS HIGH COURT in which it has been observed that the adjustment can be made u/s 143(1) of the Act. while processing the return of income and the provisions of section 80AC(ii) make it clear that any deduction that is claimed under Part C of Chapter VI-A would be admissible only if the return of income in that case were filed within the prescribed due date. Thus, no claim under any of the provisions of Part C of Chapter VIA would be admissible in the case of a belated return . Thus we hold that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20/- u/s 234A even when the Appellant is not liable there for under the law 8. That the impugned order is liable to set aside in so far as the Appellate Commissioner erred in upholding the levy of interest of 32,620/- u/s234Beven when the Appellant is not liable there for under the law 9. That the impugned order is liable to set aside in so far as the Appellate Commissioner erred in upholding the levyofinterestof11,768/- u/s234Cevenwhen the Appellant is not liable there for under the law. 2. The brief facts of the case are that the due date for filing the return of income was 31.8.2018, whereas assessee has filed return of income on 31.12.2018 declaring income from business or profession at Rs.7,64,063/-, which was claimed as deduction u/s 80P(2)(a)(i) of the Act under Chapter VI-A of the Act. The return was processed u/s 143(1) of the Act on 31.5.2019 denying the deduction claimed u/s 80P(2)(a)(i) of the Act and raised the demand of Rs.2,90,710/-. Aggrieved from the above order, the assessee has filed appeal before CIT(A) and the assessee has also relied on some case laws, which have been considered by the ld. CIT(A). The ld. CIT(A) has observed as under: 5. Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther relied on various judicial decisions in regards to the liberal interpretation should be given in case of deductions. In this issue, the observation of the Supreme Court in the following cases are relevant and are to be taken on note: (i) In the case of Orissa State Warehousing Corporation Vs. CIT reported in 237 ITR 589 (SC), Hon'ble Supreme Court held that 'Fiscal statue shall have to be interpreted on the basis of the language used there in and not de horsthe same. No words ought to be added and only the language used ought to be considered so as to ascertain the proper meaning and intent of the legislature. The Court is to ascribe natural and ordinary meaning to the words used by the legislature and the Court ought not, under any circumstances to substitute its own impression and ideas in place of the legislative intent as his available from a plan reading of the statutory provisions . (ii) In the case of KeshavjiRavji Co. Vs. CIT reported in 183 ITR 1 (SC) it was held that as long as there is no ambiguity in the statutory language resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt assessment year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of five thousand rupees. . 6.1 The AO had imposed the penalty u/s 271F on the ground that the assessee had without reasonable cause, failed to furnish return of income u/s 139(1) of the I. T. Act, 1961 for A.Y. 2018-19 and thus committed default within the meaning of Sec. 271 of the Act. Even during the course of appeal proceedings, the appellant has not filed any valid, reasonable and cogent reason for not filing his return of income, even though the provisions of Section 139(1) of the Income Tax Act explicitly required him to file his Return of Income within the stipulated time. The penalty levied by the AO u/s 271F, is therefore upheld and the appellant's appeal accordingly dismissed. Accordingly, the ld. CIT(A) dismissed the appeal of the assessee. 3. None was present on behalf of the assessee. Therefore, we proceed to dispose off this appeal after hearing the learned DR. The ld. DR submitted that the assessee is a co-operative society and it filed return of income after the due date. The due date for filling of return of income was 31.8.2018, whereas the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made:' 7. The scope of an 'intimation' under section 143(1)(a) of the Act, extends to the making of adjustments based upon errors apparent from the return of income and patent from the record. Thus to say that the scope of 'incorrect claim' should be circumscribed and restricted by the Explanation which employs the term 'entry' would, in my view, not be correct and the provision must be given full and unfettered play. The explanation cannot curtail or restrict the main thrust or scope of the provision and due weightage as well as meaning has to be attributed to the purposes of section 143(1)(a) of the Act. 8. The provisions of section 80AC(ii) make it clear that any deduction that is claimed under Part C of Chapter VIA would be admissible only if the return of income in that case were filed within the prescribed due date. Thus no claim under any of the provisions of Part C of Chapter VIA would be admissible in the case of a bela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant was barred from claiming deduction in view of Section 80P(4) of the Income-tax Act - see paragraph 5. After setting out the findings of fact in that case, and the income tax authorities concurrent holding that the society is carrying on banking business and for all practical purposes acts like a co-operative bank, this Court then held as follows: 18. We may mention at the outset that there cannot be any dispute to the proposition that section 80-P of the Act is a benevolent provision which is enacted by Parliament in order to encourage and promote growth of cooperative sector in the economic life of the country. It was done pursuant to the declared policy of the Government. Therefore, such a provision has to be read liberally, reasonably and in favour of the assessee (see Bajaj Tempo Ltd. v. CIT [1992] 3 SCC 78]). It is also trite that such a provision has to be construed as to effectuate the object of the legislature and not to defeat it (see CIT v. Mahindra and Mahindra Ltd. [1983] 4 SCC 392. Therefore, it hardly needs to be emphasised that all those cooperative societies which fall within the purview of section 80-P of the Act are entitled to deduction in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the several heads of exemption. If it fell within any one head of exemption It means that a cooperative society engaged in carrying on the business of banking and a cooperative society providing credit facilities to its members will be entitled for exemption under this sub-clause. The carrying on the business of banking by a cooperative society or providing credit facilities to its members are two different types of activities which are covered under this sub-clause. ** ** ** 13. So, in our view, if the income of a society is falling within any one head of exemption, it has to be exempted from tax notwithstanding that the condition of other heads of exemption are not satisfied. A reading of the provisions of section 80-P of the Act would indicate the manner in which the exemption under the said provisions is sought to be extended. Whenever the legislature wanted to restrict the exemption to a primary cooperative society, it was so made clear as is evident from clause (f) with reference to a milk cooperative society that a primary society engaged in supplying milk is entitled to such exemption while denying the same to a federal milk cooperative society. The afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilised to advance gold loans, etc. to the members of the first category. It is found, as a matter of fact, that the depositors and borrowers are quite distinct. In reality, such activity of the appellant is that of finance business and cannot be termed as cooperative society. It is also found that the appellant is engaged in the activity of granting loans to general public as well. All this is done without any approval from the Registrar of the Societies. With indulgence in such kind of activity by the appellant, it is remarked by the assessing officer that the activity of the appellant is in violation of the Cooperative Societies Act. Moreover, it is a cooperative credit society which is not entitled to deduction under section 80- P(2)(a)(i) of the Act. 25. It is in this background, a specific finding is also rendered that the principle of mutuality is missing in the instant case. Though there is a detailed discussion in this behalf in the order of the assessing officer, our purpose would be served by taking note of the following portion of the discussion: As various courts have observed that the following three conditions must exist before an activity could be broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstrued section 80P widely and liberally, holding that if a society were to avail of several heads of deduction, and if it fell within any one head of deduction, it would be free from tax notwithstanding that the conditions of another head of deduction are not satisfied; (IV) This is for the reason that when the legislature wanted to restrict the deduction to a particular type of co-operative society, such as is evident from section 80P(2)(b) qua milk co-operative societies, the legislature expressly says so - which is not the case with section 80P(2)(a)(i); (V) That section 80P(4) is in the nature of a proviso to the main provision contained in section 80P(1) and (2). This proviso specifically excludes only co-operative banks, which are cooperative societies who must possess a licence from the RBI to do banking business. Given the fact that the assessee in that case was not so licenced, the assessee would not fall within the mischief of section 80P(4). . . . 45. To sum up, therefore, the ratio decidendi of Citizen Co-operative Society Ltd. (supra), must be given effect to. Section 80P of the IT Act, being a benevolent provision enacted by Parliame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to claim deduction under Chapter VIA under the heading C-Deductions in respect of certain incomes . The assessee has claimed deduction U/s 80P(2)(a)(i) on profits earned during the year and filed return of income on 31.12.2018, which is beyond the due date as prescribed as per section 139(1) of the Act, accordingly the assessee is not complying with the condition which are prescribed by section 80AC(ii) of the Act. The Hon'ble Apex Court in the recent decision , settled the law in case of an exemption / deduction clause in a tax statute in the case of Checkmate Services (P.) Ltd. v. Commissioner of Income-tax reported in [2022] 143 taxmann.com 178 (SC) in which it has been held as under:- 48. One of the rules of interpretation of a tax statute is that if a deduction or exemption is available on compliance with certain conditions, the conditions are to be strictly complied with Eagle Flask Industries Ltd. v. CCE 2004 taxmann.com 350 (SC)/2004 Supp. (4) SCR 35. This rule is in line with the general principle that taxing statutes are to be construed strictly, and that there is no room for equitable considerations. 49. That deductions are to be granted only when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution [ 265. Taxes not to be imposed save by authority of law.-No tax shall be levied or collected except by authority of law. ] prohibits the State from extracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because the State cannot at their whims and fancies burden the citizens without authority of law. In other words, when the competent legislature mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the legislature. ** ** ** 34. The passages extracted above, were quoted with approval by this Court in at least two decisions being CIT v. Kasturi Sons Ltd. [CIT v. Kasturi Sons Ltd., (1999) 3 SCC 346] and State of W.B. v. Kesoram Industries Ltd. [State of W.B. v. Kesoram Industries Ltd., (2004) 10 SCC 201] (hereinafter referred to as Kesoram Industries case [State of W.B. v. Kesoram Industries Ltd., (2004) 10 SCC 201] , for brevity). In the later decision, a Bench of five Judges, after citing the above passage from Justice G.P. Singh's treatise, summed up the following principles applicable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the entire facts of the case and grounds of appeal taken by the assessee, I hold that the assessee is not eligible to claim deduction as per section 80P(2)(a)(i) of the Act. Accordingly, the grounds raised by the assessee in this regard is dismissed. 8. The next ground is with regard to levy of fee u/s 234F of the Act, which is ground No.6. I observed that the assessee has filed return of income belatedly and therefore, he is liable for levy of fee as per section 234F of the Act. The section 234F of the Act reads as under: 234F. [(1) Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in sub-section (1) of the said section, he shall pay, by way of a fee, a sum of five thousand rupees: Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.] (2) The provisions of this section shall apply in respect of return of income required to be furnished for the assessment year commencing on or after the 1st day of April, 2018]. 9. As per the above ..... X X X X Extracts X X X X X X X X Extracts X X X X
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