The Kerala High Court ruled that the pre-condition for claiming the deduction under Section 80P of the IT Act has now been made more stringent by reducing the time available to an assessee for making the claim.
Facts
The appellant/assessee is a Labour Co-operative Society registered under the Kerala Co-operative Societies Act. The Society was formed for the financial and social welfare of toddy tappers/workers and for tapping and selling toddy within the jurisdiction of Nileshwar. During the financial year 2008-09, the appellant Society got license from the Excise Department for carrying out the activity for tapping, pooling and marketing of toddy within the Excise range of Nileshwar.
For the assessment year 2009-10, the appellant did not file any return of income. Believing that the appellant had income chargeable to tax that had escaped assessment, the Department issued a notice under Section 148 of the IT Act to the appellant on 6.2.2012 requiring the appellant to furnish a return of income within 30 days of receipt of the notice. The appellant failed to file the return of income in response to the notice under Section 148. A return was however filed by the appellant on 5.7.2012, which was much beyond the date for filing of return in terms of Section 139(4) of the IT Act
Decision
The division bench of Justice A.K.Jayasankaran Nambiar And Justice Mohammed Nias C.P. found that a reading of Section 80A(5) and Section 80AC of the IT Act as they stood prior to 1.4.2018, when the latter provision was amended by Finance Act 2018, would reveal that the statutory scheme under the IT Act was to admit only such claims for deduction under Section 80P of the IT Act as were made by the assessee in a return of income filed by him. That return can be under Sections 139(1), 139(4), 142(1) or Section 148, and to be valid, had to be filed within the due date contemplated under those provisions.
The bench observed that the statutory scheme permits the allowance of a deduction under Section 80P of the IT Act only if it is made in a return recognised as such under the IT Act, and after 1.4.2018, only if that return is one filed within the time prescribed under Section 139(1) of the Act.
It was noted by the court that as the return in these cases, for the assessment years 2009- 10 and 2010-11, were admittedly filed after the dates prescribed under Sections 139(1) and 139(4) or in the notices issued under Section 142(1) and Section 148, the returns were indeed non-est and could not have been acted upon by the Assessing Officer even though they were filed before the completion of the assessment.
The court viewed that a failure on the part of an assessee to comply with the precondition for obtaining the deduction cannot be condoned either by the statutory authorities or by the courts.
“The pre-condition for claiming the deduction under Section 80P of the IT Act has now been made more stringent by reducing the time available to an assessee for making the claim” the court held.
Case title: M/S. Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham V/S The Commissioner Of Income Tax
Citation: I.T.A.NO.120 OF 2019