Neelachal Gramya Bank, Bhubaneswar V. DCIT, Circle-2(1), Bhubaneswar

ITA 420/CTK/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4309 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-02-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 02-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: B K MOHAPATRA
• Keywords: Principle of natural justice
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.420/CTK/2016 ASSESSMENT YEAR : 201 2 - 13 NEELACHAL GRAMYA BANK, 190/702, KOKILA RESIDENCY ANANTA BIHAR, AIRPORT AREA, PO: POKHARIPUT, BHUBANESWAR. VS. DCIT, CIRCLE 2(1), BHUBANESWAR,. PAN/GIR NO. AAALN 0450 F (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI B.K.MOHAPATRA, AR REVENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 28 /0 2 / 2018 DATE OF PRONOUNCEMENT : 19 /03/ 2018 O R D E R PER PAVAN KUMAR GADALE, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 1, BHUBANESWAR DATED 16.8.2016 FOR THE ASSESSMENT YEAR 2012 - 13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER DATED 16.08.2016 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT 'CIT(APPEALS)'], IN DISMISSING THE APPEAL IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE, CONTRARY TO FACTS, ARBITRARY, ERRONEOUS AND BAD, BOTH IN THE EYE OF LAW AND ON FACTS. 2. DENIAL/ DISALLOWANCE OF CLAI M OF DEDUCTION U/S. 80P OF THE I T.ACT A. THAT ON THE FACTS AND IN THE CIRCUMSTANCES THE CASE, THE SUSTAINING OF THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80P OF THE 2 ITA NO.420/CTK/2016 ASSESSMENT YEAR : 2012 - 13 IT ACT BY THE LEARNED CIT(APPEALS) IS ARBITRARY, ERRONEOUS, BAD, BOTH IN THE EYE OF LAW AND ON FACTS AND LEGALLY UNTENABLE. B. THAT THE LEARNED CIT(APPEALS) HOLDING THAT, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80P OF THE IT ACT IS ARBITRARY, ERRONEOUS AND BAD IN LAW. C. THAT THE LOWER AUTHORITIES HOLDING THAT THE ASSESSEE IS A 'CO - OPERATIVE BANK' AND HENCE DEDUCTION U/S. 80P OF THE IT ACT IS NOT ADMISSIBLE IS CONTRARY TO FACTS AND THE EXPRESS PROVISIONS OF LAW, ARBITRARY, ERRONEOUS, BAD IN LAW AND LEGALLY UNTENABLE. D. THAT THE ASSESSEE DOES NOT FALL UNDER THE PURVIEW OF SECTION 80P(4) OF THE LT.ACT AND THEREFORE THE DENIAL OF CLAIM OF DEDUCTION U/S.80P OF THE I.T ACT BY THE LOWER AUTHORITIES IS ARBITRARY, ERRONEOUS, BAD, BOTH IN THE EYE OF LAW AND ON FACTS AND LEGALLY UNTENABLE. E. THAT THE CBDT CIRCULAR RELIED ON BY THE LEARNED CIT(APPEALS) IS CONTR ARY TO THE EXPRESS PROVISIONS OF LAW AND CANNOT BE APPLIED IN THE ASSESSEE'S CASE. F. WITHOUT PREJUDICE TO GROUND (E) ABOVE, IN ANY CASE, CBDT CIRCULAR IS NEITHER BINDING ON THE ASSESSEE NOR ON THE APPELLATE AUTHORITY OUGHT NOT BE APPLIED IN THE CASE OF THE ASSESSEE.. 3. LEVY OF INTEREST U/S. 234B AND 234D OF THE ACT - RS.2,31,31,260/ - AND RS.1,735/ - RESPECTIVELY. THAT ON THE FACTS AND IN THE CIRCUMSTANCES THE CASE, THE DISMISSAL OF THE GROUNDS IN RESPECT OF CHARGING OF INTEREST OF RS.2,31,31,260/ - AND RS.1,735/ - U/S. 234B AND 234D OF THE ACT RESPECTIVELY BY THE LEARNED CIT(APPEALS) IS INCORRECT ARBITRARY, ERRONEOUS AND BAD, BOTH IN THE EYE OF LAW AND ON FACT S. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A REGIONAL RURAL BANK CAME INTO EXISTENCE BY THE AMALGAMATION OF TWO REGIONAL RURAL BANK I.E. PURI GRAMYA BANK AND DHENKANAL GRAMYA BANK W.E.F. 31.7.2004 U/S.23A OF THE REGIONAL RURAL BANK ACT, 1976. THE ASSESSEE DERIVES INCOME FROM THE BUSINESS OF RETAILING BA NKING AND E - FILED THE ORIGINAL R ETURN OF INCOME FOR THE ASSESSMENT YEAR 2012 - 13 ON 29.9.2012 3 ITA NO.420/CTK/2016 ASSESSMENT YEAR : 2012 - 13 DECLARING GROSS TOTAL INCOME OF RS.20,80,27,3 33/ - AFTER CLAIMING DEDUCTION U/S.80P(2)(A)(I) OF THE I.T.ACT, 1961. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BEFORE THE ASSESSING OFFICER, THE ASSESSEE CLAIMED THAT THE ASSESSEE IS NEITHER A CENTRAL CO - OPERATIVE BANK, STATE CO - OPERATIVE BANK NOR A P RIMARY CO - OPERATIVE BANK AS PER CHAPTER V OF BANKING REGULATION ACT, BUT IT IS A CO - OPERATIVE SOCIETY AS PER SECTION 22 OF THE RRB ACT. HOWEVER, THE ASSESSING OFFICER FOUND THAT AS PER SUB - SECTION (4) OF SECTION 80P OF THE ACT, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION SINCE THE ASSESSEE IS ENGAGED IN RURAL BANKING ACTIVITIES AND IT IS TREATED AS A C O - OPERATIVE BANK AND, THEREFORE, DISALLOWED THE CLAIM OF DEDUCTION OF RS.20,80,27,233/ - U/S. 80P OF THE ACT AND PASSED ORDER U/ S.143(3) OF THE ACT ON 5.3.2015 . 4. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: 4. I HAVE CONSIDERED THE MATTER AND GONE THROUGH THE PROVISIONS OF LAW IN THIS REGARD. THE ASSESSEE IS A REGIONAL RURAL BANK (RRB) WHICH IS DEEMED TO BE A COOPERATIVE SOCIETY AS PER THE PROVISIONS OF THE RRB ACT FOR THE PURPOSE OF INCOME TAX ACT. IT IS INVOLVED IN BANKING BUSINESS AND, THEREFORE, HAS TO BE TREATED AS A COOPERATIVE BA NK FOR THE PURPOSE OF SECTION 80P. ORIGINALLY, THE RRBS WERE NOT ENTITLED TO DEDUCTION U/S.80P. BY VIRTUE OF A BENEFICIAL CIRCULAR OF THE CBDT NO. 319, DATED JANUARY 11, 1982, DEDUCTION WAS BEING ALLOWED TO RRBS UP TO THE AY 2006 - 07. SECTION 80P WAS AMENDE D W.E.F. 1.4.2007 BY INSERTION OF A NEW SUB - SECTION (4) TO DENY DEDUCTION UNDER THAT SECTION TO THE COOPERATIVE BANKS OTHER THAN PRIMARY AGRICULTURAL CREDIT SOCIETY AND PRIMARY COOPERATIVE AGRICULTURAL DEVELOPMENT BANK. ACCORDINGLY, ALL COOPERATIVE BANKS I NCLUDING RRBS BUT EXCLUDING PRIMARY AGRICULTURAL CREDIT SOCIETY AND PRIMARY COOPERATIVE AGRICULTURAL DEVELOPMENT BANK ARE NOT ELIGIBLE FOR DEDUCTION U/S.80P. THE ASSESSEE CLAIMS THAT IT IS ONLY A COOPERATIVE SOCIETY AND NOT A COOPERATIVE BANK AND HENCE, CA NNOT 4 ITA NO.420/CTK/2016 ASSESSMENT YEAR : 2012 - 13 BE DENIED DEDUCTION U/S.80P UNDER SUB - SECTION 4(4) OF THAT SECTION. SUCH A CLAIM IS HYPER - TECHNICAL AND DEVOID OF ANY MERIT. THE CBDT HAS WITHDRAWN THE EARLIER CIRCULAR NO.319 (SUPRA) AND ISSUED A NEW CIRCULAR NO.6/2010 DATED 20.9.2010 TO CLARIFY THE EFFECT OF AMENDMENT OF SECTION 80P W.E.F. 1.4.2007. THIS CIRCULAR IS REPRODUCED BELOW. 'SECTION 80P OF THE INCOME - TAX ACT, 1961, PROVIDES FOR A DEDUCTION FROM THE INCOME OF COOPERATIVE SOCIETIES REFERRED TO IN THAT SECTION. 2. AS REGIONAL RURAL BANK (RRB) ARE BASICALLY CORPORATE ENTITIES ( AND NOT COOPERATIVE SOCIETIES ), THEY WERE CONSIDERED TO BE NOT ELIGIBLE E FOR DEDUCTION U/S 80P WHEN THE SECTION WAS ORIGINALLY INTRODUCED. HOWEVER, AS SECTION 22 OF THE REGIONAL RURAL BANK A CT PROVIDES THAT A RRB SHALL BE DEEMED TO BE CO - OPERATIVE SOCIETY FOR THE PURPOSE OF THE INCOME - TAX ACT, 1961, IN ORDER TO MAKE SUCH BANKS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P, THE CBDT ISSUED A BENEFICIAL CIRCULAR NO.319, DATED JANUARY 11, 1982*, WHI CH STATED THAT FOR THE PURPOSE OF SECTION 80P, A REGIONAL RURAL BANK SHALL BE DEEMED TO BE A CO - OPERATIVE SOCIETY. - SECTION 80P WAS AMENDED BY THE FINANCE ACT 2006, WITH EFFECT FROM A 1, 2007, INTRODUCING SUB - SECTION (4), WHICH LAID DOWN SPECIFICALLY THA T : PROVISIONS OF SECTION 80P WILL NOT APPLY TO ANY CO - OPERATIVE BANK OTHER THA N A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. ACCORDINGLY, DEDUCTION UNDER SECTION 80P WAS NO MORE AVAILABLE TO ANY REGIONAL RURAL BANK FROM THE ASSESSMENT YEAR 2007 - 08 ONWARDS. AN OM DATED AUGUST 25, 2006, ADDRESSED TO THE RBI WAS ISSUED BY BOARD CLARIFYING THAT REGIONAL RURAL BANKS WOULD NOT BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE INCOME - TAX ACT, 1961, FR OM THE ASSESSMENT YEAR 2007 - 08 ONWARDS. 3. IT HAS BEEN BROUGHT TO THE NOTICE OF THE BOARD THAT DESPITE THE AMENDED PROVISIONS, SOME REGIONAL RURAL BANKS CONTINUE TO CLAIM DEDUCTION UNDER SECTION 80P ON THE GROUND THAT THEY ARE CO - OPERATIVE SOCIETIES COVE RED BY SECTION 80P(I) READ WITH BOARD'S CIRCULAR NO, 319, DATED JANUARY 11, 1982. 4. IT IS, THEREFORE, REITERATED THAT REGIONAL RURAL BANKS ARE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE INCOME - TAX ACT, 1961, FROM THE ASSESSMENT YEAR 2007 - 08 ONW ARDS. FURTHERMORE, CIRCULAR NO. 319, DATED JANUARY 1 I, 1982, DEEMING ANY REGIONAL RURAL BANK TO BE CO - OPERATIVE SOCIETY STANDS WITHDRAWN FOR APPLICATION WITH EFFECT FROM THE ASSESSMENT YEAR 2007 - 08. THE FIELD OFFICERS MAY TAKE NOTE OF THIS POSITION AND T AKE REMEDIAL ACTION, IF REQUIRED.' 5 ITA NO.420/CTK/2016 ASSESSMENT YEAR : 2012 - 13 IT IS EVIDENT FROM THE ABOVE CIRCULAR OF THE BOARD THAT THE LEGAL POSITION IS QUITE CLEAR AND THE RRBS ARE NOT ELIGIBLE FOR DEDUCTION U/S.80P FROM THE AY 2007 - 08 ONWARDS. I ALSO FIND THAT IN THEIR ORDER DT.18.6.2012 THE H ON'BLE ITAT, INDORE BENCH IN THE CASE OF M/S. VIDISHA BHOPAL KSHETRIYA GRAMIN BANK VS. ACIT - 3(1), VIDISHA, BHOPAL IN ITA NO.215 & 216/IND/2011 FOR THE AYS 2007 - 08 & 2008 - 09 HAVE HELD THAT RRBS ARE NOT ENTITLED TO DEDUCTION U/S.80P FROM AY 2007 - 08 ONWARDS. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED BELOW: '8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT THE ASSESSEE IS A REGIONAL RURAL BANK ENGAGED IN THE ACTIV ITY OF BANKING/FINANCING IN THE DISTRICT OF BHOPAL AND VIDISHA. RETURN WAS FILED TO CLAIM ALL DEDUCTION U/S 80P IN RESPECT OF ITS INCOME. SECTION 80P, INTER ALIA, PROVIDES FOR A DEDUCTION FROM THE TOTAL INCOME OF THE CO - OPERATIVE SOCIETIES ENGAGED IN THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, OR BUSINESS OF A COTTAGE INDUSTRY, OR OF MARKETING OF AGRICULTURAL PRODUCE OF ITS MEMBERS, OR PROCESSING, WITHOUT THE AID OF POWER, OF THE AGRICULTURAL PRODUCE OF ITS MEMBERS, ETC. AFTER I NSERTION OF SUB SECTION (4) OF SECTION 80 - P, BY FINANCE ACT, 2006, W.E.F. 1.4.2007, THIS DEDUCTION IS AVAILABLE ONLY TO 1. PRIMARY AGRICULTURAL CREDIT SOCIETY (PACS) 2. PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK (PCARDB) FURTHER, A NEW SUB - CLAUSE (VIIA) HAS BEEN INSERTED IN CLAUSE (24) OF SECTION 2 TO PROVIDE THAT THE PROFITS AND GAINS OF ANY BUSINESS OF BANKING (INCLUDING PROVIDING CREDIT FACILITIES) CARRIED ON BY A CO - OPERATIVE SOCIETY WITH ITS MEMBERS SHALL BE INCLUDED IN THE DEFINITION OF 'INCOME'.' SECTION 80P HAS BEEN AMENDED BY FINANCE ACT, 2006, AND SUB SECTION (4) HAS BEEN INSERTED. AS PER FINDING RECORDED BY LOWER AUTHORITIES , THE ASSESSEE IS NEITHER PACS NOR PCARDB AND HENCE NOT ELIGIBLE FOR DEDUCTION U/S 80P. A SOCIETY FULFILLING TWO CONDITIONS IS A PCARDB AS PER EXPLANATION TO SECTION 80P(4) (A) AREA OF OPERATION CONFINED TO A TALUK (B) THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. THE PRINCIPAL O BJECT OF THE ASSESSEE HAS BEEN DISCUSSED IN DETAIL LATER WHILE DISCUSSING THAT ASSESSEE IS NOT P ACS AND THE OBJECT OF THE ASSESSEE AND 6 ITA NO.420/CTK/2016 ASSESSMENT YEAR : 2012 - 13 THE RANGE OF THE ACTIVITIES IS NOT CONFINED TO TALUK BUT IS EXTENDED TO ENTIRE DISTRICT OF BHOPAL & VIDISHA. IT IS CLEAR THAT THE ASSESSEE IS NOT FULFILLING THE SECOND CONDITION ALSO. HENCE, ASSESSEE IS NOT PCARDB. ASSESSEE IS NOT PACS, AS PER THE EXPLANATION TO SECTION 80P(4) PACS HAS BEEN DEFINED AS IN PART - V OF THE BANKING REGULATION ACT, 1949. PRIMARY OBJECT OF PRINCIPA L BUSINESS OF PACS IS TO FINANCE FOR AGRICULTURAL PURPOSES OR PURPOSES CONNECTED WITH AGRICULTURAL ACTIVITIES. THE PRIMARY OBJECT AS WELL AS ACTIVITIES OF ASSESSEE ARE NOT CONFINED TO AGRICULTURAL PURPOSES BUT OTHER PURPOSES ALSO. HENCE, ASSESSEE IS NEITHE R PACS NOR PCARDB HENCE NO EXEMPTION IS AVAILABLE TO THE ASSESSEE U/S 80P. IT WAS ALSO SUBMITTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, 'THE ASSESSEE IS A REGIONAL RURAL BANK CARRYING ON BANKING ACTIVITIES IN BHOPAL AND VIDISHA DISTRICT. UNDER THE PROVISIONS OF SECTION 22 OF THE RRB ACT. 9. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE IS NOT CLAIMING EXEMPTION AS PACS FOR PCARDB. TO CLARIFY THE AMENDED PROVISIONS AS BROUGHT BY THE FINANCE ACT, 2006, THE C.B.D.T. HAS ALSO ISSUED CIRCULAR DATED 28.12.2006, ACCORDING TO WHICH AFTER INSERTION OF SUB SECTION (4) IN SECTION 80P, THE BENEFIT OF PROVISIONS OF SECTION 80P SHALL NOT APPLY IN RELATION TO ANY COOPERATIVE BANK OTHER THAN PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY COOPERATIVE AGRICULTURA L RURAL DEVELOPMENT BANK. THUS, INCOME OF BUSINESS OF BANKING HAS BEEN BROUGHT U/S 80P FOR ALL THE COOPERATIVE SOCIETIES EXCEPT PACS AND PCARDB. THE LEGISLATIVE INTENT FOR INSERTION OF SUB SECTION (4) AS PER THE SPEECH OF HON'BLE UNION FINANCE MINISTER ON 28.2.2006 CLEARLY SHOWS THAT COOP. BANKS WERE EXCLUDED FROM THE BENEFIT OF SECTION 80P ON THE PLEA THAT LIKE ANY OTHER BANK, THE COOP. BANKS ARE ALSO LENDING INSTITUTION AND SHOULD PAY TAX ON THEIR PROFITS. ACCORDINGLY, COOP. BANKS WERE EXCLUDED FROM THE SCOPE OF SECTION 80P. XXX XXX XXX 11. NOW COMING TO THE DECISION OF THE COORDINATE BENCH IN THE CASE OF M. P. STATE AGRICULTURAL RURAL DEVELOPMENT BANK RELIED ON BY THE ID. AUTHORIZED REPRESENTATIVE, WE FOUND THAT ACTION OF CIT(A) TO ALLOW BENEFIT OF SECTION 80P WAS CONFIRMED BY TRIBUNAL ON THE FINDING THAT THE ASSESSEE IS AN AGRICULTURAL AND RURAL DEVELOPMENT BANK. IT WAS ALSO OBSERVED THAT AS PER THE FINDINGS RECORDED BY THE ID.CIT (A), THE ASSESSEE IS A CO OPERATIVE LAND MORTGAGED BANK, THEREFORE, THE BENEFIT OF SECTION 80P WAS AVAILABLE TO THE ASSESSEE DESPITE INSERTION OF SUB SECTION (4) OF SECTION 80P. THUS, THE FACTS OF THIS CASE ARE QUITE DISTINGUISHABLE FROM THE FACTS OF THE A SSESSEE'S CASE 7 ITA NO.420/CTK/2016 ASSESSMENT YEAR : 2012 - 13 WHERE THE ASSESSEE IS A REGIONAL RURAL BANK. AS THE FACTS ARE DISTINGUISHABLE, THEREFORE, PROPOSITION LAID DOWN THEREIN CANNOT BE APPLIED TO THE ASSESSEE, WHICH IS A REGIONAL RURAL BANK ENGAGED IN BANKING ACTIVITIES, THEREFORE, CLEARLY EXCLU DED FROM APPLICATION OF SECTION 80P, AFTER INSERTION OF SUB SECTION (4) OF FINANCE ACT, 2006. 12. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LOWER AUTHORITIES FOR DECLINE OF CLAIM OF DEDUCTION U/S 80P OF THE INCOME - TAX ACT, 1961.' IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT THE ASSESSEE IS NOT ELIGIBLE F OR DEDUCTION U/S.80P. ACCORDINGLY, THE DISALLOWANCE OF DEDUCTION OF RS.20,80,27,233/ CLAIMED U/S.80P IS CONFIRMED. 5. BE FORE US, LD A.R. SUBMITTED THAT AS PER APPLICABLE PROVISIONS OF SECTION, THE ASSESSE BEING A REGIONAL RURAL BANK IS DEEMED TO BE A CO - OPERATIVE SOCIETY FOR THE PURPOSE O F I.T.ACT AND HENCE, ENTITLED F O R DEDUCTION U/S.80P(2)(A)(I) OF THE ACT. L D A.R. SUBMITTED TH AT THE ASSESSEE BANK I S NOT A CO - OPERATIVE BANK, AND IS EXCLUDED FROM THE B ENEFIT S OF SECTION 80P OF THE ACT AFTER THE AMENDMENT W.E.F. 1.4.2007 AS PER THE CBDT CIRCULAR NO.6/2010 DATED 20.9.2010. LD A.R. OF THE ASSESSEE PRODUCED THE BANKING REGULATION ACT, 1949 AS AMENDED BY THE BANKING LAWS (AMENDMENT) ACT, 2012 (4 OF 2013) W.E.F. 17.1.2013 AND THE BANKING REGULATION (AMENDMENT) ACT, 2017(30/2017) W.E.F. 4.5.2017, WHEREIN, IT IS DEFINED THE CO - OPERA TIVE BANK AS UNDER: 56. (CCI) CO - OPERATIVE BANK MEANS A STATE CO - OPERATIVE BANK, A CENTRAL CO - OPERATIVE BANK AND A PRIMARY CO - OPERATIVE BANK. (CCVI) PRIMARY CO - OPERATIVE BANK MEANS A CO - OPERATIVE SOCIETY OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY. (1) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHICH IS THE TRANSACTION OF BANKING BUSINESS. 8 ITA NO.420/CTK/2016 ASSESSMENT YEAR : 2012 - 13 (2) THE PAID UP SHARE CAPITAL AND RESERVES OF WHICH ARE LESS THAN ONE LAKH OF RUPEES, AND (3) THE BYE LAWS OF WHICH DO NOT PERMIT ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS A MEMBER: PROVIDED THAT THIS SUB - CLAUSE SHALL NOT APPLY TO THE ADMISSION OF A CO - OPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO - OPERATIVE BANK SUBSCRIBING TO THE SHARE CAPITAL OF SUCH CO - OPERATIVE SOCIETY OUT OF FUNDS PROVIDED BY THE STATE GOVERNMENT FOR THE PURPOSE: (CCVII) CENTRAL CO - OPERATIVE BANK(X X X ) PRIMARY RURAL CREDIT SOCIETY AND STATE CO - OPERATIVE BANK, SHALL HAVE THE MEANS RESPECTIVELY ASSIGNED TO THEM IN THE NATIONAL BANK FOR AGRICULTURAL AND RURAL DEVELOPMENT ACT, 981 (61 OF 1981). RELYING ON THE ABOVE BANKING REGULATION ACT, LD A.R. SUBMITTED THAT THE ASSESSEES CASE DOES NOT FALL UNDER THE PURVIEW OF SECTION 80P(4) OF THE I.T.ACT AS CO - OPERATIVE BANK , THEREFORE, THE DENIAL OF CLAIM OF DEDUCTION U/S.80 P OF THE ACT IS NOT SUSTAINABL E AND RELIED ON THE JUDICIAL DECISIONS AS UNDER: I) PANDIAYA GRAM BANK VS ACIT (ITA NO.1941/MDS/2009. II) MOHD ALI KHAN VS CWT, 92 TAXMAN 52 (SC) III) J.P.BANSAL V STATE OF RAJSATHAN, 5 SCC 134 (SC) IV) ELLERMAN LINES LTD VS CIT, 82 ITR 913 (SC) V) NAVNIT LAL C. JHAVERI VS K.K.SEN, 56 ITR 198 (SC) VI) K.P.VERGHESE VS ITO, 7 TAXMAN 13 (SC) VII) KERALA FINANC I AL CORP. VS CIT, 210 ITR 129 (SC) 9 ITA NO.420/CTK/2016 ASSESSMENT YEAR : 2012 - 13 6. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE SOLE MATRIX OF THE ISSUE INVOLVED IN THIS CASE AS TO WHETHER THE ASSESSEE IS A CO - OPERATIVE BANK OR SOCIETY AND CONSEQUENTLY WHETHER THE DEDUCTION U/S.80P IS AVAILABLE TO THE ASSESSEE. ON P ERUSAL OF T HE ASSESSMENT ORDER, WE FIND TH AT THE ASSESSING OFFICER HAS NOT DEALT ON THE CLAIM OF THE ASSESSEE BEING NOT A CO - OPERATIVE BANK BUT DENIED THE DEDUCTION RELYING ON THE PROVISIONS OF SECTION 80P(4) OF THE ACT. WHEREAS THE CIT(A) HAS DEALT ON THE ISSUE AND THE SUBMISSION OF THE ASSESSEE AND RELIED ON JUDICIAL DECISIONS AND UPHELD THE ACTION OF THE ASSESSING OFFICER. THE CIT(A) WHILE CONSIDERING THE ISSUE HELD THAT THE ASSESSEE IS A REGIONAL RURAL BANK ,WHICH IS DEEMED TO BE A CO - OPERATIVE SOCIETY AS P ER THE PROVISIONS OF RRB ACT AND FOR THE PURPOSE OF INCOME TAX ACT AND SINCE THE MAIN FUNCTION OF THE ASSESSEE IS INVOLVED IN THE BANKING BUSINESS AND, THEREFORE, NOT ENTITLED FOR DEDUCTION U/S. 80P OF THE ACT. THE CIT(A) HAS FOLLOWED THE DECISION OF IN DORE BENCH OF THE TRIBUNAL IN THE CASE OF VIDISHA BHOPAL KSHETRIYA GRAMIN BANK VS ACIT, IN ITA NO.215 & 216/IND/2011 FOR THE ASSESSMENT YEAR 2007 - 08 AND 2008 - 09, WHEREIN, IT HAS BEEN HELD THAT THE RRBS ARE NOT ENTITLED TO DEDUCTION U/S.80P OF THE ACT FROM THE ASSESSMENT YEAR 10 ITA NO.420/CTK/2016 ASSESSMENT YEAR : 2012 - 13 2007 - 08. WHEREAS T HE ASSESSMENT YEAR INVOLVED IN THE PRESENT CASE IS 2012 - 13. 8. HOWEVER, LD A.R. OF THE ASSESSEE RELIED ON VARIOUS JUDICIAL DECISIONS PARTICULARLY IN THE CASE OF PANDIYAN GRAMA BANK VS ACIT IN ITA NO,1941/MAD/2009 FOR THE ASSESSMENT YEAR 2007 - 08 ORDER DATED 13.8.2010, WHEREIN, THE CONTENTION OF THE ASSESSEE WAS ACCEPTED THAT IT IS TO BE TREATED AS CO - OPERATIVE SOCIETY IN VIEW OF THE PROVISI ONS CONTAINED IN RRB ACT, 1976 AND T HE TRIBUNAL DECIDED THE ISSUE IN THE CONTEXT OF REVISION PROCEEDINGS U/S.263 OF THE ACT AND THE DECISION WAS PRIOR TO ISSUE OF CBDT CIRCULAR NO.6/2010 DATED 20.9.2010. 9. WE FIND THAT SECTION 80P(4) DEBAR ANY CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTUR AL SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK FROM THE PROVISIONS OF SECTION 80 - P WHICH ALLOWS DEDUCTION TO A CO - OPERATIVE SOCIETY. THE CO - OPERATIVE BANK HAS BEEN DEFINED UNDER THE EXPLANATION TO SECTION 80P(4 ) OF THE ACT. 9 . FURTHER, THE CIT(A) HAS RELIED ON THE DECISION OF INDORE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. VIDISHA BHOPAL KSHETRIYA GRAMIN BANK VS ACIT IN ITA NO.215 & 216/IND/2011 FOR AYS 2007 - 08 AND 2008 - 09 ORDER DATED 18.6.2012 AND THE CBDT CIRCULAR NO.6/2010 (SUPRA). WE AS A JUDICIAL PRECEDENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL AND THE CBDT CIRCULAR (SUPRA) UPHELD THE ORDER OF THE CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 11 ITA NO.420/CTK/2016 ASSESSMENT YEAR : 2012 - 13 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 19 /03 /2018. S D/ - SD/ - ( N.S SAINI) ( PAVAN KUMAR GADALE) A CCOUNTANT MEMBER JUDICIALMEMBER CUTTACK; DATED 19 /03/2018 B. K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : NEELACHAL GRAMYA BANK, 190/702, KOKILA RESIDENCY ANANTA BIHAR, AIRPORT AREA, PO: POKHARIPUT, BHUBANESWAR. 2. THE RESPONDENT. DCIT, CIRCLE 2(1), BHUBANESWAR,. 3. THE CIT(A) - 1, BHUBANESWAR 4. PR.CIT - 1, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//