Addl. CIT, Bulandshahr V. M/s. Zila Sahkari Bank Ltd, Bulandshahr

ITA 6730/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3825 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 23-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 24-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN GOTRU

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 6730/DEL/2013 (ASSESSMENT YEAR: 2007 - 08 ) ADDL. CIT, BULANDSHAHR VS. ZILA SAHKARI BANK LTD, MOTIBAGH , BULANDSHAHR PAN:AAAAZ0005B (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SHRAVAN GOTRU, SR. DR ASSESSEE BY: SHRI K. SAMPATH, ADV DATE OF HEARING 24/08 / 2017 DATE OF PRONOUNCEMENT 26 / 1 0 / 2017 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A), MEERUT DATED 20.09.2013 FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE LD CIT(A) HAS FAILED TO NOTICE THAT SECTION 80P OF THE IT ACT WAS AMEN DED BY THE FINANCE ACT, 2006 WITH EFFECT FROM 01.04.2007 INTRODUCING SUBSECTION (4) WHICH LAID DOWN SPECIFICALLY THAT THE PROVISIONS OF SECTION 80P WILL NOT APPLY TO ANY COOPERATIVE BANK AND ACCORDINGLY DEDUCTION U/S 80P WAS NO MORE AVAILABLE TO ANY REGION AL RURAL BANKS FROM ASSESSMENT YEAR 2007 - 08. 2. THAT THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 8607600/ - IN VIEW OF THE OM DATED 25.08.2006 ADDRESSED TO RBI CLARIFYING THAT REGIONAL RURAL BANKS WOULD NOT BE ELIGIBLE FOR DEDUCTION U/S 80P OF I T ACT FROM ASSESSMENT YEAR 2007 - 08. 3. THE LD CIT(A) ERRED IN DELETING THE ADDITION OF RS. 8607600/ - IN VIEW OF THE CIRCULAR NO. 6/2010 DATED 20.09.2010 WHICH CLARIFIED THAT CIRCULAR BNO. 319 DATED 11.01.1982 DEEMING ANY REGIONAL RURAL BANK TO BE COOPERATI VE SOCIETY STANDS WITHDRAWN AND RRBS ARE NOT ELIGIBLE FOR DEDUCTION U/S 80P FROM THE ASSESSMENT YEAR 2007 - 08. 3. BRIEFLY STATED THE FACTS ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF BANKING. THE ASSESSEE DERIVES INCOME FROM HOUSE PROPERTY. THE IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE IS CREDITED DIVIDEND INCOME OF RS. 8 607600 FROM UP COOPERATIVE BANK LTD AS WELL AS INDIAN FARMERS AND FERTILISERS COOPERATIVE LTD., THE ASSESSEE FILED ITS RETURN OF INCOME FOR RS. 1 060 8800 ON 29/10/2007. THE RETURN OF INCOME WAS FURTHER REVISED ON 31/10/2008 TO RS. 2 PAGE 2 OF 3 001200/ . THE REASON FOR REVISION WAS THAT THE DIVIDEND INCOM E CREDITED TO THE PROFIT AND LOSS ACCOUNT OF RS. 8 607600 WAS CLAIMED AS EXEMPT AND NOT CHARGEABLE TO TAX. THE LD. ASSESSING OFFICER PICKED UP THE CASE OF THE ASSESSEE FOR SCRUTINY AND HELD THAT THE CLAIM OF THE ASSESSEE IS NOT ACCEPTABLE. IN VIEW OF THE R EASON THAT ON THE DIVIDEND INCOME. NO DIVIDEND DISTRIBUTION TAX UNDER SECTION 1150 OF THE ACT HAS BEEN PAID. THE LD. ASSESSING OFFICER FURTHER NOTED THAT THAT IN THIS YEAR. THE DEDUCTION UNDER SECTION 80 P IS NOT AVAILABLE TO THE ASSESSEE AND THEREFORE ON THESE DIVIDEND INCOME SUCH EXEMPTION IS ALSO NOT AVAILABLE. CONSEQUENTLY, ASSESSMENT UNDER SECTION 143 (3 OF THE INCOME TAX ACT WAS PASSED ON 18/11/2009 BY THE LD. ASSESSING OFFICER DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 1 079 8800/ . 4. THE ASSE SSEE AGGRIEVED WITH THE ORDER OF THE LD. ASSESSING OFFICER PREFERRED APPEAL BEFORE THE LD. CIT (A), MEERUT WHO PER ORDER DATED 20/09/2013 ALLOWED THE CLAIM OF THE ASSESSEE OF EXEMPTION OF DIVIDEND FROM COOPERATIVE SOCIETIES HOLDING THAT PROVISIONS OF SECTI ON 80 P (2) (D) COVERS THE ABOVE EXEMPTION. 5. REVENUE AGGRIEVED WITH THE ORDER OF THE LD. CIT (A) HAS PREFERRED AN APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IT HAS BEEN CLARIFIED WIDE CIRCULAR DATED 25/08/2006, WHEREIN IT HAS BEEN STATED THAT REGIONAL RURAL BANKS WOULD NOT BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80 P OF THE INCOME TAX ACT FROM ASSESSMENT YEAR 2007 08. HE THEREFORE SUBMITTED THAT FOR ASSESSMENT YEAR 2007 08, NO EXEMPTION UNDER SECTION 80 P OF THE ACT IS ALLOWABLE TO THE REGIONAL RURAL BANKS HOLDING THEM AS COOPERATIVE BANKS. 6. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ORDER OF THE LD. CIT APPEAL IS CORRECT AS THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 P OF THE INCOME TAX ACT. AS THE DIVIDEND RECEIVED BY THE ASSESSEE FALLS UNDER THE BUSINESS OF THE BANKING AND THEREFORE THE CLAIM OF THE ASSESSEE IS CORRECTLY ALLOWED. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AS WELL AS ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE SIMPLE ISSUE R AISED BEFORE US IS WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 P OF THE INCOME TAX ACT OR NOT FOR ASSESSMENT YEAR 2007 08. CIRCULAR NO. 6/2010, DATED 20/09/2010 COVERS THE ABOVE ISSUE AS UNDER: - SECTION 80P OF THE INCOME - TAX ACT, 1961 - DEDUCTION IN RESPECT OF INCOME OF CO - OPERATIVE SOCIETIES - CLARIFICATION REGARDING ELIGIBILITY OF DEDUCTION UNDER SECTION 80P TO REGIONAL RURAL BANKS CIRCULAR NO. 6/2010 [F.NO. 173(3)/44/2009 - IT (A - I)], DATED 20 - 9 - 2010 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 BANKS (RRB) ARE BASICALLY CORPORATE ENTITIES (AND NOT COOPERATIVE SOCIETIES), THEY WERE CONSIDERED TO BE NOT ELIGIBLE FOR DEDUCTION U NDER SECTION 80P WHEN THE SECTION WAS ORIGINALLY INTRODUCED. HOWEVER, AS PAGE 3 OF 3 SECTION 22 OF THE REGIONAL RURAL BANK ACT PROVIDES THAT A RRB SHALL BE DEEMED TO BE COOPERATIVE SOCIETY FOR THE PURPOSES OF THE INCOME - TAX ACT, 1961, IN ORDER TO MAKE SUCH BANKS ELIGI BLE FOR DEDUCTION UNDER SECTION 80P, CBDT ISSUED A BENEFICIAL CIRCULAR NO. 319 DATED 11 - 1 - 1982 , WHICH STATED THAT FOR THE PURPOSE OF SECTION 80P, A REGIONAL RURA L BANK SHALL BE DEEMED TO BE A COOPERATIVE SOCIETY. 3. SECTION 80P WAS AMENDED BY THE FINANCE ACT, 2006, WITH EFFECT FROM 1 - 4 - 2007 INTRODUCING SUB - SECTION (4), WHICH LAID DOWN SPECIFICALLY THAT THE PROVISIONS OF SECTION 80P WILL NOT APPLY TO ANY COOPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. ACCORDINGLY, DEDUCTION UNDER SECTION 80P WAS NO MORE AVAILABLE TO ANY REGIONAL RURAL BANK FROM ASSESS MENT YEAR 2007 - 08 ONWARDS. AN OM DATED 25 - 8 - 2006 ADDRESSED TO RBI WAS ISSUED BY THE BOARD CLARIFYING THAT REGIONAL RURAL BANKS WOULD NOT BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE INCOME - TAX ACT, 1961 FROM THE ASSESSMENT YEAR 2007 - 08 ONWARDS. 4. IT HAS BEEN BOUGHT 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 COOPERATIVE SOCIETIES COVERED BY SECTION 80P(1) READ WITH BOARDS CIRCULAR N O. 319 DATED 11 - 1 - 1982. 5. 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 ONWARDS. FURTHER MORE, THE CIRCULAR NO. 319 DATED 11 - 1 - 1982 DEEM ING ANY REGIONAL RURAL BANK TO BE COOPERATIVE SOCIETY STANDS WITHDRAWN FOR APPLICATION WITH EFFECT FROM ASSESSMENT YEAR 2007 - 08. THE FIELD OFFICERS MAY TAKE NOTE OF THIS POSITION AND TAKE REMEDIAL ACTION, IF REQUIRED. 8. AS THE LD. CIT APPEAL HAS DECIDED THI S ISSUE WITHOUT CONSIDERING THE ABOVE CIRCULAR, WE SET ASIDE THE WHOLE ISSUE BACK TO THE FILE OF THE LD. CIT APPEAL TO VERIFY WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 P OF THE INCOME TAX ACT OR NOT. 9. IN THE RESULT APPEAL OF THE REVENU E IS ALLOWED FOR STATISTICAL PURPOSES ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 2 6 / 1 0 / 2017 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 6 / 1 0 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI