TaxTMI 
TaxTMI 
2015 (10) TMI 928
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....aigaon-Juhchandra', which is a rural place has a population of only 4,679, in support whereof the appellant had furnished before the learned Assessing Officer: (a) The letter from the Tehsildar confirming the population of 'Naigaon-Juhchandra' as per published Census Report; (b) Had produced record of Property Taxes paid to the 'Gram Panchayat Juhchandra'; and (c) Had given a copy of the census of India specific to 'Juhchandra'. 2. The learned Commissioner of Income-tax (Appeals) erred on facts in observing -"It would not be out of place to point out that in subsequent assessments the appellant bank has not treated its Naigaon branch as a rural branch." In fact, the assessee has made a claim for deduction und....
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....a) in respect of the advances given by said branch. 3. Before us the ld. AR of the assessee has submitted that while deciding the issue the AO has taken into consideration the population of three panchayat areas and not the population of the village where the bank is located. He has referred to the census report as per census of 2001 and submitted that the village Juhuchandra Naigoan is having total population of 5911 and the entire population is rural population as per census report. Therefore, for the purpose of classification of branch being rural the criteria is the place where the branch is situated has a population of not more than ten thousand according to the last census of which the relevant figures have been published before the ....
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....ntire population is rural as per census report of census India 2001. The AO has denied the deduction under section 36(1)(viia) on the ground that the area of catering the services by the said branch is spread over to two other panchayats also and accordingly the population of the area of all three panchayats was taken into consideration for determining the classification of the said branch as rural branch. At the outset we note that an identical question fell for consideration of Hon'ble Kerala High Court in the case of CIT vs. Lord Krishna Bank Ltd. (supra), wherein the Hon'ble High Court has discussed and decided the issue in para-4 to 6 as under :- "4. Next question raised pertains to the assessee's claim for deduction of pr....
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....n in the Census Report 2001 is as follows : "The basic unit for rural areas is the revenue village with definite surveyed boundaries. The rural area is, however, taken as the residual portion excluding the urban area and for that no strict definition is followed." 6. In our view, the definition clause does not exclude the literal meaning of rural branch which necessarily excludes urban areas. If the assessee's case accepted by the Tribunal that population in a ward has to be reckoned for deciding as to whether the location of a panchayat is in a rural area or not is accepted, then probably even in municipal areas there may be wards with less than 10000 population thereby answering the branch located in such municipal area also as a ru....
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....he Hon'ble High Court has analysed the provision of section 36(1)(viia) and was of the view that the meaning of rural area contained in the census report wherein the revenue village is treated as a unit of rural area, can be, rightly adopted . It has been further observed that the place referred to in the definition clause for the purpose of identifying the branch of a bank is rural branch with reference to its location as the revenue village and accordingly the Hon'ble High Court has rejected the finding of the Tribunal that "place" referred to in the definition is the Ward or local authority like panchayat or municipality. Thus it is clear from the above decision of the Kerala High Court that a rural branch has to be always in the....