TaxTMI 
TaxTMI 
TaxTMI 
2014 (6) TMI 930
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....013 vide its judgment dated 3rd April, 2014. The Hon'ble Jurisdictional High Court held as under: "8. Section 36 of the Act deals with various deductions that could be allowed in computing the income referred to in Section 28 of the Act. Section 36 has various clauses and each clause refers to deduction allowable to a particular assessee like amount of premium paid in respect of insurance against risk of damages, federal milk co-operative society, general insurance etc. We are concerned with sub-clause (a) of clause (viia) to Section 36(1). This clause makes provision for bad and doubtful debts. In other words, deduction could be claimed by banks referred to in clause (viia) in respect of bad and doubtful debts. It provides certain terms and conditions under which such deductions could be claimed by a particular bank. Section 36(1)(viia) commences with following words "in respect of any provision for bad and doubtful debt made by" and sub-clause (a) reads as under: "A scheduled bank not being a bank approved by Central Government for the purposes of clause (viiia) or a bank incorporated by or under the laws of a country outside India or a non-scheduled bank or a co-operative b....
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....Regulation Act says: "In section 5:- (i) after clause (cc), the following clause shall be inserted, namely:- (cci) "Co-operative bank" means a state co-operative bank, a central cooperative bank and a primary co-operative bank." Meaning of different terms useful for the purpose of deciding the controversy, one has to see how presence of a particular term in a particular provision and simultaneously being absent in the explanation to the said provision would change the position of the appellate banks with reference to the context. 9. Admittedly, appellants/assessees are co-operative banks. With introduction of Finance Act of 2007, coming into effect from 01.04.2007, one has to understand what was the position prior to 01.04.2007 and after 01.04.2007, they were enjoying the benefits provided u/s. 80P. With the introduction of Finance Act 2007 with effect from 01.04.2007, they could claim deductions as provided u/s. 36(1) of the Act. We are concerned with sub-clause(a) of clause (viia) to Section 36(1). Prior to Finance Act of 2007, co-operative bank was not included insub-clause (a) so far as provisions for bad and doubtful debts. With effect from 01.04.2007, co-operat....
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....o us, there is no necessity to find out the generic meaning of either urban or rural for the simple reason that explanation under Section 36(1) itself defines what could be considered as a rural branch so far as Section 36(1) of the Act. In the light of giving a particular definition for the purpose of understanding rural branch with reference to sub-clause (a) of clause (viia) to Section 36(1) one need not to go in search of the meaning of rural or what exactly would constitute rural branch. This Court had an occasion to decide the said controversy pertaining to bad and doubtful debts of a rural branch. While explaining the meaning of 'place' in Explanation (ia) to Section 36(1)(viia), their Lordships opined as under: "Next question raised pertains to the assessee's claim for deduction of provision for bad debts in terms of section 36(1) (viia) of the Income-tax Act. Here the only question raised is as to basis of classifying branches of the bank as rural branches and other branches. Rural branch is defined under Explanation (ia) to section 36(1)(viia) as follows: "rural branch" means a branch of a scheduled bank or a nonschedules bank situated in a place which has a populat....
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...."place" refered to in the above definition clause for the purpose of identifying the branch of a bank as a rural branch with reference to its location is the revenue village. Therefore, in our view, the finding of the Tribunal that "place" referred to in the definition is the ward of a local authority like panchayat or municipality is incorrect and, in our view, a rural branch has to be always in rural areas and the place referred can easily be taken as a village. Several wards may come within a village, whether it be in corporation, municipality or panchayats. There can be no village in a municipal or corporation area where the population is less than 10000. So much so, rural branches are such of the branches located in a village where the population in the village as a unit is less than 10000." It is clear from the above judgment that this Court had already an occasion to consider the meaning of place with reference to above section. Therefore, rural branch is a branch which falls under Explanation (ia) to Section 36(1) (viia). Tribunal had to reverse the judgment of CIT(appeals) in the light of the decision in Lord Krishna Bank's case (supra). 12. Then coming to the contro....