TaxTMI 
TaxTMI 
2018 (3) TMI 806
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....laimed as exempt under section 80P of the I.T. Act. The assessee submitted before A.O. that its states as Cooperative Society. The revised return is filed due to inadvertence. omission to claim deduction under section 80P(1) which is statutory deduction as the assessee is a Cooperative Society and deduction is fully admissible. The assessee relied upon various provisions of law. However, the A.O. did not accept the claim of assessee for deduction under section 80P of the I.T. Act and noted that assessee is not registered under the Cooperative Societies Act, 1912 and that after insertion of Section 80P(4) the deeming status of the Cooperative Society to Regional Rural Bank (in short "RRB") stands dissolved. The deduction under section 80P were disallowed. The A.O. also referred to explanatory note to Finance Act, 2006 w.e.f. 01.04.2007 whereby claim of assessee could not be allowed. The assessee made detailed submissions before ld. CIT(A). However, appeal of assessee has been dismissed by disallowing the deduction claimed under section 80P(2)(a)(i) of the I.T. Act. The assessee in all the grounds of appeals challenged the orders of the authorities below in denying exemption under se....
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.... any law other than this Act, and notwithstanding any custom or usage to the contrary." 4.3 It is of great significance to state that overriding effect of Section 22 of Regional Rural Bank Act, 1976 had duly been recognized by Central Board of Direct Taxes and it had also clarified vide Circular No.319 dated 11th January, 1982 which reads as under: 'Circular No. 319, dated 11th January, 1982. To All Commissioners of Income Tax, A question has arisen whether Regional Rural Banks (to which the provisions of the Regional Rural Banks Act, 1976, apply) can be treated as Cooperative Societies for the purpose of section 80P of the Income-tax Act, 1961. 2. There is a specific provision, namely, section 22 in that Act, which is to the following effect: "For the purpose of the Income-tax Act, 1961, or any other enactment for the time being in force relating to only tax on income, profits or gains, a Regional Rural Bank, shall be deemed to be a Cooperative Society." 3. Therefore, the provisions of section 80P of the Income-tax Act, 1961, will also be applicable in respect of Regional Rural Banks. In this view deductions admissible under section 80P(2)(a)(i) nave to be allowed, ....
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.... being in force. He has submitted that later on the Board has issued Circular No.6/2010 dated 20th September, 2010 on introducing Section 80P(4) of the I.T. Act and such benefit have been withdrawn. Copy of which is filed at page 108 of the paper book which reads as under : "Section 80P of the Income-tax Act, 1961 - Deduction in respect of income of cooperative 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-l) DATED 20-09-2010. Section 80P of the Income-tax Act, 1961 provides for a deduction from the income of cooperative societies referred to in that section. 2. A Regional Rural Bank (RRB) are basically corporate entities (and not cooperative societies), they were considered to be not eligible for deduction under section 80P when the section was originally introduced. However, as 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 eligible for deduction under section 80P, CBDT issued a beneficial Circular No. 319 dated 11/1/1982, which stated that for....
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.... as per RRB Act, therefore, assessee entitled for deduction under section 80P of the I.T. Act. 6. On other hand, Ld. D.R. relied upon the orders of the authorities below and submitted that assessee must be a Cooperative Society for claiming deduction under section 80P of the I.T. Act. The assessee is not registered under Cooperative Societies Act. Section 22 of RRB Act, 1976 is deeming provision which is different from actual Cooperative Society. The Circular No.319 dated 11.1.1982 have been withdrawn. Therefore, assessee is not entitled for deduction under section 80P of the I.T. Act. 7. We have considered the rival submissions. It is not in dispute that assessee is RRB as per RRB Act, 1976 and assessee duly notified by the Central Government. It is not in dispute that assessee is not registered under Cooperative Society Act. The assessee by virtue of Section 22 (Section 32) of the RRB Act, 1976 claimed the status of Cooperative Society specially for the purpose of Income Tax Act. Section 22 of RRB Act clearly support the explanation of assessee that for the purpose of Income Tax Act or any other enactment for time being in force relating to any tax on income, profit or gains, R....
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.... 1976, there is no bar for assessee to claim exemption under these provisions. Considering the above discussion in the light of various provisions contained under the Regional Rural Bank Act, 1976, we are of the view that assessee is entitled for exemption/deduction under section 80P(2)(a)(i) of the I.T. Act. The orders of the authorities below are, therefore, liable to be set aside. 8. The Revenue in its C.O. No.28/Alld./2014 for the A.Y. 2009-2010 has raised the point that CIT(A) has erred in law and on facts in making discussion on the issue of Section 80P when such issue was belatedly raised before A.O. through a non-est return. 9. Though no arguments have been made on this issue on behalf of the Revenue, we may note that it is well settled Law that the Appellate Authorities have power to consider the claim not made in a return. The assessee is entitled to raise a legal issue for the first time before the Appellate Authority who possessed the co-terminus powers with that of the A.O. We rely upon decision of Hon'ble Allahabad High Court in the case of Smt. Raj Rani Gulati v. CIT 346 ITR 543, decision of Hon'ble Bombay High Court in the case of CIT v. Pruthvi Brokers & Sh....