TaxTMI 
TaxTMI 
2022 (3) TMI 848
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....t has also been admitted before us that the respondent/assessee is a Bank, established under Section 3 of the Regional Rural Banks Act 1976. The respondent/assessee claimed deduction under Section 80P of the Income Tax Act, 1961(hereinafter referred to 'as the Act, 1961') on the ground that it is a Cooperative Society and, therefore, in terms of the provision of Section 22 of the Regional Rural Development Banks Act,1976 (hereinafter referred to 'as the R.R.B Act, 1976'), it is entitled for deduction under Section 80P of the Act. 4. The assessing authority has not accepted the claim of the deduction on the ground that the respondent/assessee is not a Cooperative Society registered under the U.P. Cooperative Societies Act,1912 and, therefore, it is not entitled for deduction under Section 80P of the Act,1961. It was further held by the Assessing Authority in paragraph 2.5 of the Assessment Order that the Regional Rural Banks are not eligible for deduction under Section 80P of the Act, 1961 from the Assessment Year 2007-08, as by Circular No. 319 dated 11.01.1982 issued by the Central Board of Direct Taxes, deeming status of the Regional Rural Banks as Cooperative Society stands wit....
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....facts, intension of Parliament is very much clear and deduction under Section 80P is not allowable to Regional Rural Bank and any cooperative bank. 5. However, it should be kept in mind that 80P (1) and 80P (2) (I) shall never be read in isolation rather it should always be read in association with 80P (4). The selection 80P (4) is introduced by Finance Act, 2006 w.e.f 01.04.2007 to clear any doubt while claiming deduction under section 80P (1) and 80P (2) (II) FURTHR CBDT ISSUED "circular no. 6/2010 (F. NO. 173 (3)/44/2009-IT (A-1) DATED 20.09.2010 C to give more and more clarity on 80P deduction. Therefore, the assessee is assessed as status of AOP. From aforesaid discussion it is held that assesseee is not entitled for deduction u/s 80P (1) of I.T. Act and claiming disallowed and added back to the total income. Penalty notice u/s 271(1) (c) is being issued separately. 6. Section 22 and 32 of the Regional Rural Banks Act, 1976 provides as under:- 22. Regional Rural Bank to be deemed to be a cooperative society for purpose of the Income Tax Act, 1961.- For the purpose of the Income Tax Act, 1961 (43 of 1961), or any other enactment for the time being in force relating to an....
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....80P as well as of Banking Regulation Act, 1949 and Part-V thereof as had been inserted to the main statute, i.e., Banking Regulation Act 1949, in the year 1965. 39. The section 80P of the Act' had been inserted, in substitution of section 8l of the Income tax Act 1961, by the Finance Act (No.2) of 1967, (20 of 1967), w.e.f. 01.04.1968. The purpose behind such a substitution, was to enlarge the scope of deduction as used to be permissible under erstwhile section 81 (the then) of the Act. In terms of section 81, rebate on certain types of income had been provided, whereas in terms of section 8OP, full and outright deduction of income earned from the 'business of Banking' or 'providing credit facilities to its members, to various types of Cooperative Societies as mentioned in sub-clauses (i) to (vii) of clause (a) of sub section 2 of 80P had been given. It clearly meant that, while enacting sections 22 r.ws. 32 of Regional Rural Bank Act, 1976, the Parliament was fully aware of the provisions contained in the newly substituted section 80P, in place of erstwhile regime of granting rebate as had been provided under section 81 of the Act. Yet the said RRB Act had granted 'R....
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.... to be having the status of a "cooperative society" enjoying the benefit of exemption. 50. For taking such a view, about interpretation of Regional Rural Bank Act, vis-à-vis sub-section (4) of Income Tax Act, 1961, we are fortified by the decision rendered by Hon'ble Supreme Court in the case of Reserve Bank of India vs. Peerless General Finance and Investment Co. Ltd. reported in (1987) 1 SCC 424 wherein it has been held that: "interpretation must depend on the text and the context. They are the basis of interpretation. One may well say if the the text is the texture, context is what gives the colour. Neither Can be 1gnored. Both are important. That interpretation is best which makes the textual interpretation match the Contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. 1f a statute is looked at in the context of its enactment, with the glasses of the statute maker provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statut....
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....ithin the letter of law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. The principle of strict interpretation of taxing statutes was best enunciated by Rowlatt J. in his classic statement: "In a taxing statute one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One must only look fairly at the language used. In A.V. Fernandez v. State of Kerala (1957 8 STC 561; AIR 1957 SC 657, the Supreme Court of India stated the principle as follows (page 661 of AlR 1957 SC): 'If the Revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statue no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the Legislature and by considering what was the substance of the matter' Where the language of a provision is plain, Courts cannot ordinarily concern themselves with the policy behin....
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....m the Hon'ble Supreme Court in the case of CIT Vs. Sahara India Savings and Investment Corporation Ltd. reported in (2010) 321 ITR 371. 54. So far as claim of exemption of its income is concerned, we have noted the decision of Hon'ble Supreme Court in the case of Citizen Coopèrative Society Ltd. vs. Asstt. CIT (2017) 397 ITR 1, dated 08.1.2017, wherein denial of the appellant's claim for exemption, by the authorities below had been upheld, owing mainly 'to the bar contained in sub-section (4) of section 80P of the Act. The facts of the said case were, that it was a "cooperative society" registered under the Andhra Pradesh Mutually Aided Cooperative Societies Act 1955. In that case, the said cooperative society had violated the provisions of Andhra Pradesh Mutually Aided Cooperative Societies Act 1955. It was under these circumstances, that the Hon'ble Supreme Court had approved the judgment, adverse to the assessee, as had earlier been delivered by Hon'ble Andhra Pradesh High Court. As against this, it is stated that this is not even the case of the revenue that the appellant had carried on the banking business, in violation of any of the provisions of Regi....
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....his order. A perusal of the said sections would clearly mean that the "appellant RRB" is a "cooperative society" and accordingly sub-section (4) below section 80P of the Income Tax Act would not operate as a bar to its claim for exemption and accordingly, we set aside the findings given in the related assessment orders as well as appellate orders so far as appellant's claim for exemption under section 80P(2)(a)(i) is concerned. The Assessing Officer would recompute the income after allowing deduction under section 80P(2)(a)(i), as per our findings given hereinfore. 58. Before parting with the issue of appellant's claim case for exemption under section 8OP(2)(a) (i), we also hold that the case laws referred to and relied upon by the ld. "CIT(A), while upholding the denial of claim for exemption of income derived from "banking business", she has referred to and relied upon various case laws, as have been discussed by us in para 47 hereinfore. Such case laws are not applicable on the facts of the present case. Surprisingly enough, the underlying principle in all such case laws support the appellant's claim for exemption as it had achieved the objective for which it had c....