TaxTMI 
TaxTMI 
2023 (1) TMI 647
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....as it is against the appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case. 2. The Appellant denies itself Liable to be taxed over and above the total business toss of Rs. 363,82,18,993/- declared by the appellant on the facts and circumstances of the case. 3. The learned Commissioner of Income Tax [Appeals] is not justified in upholding the disallowance made by the learned assessing officer on account of provision for bad and doubtful debts amounting to Rs. 492,74,01,516/- under Section 36[1][viia] of the Act on the facts and circumstances of the case. 4. The learned authorities below failed to appreciate that the provision for bad and doubtful debts is governed by Section 36[1][viia] of the Act and the words used are 'in respect of any provision', thus the authorities below failed to appreciate that as long as provision is made in the books of accounts, the appellant is eligible for claiming deduction under section 36[1][viia] of the Act since it is a specific deduction given by the statute irrespective of the quantum provided by the assessee in its accounts towards pro....
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....grounds of appeal urged above. 5. For the above and other grounds to be urged during the course of hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice." Additional grounds of appeal : "1. The authorities below failed to appreciate that the appellant is a Cooperative Society being a Rural Regional Bank and consequently not hit by the prohibition under section 8oP(4) of the Act, on the facts and circumstances of the case. 2. The appellant is eligible to the claim of deduction under section 8oP of the Act, on the facts and circumstances of the case. 3. The authorities below ought to have allowed the deduction under section 8oP of the act, by adhering to Circular 14/1955, of the Act, on the facts and circumstances of the case. 4. The assessee denies itself to be assessed as an AOP, and ought to have been assessed as a Co-operative Society, and the order passed in the wrong status is required to be set aside as bad in law, on the facts and circumstances of the case. 5. The Appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of ap....
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....and computed the income as under:- 4. Aggrieved from the order of the AO, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee and passed order on 19/03/2020. 5. Aggrieved from the order of the CIT(A), the assessee as well as revenue is in appeal before us. 6. The ld.AR filed written synopsis, which is as under:- "The appellant begs to submit the under mentioned additional grounds of appeal which were not urged specifically in the grounds of appeal filed before the learned Commissioner of Income-tax [Appeals], Hubli. These grounds do not involve any investigation of any facts otherwise on the record of the department and are also pure question of law. It is humbly prayed before this Hon'ble Tribunal that the additional grounds may kindly be admitted and disposed off on merits for the advancement of substantial cause of justice. Reliance is placed on the decision of the Hon'ble Apex Court in the case of National Thermal Power Company Limited Vs. CIT, reported in 229 ITR 383 and also on the ratio of the decision of the Hon'ble Karnataka High Court in the case of Gundathur Thimmappa & Sons Vs. CIT, reported in ....
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.... liable to be treated as a cooperative society for the purpose of Income Tax Act, 1961. 3. Whether the provisions of section 8oP () of the Act applicable to Regional Rural Banks? a) The appellant submits that there are three types of Banks, namely, Scheduled Banks, Co-operaLive Banks and Regional Rural Barks. b) The provisions of section 80P(4) has been introduced to deny the claim of deduction under section 8oP, to Co-operative banks, other than "Primary Agricultural Credit Societies" and "primary co-operative agricultural and rural development bank". The explanation to this sub-section defines co-operative banks as follows: "Explanation. -For the purposes of this sub-section,- (a) "co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (io of 1949);" In Part V of the Banking Regulation Act, 1949 (io of 1949) the term cooperative bank is defined as follows: (cci) "Co-operative bank" means a state co-operative bank, a central cooperative bank and a primary co-operative bank Further the above terms are defin....
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.... eligible for the claim of deduction under section 8oP of the income Tax Act, 1961, treat the appellant unlike a "primary Co-operative Bank", which means that the appellant shall not be treated as a Co-operative bank for the purpose of the Banking Regulation Act and thus it is a Co-operative society, eligible for the claim of deduction under section 8oP of the Income Tax Act 1961 and is not hit by section 80P () of the Act. f) Thus a harmonious reading of the various provisions indicate that section 8oP(4) excludes and denies benefits only for a co operative bank and not a regional rural hank and consequently a RRB cannot be denied exemption under section 80P 4. In this regard reliance is placed upon the decision of the Allahabad Tribunal in the case of Baroda Uttar Pradesh Gramin Bank v. Deputy Commissioner of Income Tax, Sultanpur in [2018] 169 lTD 656 (Allahabad -Trib.), which has been upheld by the Allahabad High Court in [2022] 138 taxmann.com 449 (Allahabad)I15-o3-2o22] 5. The appellant summarises its contention as follows; a. What is excluded under 80P(4) is only a co - operative bank and not a regional rural bank. b. That there a....
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....ferred to NABARD Act 1981 under which, the definition of sec. 2(d) of Central Cooperative Bank has been defined and he also referred to sec. 2(p) which is definition of regional rural banks. He also relied on the judgment of Hon'ble High Court of Allahabad which is placed on record. 1. PCIT Vs. Baroda Uttar Pradesh Gramin Bank [2022] 138 taxmann.com 449 (Allahabad) 2. Baroda Uttar Pradesh Gramin Bank Vs. DCIT [2018] 138 taxmann.com 449 (Allahabad) 8. The ld.AR further submitted that the assessee is eligible for claiming deduction u/s 80P(2a)(i) within the frame work of Circular No.14/1959 of the Act to which the lower authorities have not granted. 9. On the other hand, the ld.DR relied on the order CIT(A)/ AO in regard to sec.36(1)(vii)/36(1)(viia) of the Act has been decided by the Hon'ble jurisdictional High Court of Karnataka in the case of CIT Vs. Syndicate Bank [2020[ reported in 422 ITR 460 [kar[ that the issue is decided in favour of the revenue, therefore, reopening made by the lower authorities have been justified and addition should be upheld. 10. We have heard both the parties and perused the entire materials on record and examined the orders o....
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....ws.- The provisions of this Act shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force or in any contract, express or implied, or in any instrument having effect by virtue of any law other than this Act, and/ notwithstanding any custom or usage to the contrary." 13. From the above cited sections 22 and 32, it is clear that the assessee is deemed to be a cooperative society for the Income-tax purpose. On going through the written synopsis, the assessee referred to various definitions under the different Acts according to which, the assessee is a cooperative society for the purpose of Income-tax Act. The Hon'ble High Court of Allahabad has decided the similar issue in the case of PCIT Vs. Baroda Uttar Pradesh Gramin Bank reported in [2022] 138 taxmann.com 449 for the assessment year 2012-13 to 2016-17 in favour of the assessee. The relevant part of the decision is as under:- "3. It has been admitted before us that the respondent-assessee is a Primary Cooperative Agricultural and Rural Development Bank. It has also been admitted before us that the respondent/assessee is a Bank, established under section 3 ....
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.... or of marketing of agricultural produce of its member, or processing, without the aid of power, of the agricultural produce of its members, etc. The cooperative banks are functioning at per with other commercial banks, which do not enjoy any tax benefit. It is, therefore, proposed to amend section 80P by inserting a new sub-section (4) so as provide that the provisions of the said section shall not apply in relation to any cooperative bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank. It is also proposed the expressions "cooperative bank", "primary agricultural credit society" and "primary cooperative agricultural and rural development bank". It is also proposed to insert a new sub-clause (viia) in section 2 (24) so as to provide that the profits and grains of any business of banking (including credit facilities) carried on by a cooperative society with its members shall be included in the definition of 'income'. This amendment takes effect from 1st April, 2007 and apply in relation to the assessment year 2007-08 and subsequent years. (Clauses 3 and 19)" From aforesaid ....
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....ng its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities. 8. The Tribunal has passed impugned two common orders, firstly in matters arising out of the assessment orders, and secondly order in matters arising from the penalty orders. 9. In the Income-tax Appeals arising from the assessment order, the Income-tax Appellate Tribunal Allahabad Bench, Allahabad has recorded the following findings of the fact (paragraphs 38, 39, 41, 42, 50, 51, 54, 55, 56, 57, 58, 61):- 38. We have heard the contentions, put forth by the rival parties, perused the Paper Books in three volumes as had been uploaded by the appellant RRB. The central issue involved in all these appeals is whether 'appellant RRB is entitled to claim exemption under section 8OP(2)(a)(i) of the Act, on the ground that Regional Rural Banks in general had been notified as "Cooperative Society" by virtue of insertion of section 22 read with section 32 of Regional Rural Bank Act 1976. Further, whether such a claim is adversely affected by insertion of sub- section (4) below section 80P, by the Fin....
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.... not have been taken away or whittle down their true effect, as the said provisions remain intact. Accordingly, all the Regional Rural Banks as have been constituted and incorporated under the Regional Rural Bank Act 1976, as the appellant RRB is, continue to be "cooperative society" and thereby continue to enjoy exemption under section 80P (2)(a)(i). The "appellant RRB", is no exception. Meaning thereby, that the appellant RRB', in spite of insertion of bar by virtue of sub-section (4) below section 80P, by the Finance Act 2006 effective from 1-4-2007, continues to be enjoying exemption under section 80P(2)(a)(1). 42. Here itself, it would not be out of place to mention that status of "cooperative society" had been conferred on Regional Rural Banks, as the "appellant RRB" is, by virtue of section 22 read with section 32 of Regional Rural Bank Act 1976, and not by circular no. 319 dated 11-1- 1982 as had been issued by CBDT, as had been opined, by the Authorities below. Therefore, insertion of sub-section (4) below section 80P, and/or withdrawal of the said Circular no. 319 dated 11-1-1982 in the wake of insertion of bar by virtue of sub section (4) had not gone to adv....
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....ct', as the 'appellant RRB' is. It is a trite law that provisions contained in the fiscal statutes, have to be read word by word and nothing is to be subtracted therefrom and nothing is to be intended therein. Such a rule of interpretation had been laid down by the Hon'ble Jurisdictional High Court in the case of CIT v. Sahara India Savings and Investment Corpn. Ltd. reported in [2003] 264 ITR page 646, wherein their lordships have observed and held as under: "We do not agree. It is a well settled principle of interpretation of taxing statues that while interpreting a taxing statue we have only to see the words used in the statue and not the intention or the spirit of the statutory provision. In a taxing statue the literal rule of interpretation applies, and it is well settled that if a transaction comes within the letter of the law it has to be taxed, however great the hardship, but if it does not, it cannot be taxed, however great the loss may be to the public exchequer. The view was best expressed by Lord Cairns in Partington v. Attorney General [1869] 4 LR 100 (HL) as follows (at page 122): If the person sought to be taxed, comes within the let....
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....In other words, in a taxing statute we have to go by the letter of the law, and not its spirit or intent." The new definition of the word "interest" in section 2 (7) is in two parts. Firstly, it says that "interest" means interest on loans and advances. Secondly, it includes two other items in the definition of the word "interest". In our opinion, the only correct interpretation of this provision can be that firstly nothing is interest except interest on loans and advances. Secondly, two other categories are also included in the definition of the word "interest" as specified in clauses (a) and (b) of section 2(7). In our opinion, the word "means can only have one meaning, that is, it is CIT v. Sahara India Savings and Investment Corporation Ltd. reported in [2010] 321 ITR 371 an exclusive definition vide P. Kasilingam v. P.S. G. College of Technology (1995/supp 2 SCC 348. When we say that a word has a certain meaning then by implication we mean that it has no other meaning vde a Punjab Land Development and Reclamation Corporation Ltd. v. Presiding Officer, Labour Court/1990] 77 FJR 17; |1990) 3 SCC 682. However, when certain other categories are added then it mean....
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.... wherein it has been held that if a cooperative bank was carrying on business of banking, which required it to place a part of its funds in approved securities, the income attributable thereto, is deductible under section 8OP(2)(a)(i) of the Act. 56. Further, in other case of CIT v. Nawanshahar Central Co- op Bank Ltd. reported in [2012] 349 ITR 689, the Hon'ble Supreme Court has also held that "the assessee - cooperative society was entitled for deduction under section 80P(2)(a) (i) of focome Tax Act 961, in respect of underwriting commission and interest on PSEB Bonds and IDBI Bonds, as such is an income, attributable to the business of banking. It is not the case of revenue that any part of its income had been earned by the "appellant RRB", which is different from "Business of Banking" as defined in section 18 of Regional Rural Bank 1976. 57. From the discussion made in the foregoing paragraphs, it is abundantly clear that the Assessing Officer and so also the ld. CIT (A), had gone off the tangent, while deciding/adjudicating the appellant's claim for exemption under section 80P(2)(a)(i), owing mainly to the reason that they have failed to interpret the....
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.... agricultural sector. This finding of fact has not been disputed in the present appeals. 11. Assessing authority, in para no. 2 of the assessment order itself has recorded a finding that the respondent-assessee came into existence w.e.f. 31-3-2008, after amalgamation of the two Regional Rural Banks (RRB) i.e. Baroda Eastern U.P. Gramin Bank and Baroda Western Gramin Bank. It has not been disputed that by virtue of deeming provision under section 22 of the Regional Rural Banks Act, 1976, the respondent/assessee is deemed cooperative society. 12. We have perused the impugned common order of the Tribunal arising from the assessment order and we do not find any legal infirmity in it. 14. The AR of the assessee also relied on the judgment of the coordinate bench ITAT Allahabad Bench has decided the similar issue in the case of Baroda Uttar Pradesh Gramin Bank Vs. DCIT in ITA No.403 to 405/2014 for the assessment year 2009-10 to 2011-12 in favour of the assessee. 15. Respectfully following the above decisions, we hold that the assessee is a cooperative society for the purpose of Income-tax Act and assessee is eligible for claiming deduction as per sec. 80P(2)(a)(i....