TaxTMI 
TaxTMI 
2025 (2) TMI 1867
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....1,86,64,928/- 4 That the Ld. CIT(A)-NFAC, has erred in facts and in law in confirming the addition of Rs. 38,429/- by disallowing expenditure u/s. 36(1)(va). 5 That the appellant craves to add, amend and alter the grounds before or at the time of appellate hearing." 2. The brief facts of the case are that the assessee is a Regional Rural bank (RRB) involved in the business of giving loans and accepting deposits from its customers to earn the business income during the year under consideration. The assessee was being promoted and financed by the Bank of Baroda, Rajasthan Government and Central Government. The assessee established by Central Govt. in exercise of the powers conferred by sub-section (1) of section 23A of the Regional Rural Banks Act, 1976 by amalgamating three existing regional rural banks, namely Baroda Rajasthan Gramin Bank, Hadoti Gramin Bank and Rajasthan Gramin Bank sponsored by the Bank of Baroda, Central Bank and Punjab National Bank respectively. 3. For the A.Y. under consideration, the assessee filed its return of income declaring total income at Rs. 3,83,080/- after claiming deduction u/s. 80P of the Act amounting to Rs. 211,86,64,928/....
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....ere, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely: - (a) in the case of a co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or (iii) the marketing of agricultural produce grown by its members, or (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, or (vi) the collective disposal of the labour of its members, or (vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in....
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....ing of commodities, the whole of such income; (f) in the case of a co-operative society, not being a housing society or an urban consumers' society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on securities or any income from house property chargeable under section 22. Explanation. -For the purposes of this section, an "urban consumers' co-operative society" means a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area or cantonment. (3) In a case where the assessee is entitled also to the deduction undersection 80HH or section 80HHA or section 80HHB or section 80HHC or section 80HHD or section 80I or section 80IA or section 80J, the deduction under sub-section (1) of this section, in relation to the sums specified in clause (a) or clause (b) or clause (c) of sub-section (2), shall be allowed with reference to the income, if any, as referred t....
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....her than a Primary Agricultural Credit Society or a Primary Cooperative Agricultural and Rural Development Bank. Accordingly, deduction under section 80P was no more available to any Regional Rural Bank from assessment year 2007-08 onwards. An OM dated 25-8-2006 addressed to RBI was issued by the Board clarifying that Regional Rural Banks would not be eligible for deduction under section 80P of the Income-tax Act, 1961 from the assessment year 2007-08 onwards. 4. It has been bought to the notice of the Board that despite the amended provisions, some Regional Rural Banks continue to claim deduction under section 80P on the ground that they are cooperative societies covered by section 80P(1) read with Boards Circular No. 319 dated 11-1-1982. 5. It is, therefore, reiterated that Regional Rural Banks are not eligible for deduction under section 80P of the Income-tax Act, 1961 from the assessment year 2007-08 onwards. Furthermore, the Circular No. 319 dated 11-1-1982 deeming any Regional Rural Bank to be cooperative society stands withdrawn for application with effect from assessment year 2007-08. The field officers may take note of this position and take reme....
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....ister on 28-2-2006 clearly shows that cooperative Banks were excluded from the benefit of section 80P of the Act on the plea that like any other bank, the co-operative banks are also lending institution and should pay tax on their profits. Accordingly, co-operative banks were excluded from the scope of section 80P of the Act. 7. Section 80P of the Act, inter alia, provides for a deduction from the total income of the Co-operative societies engaged in the business of banking or providing credit facilities to its members, or business of a cottage industry, or of marketing of agricultural produce of its members, or processing, without the aid of power, of the agricultural produce of its members, etc. The cooperative banks are functioning at par with other commercial banks, which do not enjoy any tax benefit. Therefore, section 80P of the Act has been amended and a new sub-section (4) has been inserted to provide that the provisions of the said section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. The expressions "co-operative bank", "primary agricultural credit....