TaxTMI 
TaxTMI 
2026 (9) TMI 499
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....hetriya Gramin Bank. 2. The facts germane to the controversy are that the assessee is a cooperative society and, for the year under consideration, had claimed deduction under section 80P(2)(d), inter alia, on interest income of Rs. 2,84,39,130/- received from Baroda Rajasthan Kshetriya Gramin Bank. During the course of assessment proceedings, the Assessing Officer specifically examined the claim of deduction under section 80P. As recorded in the assessment order itself, the assessee had claimed aggregate deduction of Rs. 3,61,01,180/-, comprising interest of Rs. 14,88,240/- from Central Co-operative Bank, interest of Rs. 2,84,39,130/- from Baroda Rajasthan Kshetriya Gramin Bank and dividend of Rs. 61,73,810/- from Co-operative Federation Ltd. The assessee had furnished its explanation and relied upon various judicial precedents in support of the claim. 3. Insofar as the interest of Rs. 2,84,39,130/- received from Baroda Rajasthan Kshetriya Gramin Bank was concerned, the assessee had specifically placed before the Assessing Officer the judgment of the Hon'ble jurisdictional Rajasthan High Court in assessee's own case, Pr. CIT v. Bhilwara Zila Dugdh Utpadak Sahakari Sangh Ltd.,....
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.... had placed the judgment of the Hon'ble jurisdictional Rajasthan High Court in its own case before the Assessing Officer. The Assessing Officer, after considering the same, consciously followed the binding judgment and allowed the claim. Therefore, neither can the assessment order be characterised as having been passed without inquiry nor can the view adopted therein be regarded as an erroneous view. 7. The learned counsel further drew our attention to the judgment of the Hon'ble Rajasthan High Court in assessee's own case and submitted that the precise question regarding the character of a Regional Rural Bank for the purposes of the Income-tax Act already stood concluded by the jurisdictional High Court. The Hon'ble High Court had specifically considered section 22 of the Regional Rural Banks Act, 1976, which provides that, for the purposes of the Income-tax Act, 1961 or any other enactment for the time being in force relating to any tax on income, profits or gains, a Regional Rural Bank shall be deemed to be a co-operative society. After considering section 80P(4) and CBDT Circular No.6/2010 dated 20.09.2010, the Hon'ble High Court held that the Revenue's contention was unsust....
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....els any suggestion that the claim was allowed without inquiry or verification. The Assessing Officer has expressly recorded the constituents of the deduction claimed under section 80P(2)(d), including the amount of Rs. 2,84,39,130/- received from Baroda Rajasthan Kshetriya Gramin Bank. He has thereafter referred to the judgment of the Hon'ble Rajasthan High Court in D.B. Income Tax Appeal No.2/2019 dated 13.08.2019 and, after noticing that Baroda Rajasthan Kshetriya Gramin Bank had therein been accepted as a co-operative society, allowed the deduction. Thus, the assessment order manifests a conscious adjudicatory exercise and not an inadvertent or mechanical acceptance of the claim. 12. We now advert to the judgment of the Hon'ble jurisdictional Rajasthan High Court, because it goes to the very root of the matter. In assessee's own case, the issue before the Hon'ble High Court pertained to interest earned on amounts deposited with Baroda Rajasthan Regional Rural Bank. The Tribunal had granted relief by taking note of section 22 of the Regional Rural Banks Act, 1976. The Revenue challenged the same before the Hon'ble High Court and also relied upon CBDT Circular No.6/2010 dated 2....
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.... and more importantly, the judgment of the Hon'ble Rajasthan High Court in assessee's own case was binding upon the authorities functioning within its territorial jurisdiction. A decision of a Coordinate Bench of the Tribunal, notwithstanding the respect which it commands, cannot have the effect of effacing or overriding the declaration of law by the jurisdictional High Court. If a subsequent decision of the Tribunal has taken a different view without giving effect to an earlier binding jurisdictional High Court judgment, that circumstance cannot furnish the foundation for revising an assessment order which had faithfully followed the jurisdictional High Court. 17. We also find substance in the distinction sought to be drawn by the assessee with regard to the judgment of the Hon'ble Supreme Court in Kerala State Co-operative Agricultural & Rural Development Bank Ltd. (supra). That judgment dealt with the ambit of section 80P(4) and the question whether the assessee therein answered the description of a co-operative bank for the purposes of the exclusion contained in section 80P(4). The present case, however, has an additional statutory dimension, namely section 22 of the Regiona....
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....bsequent orders for deciding the merits of the deduction, their existence itself reinforces that the issue is not one where the view adopted by the Assessing Officer could be described as an untenable or manifestly erroneous view. 21. In fact, the peculiar feature of the present case is that the Assessing Officer did not merely choose one among two competing interpretations available in general jurisprudence. He followed a judgment rendered by the jurisdictional High Court in the assessee's own case. Therefore, the assessment order stood on a much firmer pedestal. Unless that judgment was reversed, stayed or otherwise rendered inapplicable by a binding higher judicial pronouncement directly governing the statutory fiction under section 22 of the Regional Rural Banks Act, the Assessing Officer could not be faulted for having followed it. 22. We may also observe that section 80P(4) operates to exclude specified co-operative banks from claiming deduction under section 80P in their own assessments. The controversy under section 80P(2)(d), however, concerns deduction in the hands of an assessee co-operative society in respect of interest or dividend derived from investments with a....