2015 (1) TMI 1328 - HC - Income Tax

Claim of deduction under Section 36(1)(viia) - Assessing Authority took population figures of the Census 2001 to be adopted for the purpose but was computed by the assessee in respect of population of the places in which the assessee s Rural Banks were situated with reference to the population figures of the Census 1991 - Held that - The word published has to be understood as final population as contended by the learned counsel appearing for the assessee. If other words are added it would amount to re-writing which is impermissible in law. Keeping in mind the object, before the bank is entitled to the said benefit all that is to be seen is whether in that village where the rural branch is situated population is less than 10,000 or exceeding 10,000. Census is conducted once in ten years. After conclusion of the Census, provisional figure will be published and then final publication is made. If from the date of provisional population totals being published it has crossed the 10,000 limit as prescribed under the Law, then it does not satisfies the requirements of the rural branch and consequently assessee would not be entitled to the benefit granted to the rural branches. The publication of the final population total is only a formality. If after provisional population total shows more than 10,000 and in the final population total figure shown is less than 10,000 then it will make difference. But in both the provisional population total and the final population total if figure is mentioned above 10,000 it makes no different in the instant case. It is not the case of the assessee though the provisional figure mentioned is above 10,000 and in the final population total it has gone below 10,000. Therefore, provisional population total cannot be acted and in that view of the matter the Tribunal was justified in upholding the order passed by the assessing authority where they have acted on the Census figures of 2001 as reflected in the provisional population totals and denied the benefit to the assessee. We do not find any error committed by the authorities. In that view of the matter, the substantial question of law is answered in favour of the revenue and against the assessee.

Summary

Issues:
Interpretation of Section 36(1)(viia) of the Income Tax Act 1961 regarding deduction claim based on population figures from Census 1991 or Census 2001.

Analysis:
The judgment involves a dispute over the deduction claimed by a scheduled Bank of the Government of India under Section 36(1)(viia) of the Income Tax Act 1961 for the assessment years 2003-2004 and 2004-2005. The Assessing Officer rejected the deduction claim based on the population figures of Census 1991 used by the assessee, insisting on adopting the figures from the Census 2001. The Commissioner of Income-Tax (Appeals) and the Tribunal upheld the decision, leading to the appeals by the assessee.

The primary issue revolves around whether the Assessing Authority was justified in adopting the population figures of the 2001 census for the deduction claim under Section 36(1)(viia) despite the Census Data being published only in March 2004. The senior counsel for the assessee argued that the final population totals published in December 2013 should be considered, as they were released after the relevant assessment years. On the other hand, the revenue's counsel contended that the distinction between provisional and final population figures is irrelevant as the objective is to determine the population based on the last preceding Census.

The Court analyzed the legislative intent behind Section 36(1)(viia) and the definition of a "rural branch" based on the population criterion. The provision allows deductions for bad and doubtful debts made by scheduled banks, with specific percentages based on the population of the area. The Court emphasized that the population figure of not more than 10,000, as per the last preceding Census published before the first day of the previous year, determines the eligibility for the deduction. The Court highlighted that the publication of final population figures is crucial to ascertain the rural branch status for claiming the deduction.

The judgment clarifies that the Census figures must be published before the first day of the previous year to determine the eligibility for the deduction under Section 36(1)(viia). The Court rejected the assessee's argument, stating that the provisional population totals cannot be relied upon, and only the final population figures published before the relevant assessment years are relevant. Consequently, the Tribunal's decision to uphold the assessing authority's order based on the Census figures of 2001 was deemed justified, and the appeals were dismissed in favor of the revenue.