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2018 (3) TMI 955 - AT - Income TaxDenial/ Disallowance of claim of deduction u/s. 80P - whether the assessee is a co-operative Bank or Society and consequently whether the deduction u/s.80P is available to the assessee? - Held that - The assessee is a Regional Rural Bank ,which is deemed to be a co-operative society as per the provisions of RRB Act and for the purpose of Income Tax Act and since the main function of the assessee is involved in the banking business and, therefore, not entitled for deduction u/s. 80P of the Act. CIT(A) has correctly followed the decision in the case of Vidisha Bhopal Kshetriya Gramin Bank vs ACIT 2012 (8) TMI 119 - ITAT INDORE for the assessment year 2007-08 and 2008-09, wherein, it has been held that the RRBs are not entitled to deduction u/s.80P of the Act from the assessment year 2007-08. Whereas the assessment year involved in the present case is 2012-13. - Decided against assessee.
Issues Involved:
1. Denial/Disallowance of claim of deduction under Section 80P of the Income Tax Act. 2. Levy of Interest under Sections 234B and 234D of the Income Tax Act. Detailed Analysis: 1. Denial/Disallowance of claim of deduction under Section 80P of the Income Tax Act: The assessee, a Regional Rural Bank (RRB), appealed against the order of the CIT(A)-1, Bhubaneswar, which denied the deduction under Section 80P of the Income Tax Act for the assessment year 2012-13. The primary contention of the assessee was that it should be considered a cooperative society under Section 22 of the RRB Act, thereby qualifying for the deduction under Section 80P(2)(a)(i) of the Income Tax Act. However, the Assessing Officer found that under subsection (4) of Section 80P, the assessee, being engaged in rural banking activities, is treated as a cooperative bank and thus not eligible for the deduction. On appeal, the CIT(A) upheld the Assessing Officer's decision, citing that RRBs, although deemed cooperative societies for the purpose of the Income Tax Act, are involved in banking business and thus are to be treated as cooperative banks for the purpose of Section 80P. The CIT(A) referred to the amendment to Section 80P effective from April 1, 2007, which specifically denies the deduction to cooperative banks other than Primary Agricultural Credit Societies and Primary Cooperative Agricultural Development Banks. The CIT(A) also referenced CBDT Circular No. 6/2010, which clarified that RRBs are not eligible for the deduction under Section 80P from the assessment year 2007-08 onwards. The CIT(A) further supported its decision with the judgment of the ITAT, Indore Bench, in the case of M/s. Vidisha Bhopal Kshetriya Gramin Bank vs. ACIT, which held that RRBs are not entitled to deduction under Section 80P from the assessment year 2007-08 onwards. The Tribunal, upon hearing the submissions, noted that the Assessing Officer did not address the assessee's claim of not being a cooperative bank but denied the deduction based on Section 80P(4). The CIT(A) had considered the assessee as a cooperative society involved in banking business, thus not entitled to the deduction. The Tribunal upheld the CIT(A)'s decision, following the precedent set by the Indore Bench and the CBDT Circular, and dismissed the appeal. 2. Levy of Interest under Sections 234B and 234D of the Income Tax Act: The assessee also contested the levy of interest amounting to ?2,31,31,260/- under Section 234B and ?1,735/- under Section 234D of the Income Tax Act. The CIT(A) had dismissed these grounds, and the Tribunal, aligning with the CIT(A)'s findings and the provisions of the law, did not find any merit in the assessee's appeal on this issue either. Conclusion: The Tribunal concluded that the assessee, being a Regional Rural Bank, is not eligible for the deduction under Section 80P of the Income Tax Act due to the specific exclusion of cooperative banks from the benefits of this section post the amendment effective from April 1, 2007. The appeal was dismissed, and the CIT(A)'s order was upheld. The levy of interest under Sections 234B and 234D was also confirmed as per the provisions of the law. The order was pronounced on March 19, 2018.
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