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2024 (12) TMI 425 - AT - Income TaxEligibility for deduction u/s 36(1)(viia) - reliability on census data for classification of rural branches - whether the census data relied upon was provisional or final? - HELD THAT - We have respectfully considered the decisions in State Bank of Mysore 2015 (1) TMI 1328 - KARNATAKA HIGH COURT but note that the facts in those cases are distinguishable. The assessee utilized village-wise population data for its rural branches, where the population was less than 10,000, to determine eligibility for deduction u/s 36(1)(viia). In contrast, the Ld. AO relied on district-wise data from the 2011 Census, which led to the erroneous rejection of the rural branch status for five branches of the assessee. Due to the absence of village-wise data in the 2011 Census, the assessee appropriately relied on the final data from the 2001 Census to claim the deduction. AO, acting on an incorrect assumption, disallowed the deduction and made an addition to the income. Upon review, we find no error in the impugned appellate order, which appropriately addressed the matter. Accordingly, the revenue's appeal is dismissed.
Issues:
Interpretation of census data for classification of rural branches and eligibility for deduction under Section 36(1)(viia) of the Income-tax Act, 1961. Detailed Analysis: Issue 1: Interpretation of Census Data The appeal was filed by the revenue against an order passed under section 250 of the Income-tax Act, 1961 for Assessment year 2013-14. The impugned order stemmed from a rectification order passed by the Ld. Assistant Commissioner of Income-tax, changing the status of 5 rural branches of the assessee based on census data. The assessee claimed a deduction under Section 36(1)(viia) using census data from 2001, while the Ld.AO relied on provisional data from the 2011 census. The Ld.CIT(A) upheld the appeal of the assessee, leading to the revenue's appeal before the tribunal. Issue 2: Ld. AO's Position The Ld.DR argued that the Ld.AO correctly rejected the claim under Section 36(1)(viia) based on the provisional data from the 2011 census, as the population of 5 branches exceeded 10,000. The Ld.DR relied on the Supreme Court's directive to consider provisional data from the beginning of the financial year. The Ld.AO's decision was based on the assumption that the provisional data should be used for classification. Issue 3: Assessee's Position The assessee contended that they requested village-wise population data from the Registrar General of India for the 2011 census but were informed that only district-wise data was available. The assessee argued that the Ld.AO erred in relying on district-wise data, which led to the incorrect rejection of the rural branch status. The assessee maintained that since final data from the 2011 census was not available at the beginning of the relevant assessment year, they appropriately used the 2001 census data for classification and deduction purposes. Issue 4: Tribunal's Decision The tribunal considered both parties' submissions and reviewed the documents on record. It noted that the Ld.AO's reliance on district-wise data was erroneous, as the assessee had no access to village-wise data from the 2011 census. The tribunal found no error in the Ld.CIT(A)'s decision to allow the deduction based on the 2001 census data. It distinguished previous court decisions cited by the revenue, emphasizing the unique circumstances of the case. Ultimately, the tribunal dismissed the revenue's appeal, upholding the Ld.CIT(A)'s decision. In conclusion, the tribunal's detailed analysis focused on the correct interpretation of census data for classification of rural branches and eligibility for deduction under Section 36(1)(viia) of the Income-tax Act, 1961. The decision highlighted the importance of using available and appropriate data for such assessments, ultimately leading to the dismissal of the revenue's appeal.
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