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TMI Blog2010 (8) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... he had decided that the assessee was equivalent to a co operative society eligible for deduction u/s 80P(2)(a)(i) HELD THAT:- There is much strength in the argument of the assessee that it is to be treated as co-operative society in view of the provisions contained in RRB Act, 1976. If so, it would be eligible under section 80P(2)(a)(i) of the Act. In present case, the AO had carefully considered the claim of the assessee and allowed deduction u/s 80P(2)(a)(i). AO was very well aware that assessee was a rural bank under RRB Act, 1976 and it was only after considering relevant provisions, he had decided that the assessee was equivalent to a co operative society eligible for deduction u/s 80P(2)(a)(i). Thus, the issue whether assessee was qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the CIT considered, sub-section (4) of section 80P of the Act, which was applicable to co-operative banks, as applicable to assessee also. According to assessee, it was not a co-operative bank, and therefore, sub-section (4) of section 80P would not apply to it. In any case, as per the assessee, two views were possible regarding applicability of section 80P(2)(a)(i) of the Act to Regional Rural Bank and the Assessing Officer had taken a permissible view. Therefore, in the opinion of the assessee, the order of the Assessing Officer could not be considered as erroneous in so far as it was prejudicial to the interest of the revenue. 3. In the assessment completed by the A.O. originally on 19.3.2009, assessee was given deduction under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the statute, an RRB could not be taxed under Income-tax Act, 1961. However, the CIT did not appreciate the contention of the assessee. The relevant findings of the CIT are as under:- "3.3 The statutory provision is that this deduction is applicable to a 'cooperative society' only. The amount of deduction refers to income out of carrying on the business of banking or providing credit facilities to its members (and other activities which are not relevant for our purpose). The assessee is a cooperative bank rendering banking services to the public in rural areas. A 'cooperative bank' and a 'cooperative society' are two distinct entities. The primary distinction being a 'cooperative bank' renders banking serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit u/s.80P(2)(a)(i), will lose the said exemption from 01.04.2007 but the specifically mentioned two cooperative societies will continue to enjoy such exemption. In the Explanation to sub-section (4), it has been mentioned that 'cooperative bank' and 'primary agricultural credit society' shall have the meaning as assigned to them in Part V of the Banking Regulation Act, 1949. And 'primary cooperative agricultural and rural development bank' means " a society having its area o f operation confined to a Taluk and principal object of which is to provide for long term credit for agricultural and rural development activities". 3.4 The assessee is a 'rural cooperative bank' (admitted in the written su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, which is a cooperative bank. The legislative intention behind such amendment as quoted in paragraph 3.1 above clearly specifies that the cooperative banks will henceforth be subject to income tax in the line as other commercial banks w.e.f.01.04.2007 and hence will not enjoy the benefit hitherto allowed u/s.80P(2)(a)(i) of the I.T.Act. In view of these facts and circumstances, analysis of the statutory provision and explanatory Memorandum thereof, I am inclined the reject the arguments of the Ld.A/R." 4. Now, before us, the learned A.R. submitted that the Assessing Officer had carefully considered the claim of the assessee and allowed deduction under section 80P(2)(a)(i) of the Act. According to him, Assessing Officer was very well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bank at all. Whatever that may be, there is much strength in the argument of the assessee that it is to be treated as co-operative society in view of the provisions contained in RRB Act, 1976. If so, it would be eligible under section 80P(2)(a)(i) of the Act. Now, let us look at relevant paragraph appearing at page no.2 of the assessment order dated 19.3.2009 which is very pertinent, as reproduced hereunder:- "The assessee's authorized representative produced the evidences and details which confirms that the assessee is a regional rural bank. As per the provisions of Regional Rural Banks Act, 1976, the assessee bank is treated as a Co-operative Society for income-tax purpose and it is eligible for the deduction u/s 80P(2)(a)(i). Hence, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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