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TMI Blog2018 (3) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... belatedly raised before A.O. through a non-est return - Held that:- In the present case, the assessee has raised the issue of claim of exemption under section 80P before A.O. which have been discussed and considered by the A.O. Therefore, there was no bar on the powers of the ld. CIT(A) to consider the same issue even if such issue would not have raised before A.O. Ld. CIT(A) was entitled to consider this issue at the First Appellate Stage. There is no merit in the cross objection and the same is liable to be dismissed. Orders of the authorities below are set aside and matter is restored to the A.O. to re-frame the assessment in accordance with law by granting benefit to the assessee under section 80P(2)(a)(i) of the I.T. Act because the A.O. has not examined the conditions of above provisions. The A.O. shall give reasonable, sufficient opportunity of being heard to the assessee. - ITA 403/ALLD/2014, ITA 404/ALLD/2014 And ITA 405/ALLD/2014 - - - Dated:- 8-1-2018 - BHAVNESH SAINI, JUDICIAL MEMBER AND MR. L.P. SAHU, ACCOUNTANT MEMBER For The Appellant : S.K. Garg, Ashish Bansal Advocates and Saurabh Agarwal, CA For The Respondent : A.K. Tripathi, CIT-DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g powers vested in it, under sub-section (1) of Section 23A of the Regional Rural Bank Act, 1976 which was published in the Official Gazette on the same day. Copy of the Notification is filed at page-31 of the paper book. He has submitted that RRB Act, 1976 is a Central Legislation which provides for the incorporation regulation and windingup of Regional Rural Bank with a view to developing the rural economy by providing for the purpose of development of agriculture, trade, commerce, industry and other productive activities in the rural area, credit and other facilities, particularly to the small and marginal farmers, agricultural labourers, artisans and small entrepreneurs and for matters connected therewith and incidental thereto and the Regional Rural Bank as constituted thereunder like the assessee are required to carry on banking business as per Section 18 thereof. Accordingly, the assessee is RRB has been carrying on banking business ever since its inception and there is no dispute whatsoever on this aspect of the matter. 4.1 The said RRB Act, 1976 also provides that RRB shall be deemed to be Cooperative Society for the purpose of Income Tax Act, as per Section 22 thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (cciia) Cooperative Society means a society registered or deemed to have been registered under any Central Act for the time being in force relating to the multi-State Cooperative Societies or any other Central or State Law relating to Cooperative Societies for the time being in force. 4.5 The assessee claimed the status of Cooperative Society and was entitled for deduction under section 80P(2)(a)(i) of the I.T. Act, 1961. As per Circular No. 14, dated 28th December, 2006 reported in 288 ITR 27 (Statute), the scope of newly inserted sub-section (4) has been explained, so as to mean that the same is applicable to Cooperative Bank. As per meaning assigned in para-V of Banking Regulation Act, 1949, the Cooperative Bank means State Cooperative Bank, Central Cooperative Bank and Primary Cooperative Bank. Copy of Circular is filed at page 107 of the paper book. The assessee is neither the State Cooperative Bank nor Central Cooperative Bank nor even a Primary Cooperative Bank and it continues to be Cooperative Society as per Section 22 of RRB Act, 1976. Although the assessee is not registered as a Cooperative Society, its status as that of Cooperative Society has been conferred o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Society or a Primary Cooperative Agricultural and Rural Development Bank. Accordingly, deduction under section 80P was no more available to any Regional Rural Bank from assessment year 2007-08 onwards. An OM dated 25-8-2006 addressed to RBI was issued by the Board clarifying that Regional Rural links would not be eligible for deduction under section 80P of the Income-tax Act, 1961 from the assessment year 2007-08 onwards. 4. It has been bought to the notice of the Board that despite the amended provisions, some Regional Rural Banks continue to claim deduction under section 80P on the ground that they are cooperative societies covered by section 80P(1) read with Boards Circular No. 319 dated 11-1-1982. 5. It is, therefore, reiterated that Regional Rural Banks are not eligible for deduction under section 80P of the Income-tax Act, 1961 from the assessment year 2007-08 onwards. Further more, the Circular No.319 dated 11-1-1982 deeming any Regional Rural Bank to be cooperative society stands withdrawn for application with effect from assessment year 2007-08. 5. He has further submitted that assessee is not a Cooperative Bank so Section 80P(4) will not apply to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 80P(2)(a)(i) of the I.T. Act in making income tax assessments of these banks. This circular has been issued on the basis of Section 22 of RRB Act, 1976. Later on, Section 80P(4) have been inserted into the Act withdrawing the tax benefit available to certain Cooperative Banks. The assessee explained that it is not a Cooperative Bank. Nothing is produced before us on behalf of the Department to prove that assessee is a Cooperative Bank as is mentioned in Section 80P(4) of the Act. The Board later on issued Circular No.6 of 2010 dated 20th September, 2010 withdrawing the benefit under section 80P of the Act to Cooperative Banks and according to the Income Tax Authorities, the earlier Circular No.319 have been withdrawn. It may be noted here that the assessee s claim for exemption had not originated from the Circular No.319 dated 11th January, 1982 but it was claimed on the basis of Section 22 r.w.s.32 of RRB Act, 1976 and there is no change in the Law affecting the status of RRB, the benefit of exemption under section 80P(2)(a)(i) could not have been denied to the assessee. Moreover, when assessee is not a Cooperative Bank, such Circular No.6 of 2010 may not be applicable to the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the ld. CIT(A) to consider the same issue even if such issue would not have raised before A.O. Ld. CIT(A) was entitled to consider this issue at the First Appellate Stage. There is no merit in the cross objection and the same is liable to be dismissed. In the result, the orders of the authorities below are set aside and matter is restored to the A.O. to re-frame the assessment in accordance with law by granting benefit to the assessee under section 80P(2)(a)(i) of the I.T. Act because the A.O. has not examined the conditions of above provisions. The A.O. shall give reasonable, sufficient opportunity of being heard to the assessee. 11. In the result, ITA. No. 403/Alld./2014 of the Assessee is allowed and C.O.No.28/Alld./2014 of the Department is dismissed. ITA. Nos. 404 405/Alld./2014 - A.Ys. 2010-2011 2011-2012 : 12. Both the appeals by Assessee are directed against different orders of the ld. CIT(A)-III, Lucknow, dated 28th March, 2014 for A.Ys. 2010-201 and 2011-2012. In both the appeals assessee made claim/denial of exemption under section 80P(2) of the I.T. Act, 1961. 13. This issue is same as has been considered by us in A.Y. 2009-2010. Following ..... X X X X Extracts X X X X X X X X Extracts X X X X
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