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TMI Blog2018 (8) TMI 2027X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Branch is situated, any attempt to expand the definition bringing into the explanation given with regard to any other section which is not relevant even for harmonious interpretation of the Act cannot be accepted. Hence, keeping in view the provisions of the Act, facts on the record and as the rural branches namely Daria, Khuda Ali Sher, Kaimbwala, Delhi Jounti Block, N.Delhi Bamnoli, Chandi Mandir, Dadu Majra, Bahadurgarh, and Sarangpur have been found to be situated in the Rural Areas / Villages wherein the population is less than 10,000 as required under section 36(1)(viia) read with Explanation (ia) below sub clause (viia) to Section 36 of the Income Tax Act,1961 the disallowance made by the Assessing Officer in relation to these Branches is hereby ordered to be deleted. The branches namely Kasauli, Palampur, Sankhol, Kot Fatta, Raipur Rani ,Nurpur, Kangra, Nalagarh, Nalagarh(ADB), Jandiala, Mustafabad, Ghagga, Begowal, Mehatpur, cheema, Shekhpura, Gardhiwala, Badni Kalan, Hadiyala, Dhillwan, Nagrota Bhagwan and Chachhrauli being the branches situated in the urban areas are not eligible for deduction @ 10% of aggregate advances. - Appeals of the assessee are partly allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds: 1. That the learned Commissioner of Income-tax (Appeals) has erred in holding that notice u/s 148 is not without jurisdiction and, as such, is not illegal and void ab initio. 2. That the learned Commissioner of Income-tax (Appeals) has erred in dismissing ground No. 2, which reads as under, without assigning any reason: "That the assessment has been completed without disposing of the objection filed against notice u/s 148 vide letter dated 04-08-2007 and, as such, is illegal and void ab initio and may please be quashed." 3 That the Commissioner of Income-tax (Appeals) has erred in upholding withdrawal of deduction u/s 36(1)(viia) amounting to ₹ 36,50,900/- 4 That the learned Commissioner of Income-tax (Appeals) has erred in dismissing the ground with regard to charging of interest u/s 234D amounting to ₹ 2,24,885/- despite the fact that the provisions are not applicable. 5 That the whole order is against the provisions of law and facts of the case and right is reserved to assail the same on such other grounds as may be advanced at the time of hearing for which the appellant requests leave to amend, vary from or add to the grounds of appeal he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l)(viia) that only two conditions are to be fulfilled i.e. the branch has to be situated at a place in rural area, secondly the population of that place should not be more than ten thousand accordingly to the last census report. In the definition of rural branch, no criteria for categorization of branch as urban has been given where the branch is situated within 8 km of the municipal limit. The only criteria is the place where the branch is situated and the population of that place. Therefore, the criteria applied by you is not legally tenable as the criteria is only relevant for definition of urban land for the purposes of capital gain under the Income Tax Act and urban land under the Wealth Tax Act." 9. The Assessing Officer held that the above reply of the assessee is not correct as the assessee claimed deduction u/s 36(l)(viia) in respect of some branches, the details of the same are given above which are situated in the rural area but the population of the rural area is more than 10,000 and some of the branches are situated in the urban area as per the report of the Census Department. The Assessing Officer held that as per section 36(l)(viia), the assessee is not entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Branch is defined under Explanation (ia) to Section 36(1)(viia) as follows: "Rural branch" means a branch of a scheduled bank or a non-scheduled bank situated in a place which has a population of not more than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year." What is clear from the above is that classification between Rural and other Branches of a Bank is made based on the population in the place where the concerned Branch is located. While the assessee's case that found acceptance with the Tribunal is that "place" referred to in the above definition clause is the Ward of a Panchayat or Municipality, the Assessing Officer took the view that "place" contained in the definition clause should mean a Revenue Village. No doubt, "place" as such is not defined in the definition clauses and so much so, we have to find out the scope and meaning of "place" referred to in the Section. Standing counsel for the department produced before us last published Census Report of 2001. Even though the previous Census Report may be the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by restoring the assessment. In view of the above judgment, the Branches of Daria, Khuda Ali Sher, Kambwala, Jonty, Chandi Mandir, Dadu Majra, Bahadurgarh, Sarangpur which are in the Rural limits would be eligible for deduction @10% under section 36(1)(viia) and the Branches mentioned below falling under Urban Areas as per the Census Department and hence not eligible for deduction @ 10% under section 36(1)(viia). Name of the Branch Kasuli-0122 Palampur-0126 Sankhol-268 Kot Fatta-054 Raipur Rani-359 Nurpur-125 Kanga(MC)-124 Nalagarh(T)-119 Nalagarh(ADB)-206 Jandiala 0702 Mustafabad-92 Ghagga-694 Begowal-692 Mehatpur-243 Cheema-34 Shekhpura-404 Gardhiwala-716 Badni Kalan-695 Hadiyala 150 Dhillwan-454 Nagrota Bhagwan 705 Chhachhrauli 235 * Source Census of India 2001 and Paper Book Page 92-120. ** While the Census of India 1991 are applicable to the case in question even based on the Census of India 2001 the population of the Rural Branches did not exceed the stipulated limit of population of 10,000. 15. We have also examined the reason as to why the Assessing Officer has disallowed the deduction and found that the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X
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