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TMI Blog2023 (12) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... Rural Development Bank Ltd. v [ 2023 (9) TMI 761 - SUPREME COURT] However, addition of interest received by the appellant from Central Cooperative Bank is held to rightly deleted by the CIT(A). Thus, addition made in the assessment order in respect of the interest received by the appellant from Baroda Rajasthan Gramin Bank Ltd., a Regional Rural Bank which is not a cooperative bank would be liable to be sustained. We accept the grievance of the revenue as genuine in respect of the addition on account of interest received by the appellant from Baroda Rajasthan Gramin Bank Ltd and as such, it is sustained. Appeal of the Revenue is partly allowed. - DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER For the Appellant : Smt. Raksha Birla, C.A. and Sh. Rajendra Jain, Adv. For the Respondent : Ms. Nidhi Nair, JCIT-DR ORDER Per Dr. M. L. Meena, AM: This captioned appeal has been filed by the Revenue against the order of the ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated 23.03.2023 in respect of Assessment Year 2018-19 challenging therein the decision of the ld. CIT(A) in deleting the disallowances of deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f deduction u/s. 80P(2)(d) of I.T. Act on interest income received from Baroda Rajasthan Kshetriya Gramin Bank Ltd. and Central Co-op Bank Ltd. 5.1.2 I have considered the submission of the appellant and gone through the AO's order. I find the issue is settled in favour of the appellant in its own case by the decision of Hon'ble Rajasthan High Court, Jodhpur in D.B. income tax Appeal No.2/2019 dated 13.08.2019 , while adjudicating the issue, High Court in para onwards in its judgment as under: The revenue cites a CBDT Circular (No.6/2010 dated 20.9.2010) and contends that the Board categorically stated that interest income derived from deposits, made with non-cooperative institutions and more specifically Regional Rural Banks do not qualify for the benefit under Section 80P(2) of the Act of 1961 Section 22 of the Regional Rural Banks Act, 1976 states as follows: 22. Regional Rural Bank to be deemed to be a co operative society for purpose of the Income Tax Act, 1961 - For the purpose of the Income Tax Act, 1961 (43 of 1961), or any other enactment for the time being in force relating to any tax on income, profits, or gains, a Regional Rural Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank is not correct interpretation. Therefore, it is not the case of the RRB wherein vide CBDT Circular No. 61201(F. No. 273(3) 144/2009-IT(A-1) dated 20.09.2010, and the RRB are not eligible for deduction u/s 80P from A.Y. 2007-08 onward and also the Circular No. 319 dated 11.01.1982 seeming any RRB to be co-operative society stands withdrawn from application w.e.f. assessment year 2007-08. Also as per clause 22.02 of Circular No. 141.2006 dated 28.12.2006 of the Finance Act, 2006 explanatory notes on provisions relating to Direct Taxes, it has been explained that the co-operative banks are functioning at par with other commercial banks, which do not enjoy the tax benefit. Therefore, section 80P has been amended and a new sub-clause (4) has been inserted to provide that the provisions of the said section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative society agricultural land and rural development bank. Accordingly, the AO has disallowed exemption claimed u/s 80P(2)(d) of the Act. In support, he relies on the latest judgment of Apex Court in the case of Kerala State Co-Operative Agricultural Rural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Admittedly, the assessee has claimed deduction u/s 80P(2)(d) of the Act, on interest amounting to Rs. 2,31,59,253/- received from Baroda Rajasthan Gramin Bank Ltd, a Regional Rural Bank and interest amounting to Rs. 18,12,954/- from Central Cooperative Bank in violation to the condition laid down in section 80P(2)(d) of the Act. The Ld. DR contended, that the interest received by the appellant amounting to Rs. 2,31,59,253/- from Baroda Rajasthan Gramin Bank Ltd, a Regional Rural Bank is not allowable deduction u/s 80P(2)(d) of the Act as this entity is not a cooperative society as provided u/s 80P(2)(d) of the Act. He further stated that the interpretation of section 22 of RRB (Regional Rural Bank) Act by the assessee, that the section only says so with reference to taxation of region rural bank under I.T. Act, 1961 and not on taxation of assessee which is undisputedly not a Regional Rural Bank is of no help to the appellant. In our view, it is not the case of the RRB. The CBDT Circular No. 61201(F. No. 273(3) 144/2009-IT(A-1) dated 20.09.2010, clarified that the RRB are not eligible for deduction u/s 80P from A.Y. 2007-08 onward and also the Circular No. 319 dated 11.01.1982 sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a co-operative bank within the meaning of Section 5 (b) read with Section 56 of the BR Act, 1949. In the result, the appeals filed by the appellant are allowed and the order(s) of the Kerala High Court and other authorities to the contrary are set aside. Consequently, we hold that the appellant is entitled to the benefit of deduction under Section 80P of the Act. The questions for consideration are answered accordingly. 9. In the order of the coordinate bench relied by the appellant, the Tribunal has followed its earlier order in the assessee's own case without taking into consideration the latest judgment of the Apex Court (Supra). In the present case, the appellant is a co-operative society whose primary object is to provide financial accommodation to its members who are all other cooperative societies and not member of the public. Thus, the interest received by the appellant amounting to Rs. 2,31,59,253/- from Baroda Rajasthan Gramin Bank Ltd, a Regional Rural Bank and not a co-operative bank would not be allowable deduction u/s 80P(2)(d) of the Act as this entity is not a cooperative society as provided u/s 80P(2)(d) of the Act in the light of the latest judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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