TMI Blog2022 (3) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 271(1) (c) of Income Tax Act, 1961 is concerned, we find that the Tribunal has recorded a finding of the fact that there is no evidence of concealment of income. Tribunal has concluded that the appellant had made a legitimate claim for exemption under section 80P(2)(a)(i) which was purely a legal in nature and even on rejection of such a claim, no penalty is leviable. The case of the appellant RRB is even on a better footing as all the five appeals for the corresponding assessment years have been allowed by us on merits therefore, in terms of our four separate orders of date We have perused the impugned common order of the Income Tax Appellate Tribunal arising from the penalty orders under Section 271 (1) (c) of the Act and we find that it also does not suffer from any legal infirmity. Matter is also concluded by the findings of the fact. No substantial questions of law - Income Tax Appeal No. - 23 of 2022, 28 of 2022, 16 of 2022, 18 of 2022, 19 of 2022, 20 of 2022, 22 of 2022, 17 of 2022, 21 of 2022, 24 of 2022 - - - Dated:- 15-3-2022 - Hon'ble Surya Prakash Kesarwani And Hon'ble Jayant Banerji JJ. For the Appellant : Gaurav Mahajan ORDER 1. Hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 2007-08, And a clarification has been also given in this circular that Regional Rural Bank are not entitled for deduction u/s 80P of I.T. Act Circular has been typed in paragraph 3.1 (B) of assessment order. b. A sub-section 80P(4) was introduced by Finance Act, 2006 w.e.f. 01.04.2007 withdrawing deduction u/s 80P in relation to any cooperative bank. The explanatory note to Finance Act with regard to this section is noted below:- Withdrawl of tax benefits available to certain cooperative banks:- Section 80P, inter alia, provides for a deduction from the total income of the Cooperative societies engaged in the business of banking or providing credit facilities to its members, or business of a cottage industry , or of marketing of agricultural produce of its member, or processing, without the aid of power, of the agricultural produce of its members, etc. The cooperative banks are functioning at per with other commercial banks, which do not enjoy any tax benefit. It is, therefore, proposed to amend section 80P by inserting a new sub-section (4) so as provide that the provisions of the said section shall not apply in relation to any cooperative bank other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Sub-section (4) of Section 80P of the Act. 1961 (incorporated by Finance Act, 2006 w.e.f. 01.04.2007 provides as under. Para 1.644 (4) The provisions of this section shall not apply in relation to any cooperative bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank; Explanation- For the purposes of this sub-section- (a) cooperative bank and primary agricultural credit society shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949); (b) primary cooperative agricultural and rural development bank means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities. 8. The Tribunal has passed impugned two common orders, firstly in matters arising out of the assessment orders, and secondly order in matters arising from the penalty orders. 9. In the Income Tax Appeals arising from the assessment order, the Income Tax Appellate Tribunal Allahabad Bench, Allahabad has recorded the following findings of the fact ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had been given the status of 'overriding nature, as per section 32 thereof. Therefore, as per simple rule of interpretation, the Regional Rural Bank Act, 1976, overrides the substituted section 80P of the Act. Such an analogy is applicable to sub-section (4) also of section 80P also, for the reason that the said sub-section (4) had been inserted by the Finance Act, 2006 without there being any corresponding amendment in the RRB Act 1976 particularly in section 22 of Regional Rural Bank Act 1976. 41 . In short, the effect of over-riding provisions as contained in section 22 read with section 32 of Regional Rural Bank Act 1976, had not/ could not have been taken away or whittle down their true effect, as the said provisions remain intact. Accordingly, all the Regional Rural Banks as have been constituted and incorporated under the Regional Rural Bank Act 1976, as the appellant RRB is, continue to be cooperative society and thereby continue to enjoy exemption under section 80P (2)(a)(i). The appellant RRB , is no exception. Meaning thereby, that the appellant RRB', in spite of insertion of bar by virtue of sub- section (4) below section 80P, by the Finance Act 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ything is in its place. It is by looking at the definition as a whole in the setting of the entire Act and by reference to what preceded the enactment and the reasons for it that the court construed in the expression Prize Chit in Srinivasa and we find no reason to depart from the Court s construction . 51. Speaking further, even if it is held that the term 'Regional Rural Bank has a different meaning in its purport, than that given in the Regional Rural Bank Act 1976, this would be the case of ambiguity in the statute. It is a law well settled that benefit of such an ambiguity has to be given to the 'subject', as the 'appellant RRB is. It is a trite law that provisions contained in the fiscal statutes, have to be read word by word and nothing is to be subtracted therefrom and nothing is to be intended therein. Such a rule of interpretation had been laid down by the Hon'ble Jurisdictional High Court in the case of CIT Vs. Sahara India Savings and Investment Corpn. Ltd. reported in (2003) 264 ITR page 646 , wherein their lordships have observed and held as under: We do not agree. It is a well settled principle of interpretation of taxing statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the statute, and at the remedy sought to be applied, and consider what was the former state of the law, and what it was that the Legislature contemplated' was made while construing a non-taxıng statute. The said rule had only a limited application in interpreting a taxing statute. It follows from this decision that the mischief rule laid down in Heydon s case (1584) 3 Co. Rep 7a has only a limited application to taxing statutes. Hence there is no question of looking into the legislative intent or spirit of the law in a taxing statute. We have only to see the actual words used. In other words, in a taxing statute we have to go by the letter of the law, and not its spirit or intent. The new definition of the word interest in section 2 (7) is in two parts. Firstly, it says that interest means interest on loans and advances. Secondly, it includes two other items in the definition of the word interest . In our opinion, the only correct interpretation of this provision can be that firstly nothing is interest except interest on loans and advances. Secondly, two other categories are also included in the definition of the word interest as specified in claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er enabling provisions, as contained in section 18 of Regional Rural Bank Act, 1976 and it had been specifically given the status of a Cooperative Society' by virtue of section 22 of RRB Act 1976 looking to the preamble of the statute namely Regional Rural Bank Act 1976. 55. It is worthwhile to mention here that in the case of Citizen Cooperative Society Ltd., as has been referred to by the ld. CIT DR, the Hon'ble Supreme Court had also, referred to its earlier decision in the case of CIT vs. Nawanshahar Central Co-op Bank Ltd. reported in (2007) 289 ITR 6 wherein it has been held that if a cooperative bank was carrying on business of banking, which required it to place a part of its funds in approved securities, the income attributable thereto, is deductible under section 8OP(2)(a)(i) of the Act. 56. Further, in other case of CIT vs. Nawanshahar Central Co- op Bank Ltd. reported in (2012) 349 ITR 689 , the Hon'ble Supreme Court has also held that the assessee - cooperative society was entitled for deduction under section 80P(2)(a) (i) of focome Tax Act 961, in respect of underwriting commission and interest on PSEB Bonds and IDBI Bonds, as such i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly concur with the view expressed by the Coordinate Bench at Allahabad in the case of 'appellant RRB' in order dated 08.01.2018 and reverse the orders passed by the authorities below, in relation to the appellant's claim for exemption under section 80P(2)(a)(i). With such an elaboration as has been given by us, we uphold the appellant's claim for exemption under section 80P(2)(a)(i). 10. Income Tax Appellate Tribunal has recorded a clear finding of the fact in the afore-noted order that the appellant had come into existence for development and growth of agricultural sector. This finding of fact has not been disputed in the present appeals. 11. Assessing authority, in para no. 2 of the assessment order itself has recorded a finding that the respondent-assessee came into existence w.e.f. 31.03.2008, after amalgamation of the two Regional Rural Banks (RRB) i.e. Baroda Eastern U.P. Gramin Bank and Baroda Western Gramin Bank. It has not been disputed that by virtue of deeming provision under Section 22 of the Regional Rural Banks Act, 1976, the respondent/assessee is deemed cooperative society. 12. We have perused the impugned common order of the Tribunal arisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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