Iapl/23/2022 Of The Pr. Commissioner Of Income Tax And Another v. Baroda Uttar Pradesh Gramin Bank

Court No. - 3 Case :- INCOME TAX APPEAL No. - 23 of 2022Appellant :- The Pr. Commissioner Of Income Tax And AnotherRespondent :- Baroda Uttar Pradesh Gramin BankCounsel for Appellant :- Gaurav Mahajan With (1)Case :- INCOME TAX APPEAL No. - 28 of 2022Appellant :- The Pr. Commissioner Of Income Tax And AnotherRespondent :- Baroda Uttar Pradesh Gramin BankCounsel for Appellant :- Gaurav Mahajan (2) Case :- INCOME TAX APPEAL DEFECTIVE No. - 16 of 2022Appellant :- The Pr. Commissioner Of Income Tax And AnotherRespondent :- Baroda Uttar Pradesh Gramin BankCounsel for Appellant :- Gaurav Mahajan (3) Case :- INCOME TAX APPEAL DEFECTIVE No. - 18 of 2022Appellant :- The Pr. Commissioner Of Income Tax And AnotherRespondent :- Baroda Uttar Pradesh Gramin BankCounsel for Appellant :- Gaurav Mahajan (4) Case :- INCOME TAX APPEAL DEFECTIVE No. - 19 of 2022Appellant :- The Pr. Commissioner Of Income Tax And AnotherRespondent :- Baroda Uttar Pradesh Gramin BankCounsel for Appellant :- Gaurav Mahajan (5) Case :- INCOME TAX APPEAL DEFECTIVE No. - 20 of 2022Appellant :- The Pr. Commissioner Of Income Tax And AnotherRespondent :- Baroda Uttar Pradesh Gramin BankCounsel for Appellant :- Gaurav Mahajan (6) Case :- INCOME TAX APPEAL DEFECTIVE No. - 22 of 2022Appellant :- The Pr. Commissioner Of Income Tax And AnotherRespondent :- Baroda Uttar Pradesh Gramin BankCounsel for Appellant :- Gaurav Mahajan (7) Case :- INCOME TAX APPEAL DEFECTIVE No. - 17 of 2022Appellant :- The Pr. Commissioner Of Income Tax And AnotherRespondent :- Baroda Uttar Pradesh Gramin BankCounsel for Appellant :- Gaurav Mahajan (8) Case :- INCOME TAX APPEAL DEFECTIVE No. - 21 of 2022Appellant :- The Pr. Commissioner Of Income Tax And AnotherRespondent :- Baroda Uttar Pradesh Gramin BankCounsel for Appellant :- Gaurav Mahajan (9) Case :- INCOME TAX APPEAL No. - 24 of 2022Appellant :- The Pr. Commissioner Of Income Tax And AnotherRespondent :- Baroda Uttar Pradesh Gramin BankCounsel for Appellant :- Gaurav Mahajan Hon'ble Surya Prakash Kesarwani,J.Hon'ble Jayant Banerji,J. 1.Heard Sri Gaurav Mahajan, learned counsel for the appellant andlearned Counsel for the Income Tax Department. 2.Income Tax Appeal No. 28 of 2022, Income Tax Appeals (Defective)Nos.16, 18, 19 and 20 all of 2022 arise from the Assessment Orders forAssessment Year 2012-13, 2013-14, 2015-16, 2016-17 and 2014-15respectively, whereas the Income Tax Appeal No. 23 of 2022 and IncomeTax Appeals (Defective) Nos. 17, 21, 24 and 22 all of 2022 arise from thePenalty orders under Section 271 (1) (c) of the Income Tax Act, 1961 for theaforesaid assessment years.. 3.It has been admitted before us that the respondent-assessee is aPrimary Cooperative Agricultural and Rural Development Bank. It has alsobeen admitted before us that the respondent/assessee is a Bank, establishedunder Section 3 of the Regional Rural Banks Act 1976. Therespondent/assessee claimed deduction under Section 80P of the IncomeTax Act, 1961(hereinafter referred to ‘as the Act, 1961’) on the ground that itis a Cooperative Society and, therefore, in terms of the provision of Section22 of the Regional Rural Development Banks Act,1976 (hereinafter referredto ‘as the R.R.B Act, 1976’), it is entitled for deduction under Section 80P ofthe Act. 4.The assessing authority has not accepted the claim of the deduction onthe ground that the respondent/assessee is not a Cooperative Societyregistered under the U.P. Cooperative Societies Act,1912 and, therefore, it is not entitled for deduction under Section 80P of the Act,1961. It was furtherheld by the Assessing Authority in paragraph 2.5 of the Assessment Orderthat the Regional Rural Banks are not eligible for deduction under Section80P of the Act, 1961 from the Assessment Year 2007-08, as by Circular No.319 dated 11.01.1982 issued by the Central Board of Direct Taxes, deemingstatus of the Regional Rural Banks as Cooperative Society stands withdrawnw.e.f. Assessment Year 2007-08. 4.The assessing authority has not accepted the claim of the deduction onthe ground that the respondent/assessee is not a Cooperative Societyregistered under the U.P. Cooperative Societies Act,1912 and, therefore, it is not entitled for deduction under Section 80P of the Act,1961. It was furtherheld by the Assessing Authority in paragraph 2.5 of the Assessment Orderthat the Regional Rural Banks are not eligible for deduction under Section80P of the Act, 1961 from the Assessment Year 2007-08, as by Circular No.319 dated 11.01.1982 issued by the Central Board of Direct Taxes, deemingstatus of the Regional Rural Banks as Cooperative Society stands withdrawnw.e.f. Assessment Year 2007-08. 5.In the assessment order, the assessing authority has held in para no. 4and 5, as under:- 4. The stand taken by assessee on this issue is not correct due tofollowing reason:- a. Regional Rural Bank Act, 1976 has not overriding power overIncome Tax Act, 1961 Circular No. 319 dated 11.01.1982 allowingdeeming provision of cooperative society has been withdrawn byBoard CIRCULAR NO. 6/2010 (F. No.173 (3)/44/2009-IT (A-1)DATED 20/9/2010 w.e.f. assessment year 2007-08, And a clarificationhas been also given in this circular that Regional Rural Bank are notentitled for deduction u/s 80P of I.T. Act Circular has been typed inparagraph 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 anycooperative bank. The explanatory note to Finance Act with regard tothis section is noted below:- “Withdrawl of tax benefits available to certain cooperative banks:- Section 80P, inter alia, provides for a deduction from the total incomeof the Cooperative societies engaged in the business of banking orproviding credit facilities to its members, or business of a cottageindustry , or of marketing of agricultural produce of its member, orprocessing, without the aid of power, of the agricultural produce of itsmembers, etc. The cooperative banks are functioning at per with other commercialbanks, which do not enjoy any tax benefit. It is, therefore, proposed toamend section 80P by inserting a new sub-section (4) so as providethat the provisions of the said section shall not apply in relation to anycooperative bank other than a primary agricultural credit society or aprimary cooperative agricultural and rural development bank. It is alsoproposed the expressions “cooperative bank”, “primary agriculturalcredit society” and “primary cooperative agricultural and ruraldevelopment bank”. It is also proposed to insert a new sub-clause (viia) in section 2 (24) soas to provide that the profits and grains of any business of banking(including credit facilities) carried on by a cooperative society with itsmembers shall be included in the definition of ‘income’. This amendment takes effect from 1st April, 2007 and apply inrelation to the assessment year 2007-08 and subsequent years.(Clauses 3 and 19)” From aforesaid facts, intension of Parliament is very much clear anddeduction under Section 80P is not allowable to Regional Rural Bankand any cooperative bank. 5. However, it should be kept in mind that 80P (1) and 80P (2) (I)shall never be read in isolation rather it should always be read inassociation with 80P (4). The selection 80P (4) is introduced byFinance Act, 2006 w.e.f 01.04.2007 to clear any doubt while claimingdeduction under section 80P (1) and 80P (2) (II) FURTHR CBDTISSUED “circular no. 6/2010 (F. NO. 173 (3)/44/2009-IT (A-1)DATED 20.09.2010 C to give more and more clarity on 80Pdeduction. Therefore, the assessee is assessed as status of AOP. From aforesaid discussion it is held that assesseee is not entitled fordeduction u/s 80P (1) of I.T. Act and claiming disallowed and addedback to the total income. Penalty notice u/s 271(1) (c) is being issuedseparately. 6.Section 22 and 32 of the Regional Rural Banks Act, 1976 provides as under:- From aforesaid discussion it is held that assesseee is not entitled fordeduction u/s 80P (1) of I.T. Act and claiming disallowed and addedback to the total income. Penalty notice u/s 271(1) (c) is being issuedseparately. 6.Section 22 and 32 of the Regional Rural Banks Act, 1976 provides as under:- 22. Regional Rural Bank to be deemed to be a cooperative societyfor purpose of the Income Tax Act, 1961.- For the purpose of theIncome Tax Act, 1961 (43 of 1961), or any other enactment for thetime being in force relating to any tax on income, profits or gains, aRegional Rural Bank shall be deemed to be a cooperative society. 32. Act to override the provisions of other laws.- The provisions ofthis Act shall have effect notwithstanding anything to the contrary inany other law for the time being in force or in any contract, expressor implied, or in any instrument having effect by virtue of any lawother than this Act, and notwithstanding any custom or usage to thecontrary. 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 anycooperative bank other than a primary agricultural credit society or aprimary cooperative agricultural and rural development bank; Explanation- For the purposes of this sub-section- (a)”cooperative bank” and “primary agricultural credit society” shallhave the meanings respectively assigned to them in Part V of theBanking 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 andthe principal object of which is to provide for long-term credit foragricultural and rural development activities. 8.The Tribunal has passed impugned two common orders, firstly inmatters arising out of the assessment orders, and secondly order in mattersarising from the penalty orders. 9.In the Income Tax Appeals arising from the assessment order, theIncome Tax Appellate Tribunal Allahabad Bench, Allahabad has recordedthe following findings of the fact (paragraphs 38, 39, 41, 42, 50, 51, 54, 55,56, 57, 58, 61):- 38. We have heard the contentions, put forth by the rival parties,perused the Paper Books in three volumes as had been uploaded bythe appellant RRB. The central issue involved in all these appeals iswhether 'appellant RRB is entitled to claim exemption under section8OP(2)(a)(i) of the Act, on the ground that Regional Rural Banks ingeneral had been notified as "Cooperative Society" by virtue ofinsertion of section 22 read with section 32 of Regional Rural BankAct 1976. Further, whether such a claim is adversely affected byinsertion of sub- section (4) below section 80P, by the Finance Act2006. To find out answer for such issues, it would be useful to tracethe history of section 80P as well as of Banking Regulation Act, 1949and Part-V thereof as had been inserted to the main statute, i.e.,Banking Regulation Act 1949, in the year 1965. 39. The section 80P of the Act' had been inserted, in substitution ofsection 8l of the Income tax Act 1961, by the Finance Act (No.2) of1967, (20 of 1967), w.e.f. 01.04.1968. The purpose behind such asubstitution, was to enlarge the scope of deduction as used to bepermissible under erstwhile section 81 (the then) of the Act. In termsof section 81, rebate on certain types of income had been provided,whereas in terms of section 8OP, full and outright deduction of incomeearned from the ‘business of Banking’ or 'providing credit facilities toits members, to various types of Cooperative Societies as mentioned insub-clauses (i) to (vii) of clause (a) of sub section 2 of 80P had beengiven. It clearly meant that, while enacting sections 22 r.ws. 32 ofRegional Rural Bank Act, 1976, the Parliament was fully aware of theprovisions contained in the newly substituted section 80P, in place oferstwhile regime of granting rebate as had been provided undersection 81 of the Act. Yet the said RRB Act had granted 'RegionalRural Banks' 1961, the status of "cooperative society", for thepurposes of "taxation of its income or any other enactment for the timebeing in force, related to any tax on its income, profits or gain asderived by specified categories of co operative societies, from BankingBusiness". The term Banking Business' itself is a connotation of verywide import. The said statute, namely RRB Act 1976, as a whole hadbeen given the status of 'overriding nature, as per section 32 thereof.Therefore, as per simple rule of interpretation, the Regional RuralBank Act, 1976, overrides the substituted section 80P of the Act. Suchan 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 theFinance Act, 2006 without there being any corresponding amendmentin the RRB Act 1976 particularly in section 22 of Regional Rural BankAct 1976. 41. In short, the effect of over-riding provisions as contained insection 22 read with section 32 of Regional Rural Bank Act 1976, hadnot/ could not have been taken away or whittle down their true effect,as the said provisions remain intact. Accordingly, all the RegionalRural Banks as have been constituted and incorporated under theRegional Rural Bank Act 1976, as the appellant RRB is, continue to be"cooperative society” and thereby continue to enjoy exemption undersection 80P (2)(a)(i). The "appellant RRB", is no exception. Meaningthereby, that the appellant RRB', in spite of insertion of bar by virtueof sub- section (4) below section 80P, by the Finance Act 2006effective from 1.4.2007, continues to be enjoying exemption undersection 80P(2)(a)(1). 42. Here itself, it would not be out of place to mention that statusof "cooperative society" had been conferred on Regional Rural Banks,as the "appellant RRB” is, by virtue of section 22 read with section 32of Regional Rural Bank Act 1976, and not by circular no.319 dated11.01.1982 as had been issued by CBDT, as had been opined, by theAuthorities below. Therefore, insertion of sub-section (4) below section80P, and/or withdrawal of the said Circular no. 319 dated 11.01.1982in the wake of insertion of bar by virtue of sub section (4) had notgone to adversely affect ‘claim for exemption’ from income tax as hadbeen put forth by the "appellant RRB". The "appellant RRB” continuesto be having the status of a "cooperative society” enjoying the benefitof exemption. 50. For taking such a view, about interpretation of Regional RuralBank Act, vis-à-vis sub-section (4) of Income Tax Act, 1961, we arefortified by the decision rendered by Hon'ble Supreme Court in thecase of Reserve Bank of India vs. Peerless General Finance andInvestment Co. Ltd. reported in (1987) 1 SCC 424 wherein it hasbeen held that: 50. For taking such a view, about interpretation of Regional RuralBank Act, vis-à-vis sub-section (4) of Income Tax Act, 1961, we arefortified by the decision rendered by Hon'ble Supreme Court in thecase of Reserve Bank of India vs. Peerless General Finance andInvestment Co. Ltd. reported in (1987) 1 SCC 424 wherein it hasbeen held that: "interpretation must depend on the text and the context. They arethe basis of interpretation. One may well say if the the text is thetexture, context is what gives the colour. Neither Can be1gnored. Both are important. That interpretation is best whichmakes the textual interpretation match the Contextual. A statuteis best interpreted when we know why it was enacted. With thisknowledge, the statute must be read, first as a whole and thensection by section, clause by clause, phrase by phrase and wordby word. 1f a statute is looked at in the context of its enactment,with the glasses of the statute maker provided by such context, itsscheme, the sections, clauses, phrases and words may takecolour and appear different than when the statute is looked atwithout the glasses provided by the context. With those glasseswe must look at the Act as a whole and discover what eachsection, each clause, each phrase and each word is meant anddesigned to say as to fit into the scheme of the entire Act. No partof a statute and no word of a statute can be construed inisolation. Statutes have to be construed so that every word has aplace and everything is in its place. It is by looking at thedefinition as a whole in the setting of the entire Act and byreference to what preceded the enactment and the reasons for itthat the court construed in the expression ‘Prize Chit’ in Srinivasa and we find no reason to depart from the Court’sconstruction”. 51. Speaking further, even if it is held that the term 'Regional RuralBank’ has a different meaning in its purport, than that given in theRegional Rural Bank Act 1976, this would be the case of ambiguity inthe statute. It is a law well settled that benefit of such an ambiguity hasto be given to the 'subject', as the 'appellant RRB’ is. It is a trite lawthat provisions contained in the fiscal statutes, have to be read word byword and nothing is to be subtracted therefrom and nothing is to beintended therein. Such a rule of interpretation had been laid down bythe Hon'ble Jurisdictional High Court in the case of CIT Vs. SaharaIndia Savings and Investment Corpn. Ltd. reported in (2003) 264 ITRpage 646, wherein their lordships have observed and held as under: “We do not agree. It is a well settled principle of interpretation oftaxing statues that while interpreting a taxing statue we have onlyto see the words used in the statue and not the intention or thespirit of the statutory provision. ln a taxing statue the literal rule ofinterpretation applies, and it is well settled that if a transactioncomes within the letter of the law it has to be taxed, however greatthe hardship, but if it does not, it cannot be taxed, however greatthe loss may be to the public exchequer. The view was bestexpressed by Lord Cairns in Partington v. Attorney General |1869]4 LR 100 (HL) as follows (at page 122): ‘If the person sought to be taxed, comes within the letter of the lawhe must be taxed, however great the hardship may appear to thejudicial mind to be. On the other hand if the Court seeking torecover the tax, cannot bring the subject within the letter of law,the subject is free, however apparently within the spirit of the lawthe case might otherwise appear to be. The principle of strict interpretation of taxing statutes was bestenunciated by Rowlatt J. in his classic statement: ‘If the person sought to be taxed, comes within the letter of the lawhe must be taxed, however great the hardship may appear to thejudicial mind to be. On the other hand if the Court seeking torecover the tax, cannot bring the subject within the letter of law,the subject is free, however apparently within the spirit of the lawthe case might otherwise appear to be. The principle of strict interpretation of taxing statutes was bestenunciated by Rowlatt J. in his classic statement: “In a taxing statute one has to look merely at what is clearly said.There is no room for any intendment. There is no equity about atax. There is no presumption as to a tax. Nothing is to be read in,nothing is to be implied. One must only look fairly at the languageused. In A.V. Fernandez v. State of Kerala (1957 8 STC 561; AIR1957 SC 657, the Supreme Court of India stated the principle asfollows (page 661 of AlR 1957 SC): ‘If the Revenue satisfies thecourt that the case falls strictly within the provisions of the law, thesubject can be taxed. If, on the other hand, the case is not coveredwithin the four corners of the provisions of the taxing statue notax can be imposed by inference or by analogy or by trying toprobe into the intentions of the Legislature and by consideringwhat was the substance of the matter’ Where the language of a provision is plain, Courts cannotordinarily concern themselves with the policy behind the provision,or the intention of the Legislature. As Lord Watson said in A.Salomon V. A. Salomon and Co (1897) AC 22, 38 (HL) "intentionof the Legislature is a common but slippery phrase”. In ITO V TSDevinatha Nadar (1968) 68 ITR 252; AIR 1968 SC 623, theSupreme Court of India observed that the rule that (page 257): "we must look to the general scope and purview of the statute, andat the remedy sought to be applied, and consider what was theformer state of the law, and what it was that the Legislaturecontemplated' was made while construing a non-taxıng statute.The said rule had only a limited application in interpreting ataxing statute. It follows from this decision that the mischief rulelaid down in Heydon’s case (1584) 3 Co. Rep 7a has only a limitedapplication to taxing statutes. Hence there is no question of looking into the legislative intent orspirit of the law in a taxing statute. We have only to see the actualwords used. In other words, in a taxing statute we have to go bythe letter of the law, and not its spirit or intent." The new definition of the word "interest" in section 2 (7) is in twoparts. Firstly, it says that "interest" means interest on loans andadvances. Secondly, it includes two other items in the definition ofthe word "interest". In our opinion, the only correct interpretation of this provision canbe that firstly nothing is interest except interest on loans andadvances. Secondly, two other categories are also included in thedefinition of the word "interest" as specified in clauses (a) and (b) ofSection 2(7). In our opinion, the word "means can only have onemeaning, that is, it is CIT Vs. Sahara India Savings and InvestmentCorporation Ltd reported in (2010) 321 ITR 371 an exclusivedefinition vide P. Kasilingam V. P.S. G. College of Technology (1995/supp 2 SCC 348. When we say that a word has a certain meaningthen by implication we mean that it has no other meaning vde aPunjab Land Development and Reclamation Corporation Ltd. V.Presiding Officer, Labour Court /1990] 77 FJR 17; |1990) 3 SCC682. However, when certain other categories are added then itmeans that only those additional categories will be included withinthe definition and none others, Vide Mahalakshmi Oil Mills Vs. Stateof A.P |1989 1 SCC 164; 1988) 71 STC 285 (SC)" The aforesaid judgment had received affirmation also, from theHon'ble Supreme Court in the case of CIT Vs. Sahara IndiaSavings and Investment Corporation Ltd. reported in (2010) 321ITR 371. The aforesaid judgment had received affirmation also, from theHon'ble Supreme Court in the case of CIT Vs. Sahara IndiaSavings and Investment Corporation Ltd. reported in (2010) 321ITR 371. 54. So far as claim of exemption of its income is concerned, we have notedthe decision of Hon’ble Supreme Court in the case of Citizen CoopèrativeSociety Ltd. vs. Asstt. CIT (2017) 397 ITR 1, dated 08.1.2017, whereindenial of the appellant's claim for exemption, by the authorities below hadbeen upheld, owing mainly 'to the bar contained in sub-section (4) of section80P of the Act. The facts of the said case were, that it was a "cooperativesociety" registered under the Andhra Pradesh Mutually Aided CooperativeSocieties Act 1955. In that case, the said cooperative society had violated theprovisions of Andhra Pradesh Mutually Aided Cooperative Societies Act1955. It was under these circumstances, that the Hon‘ble Supreme Court hadapproved the judgment, adverse to the assessee, as had earlier beendelivered by Hon'ble Andhra Pradesh High Court. As against this, it is statedthat this is not even the case of the revenue that the appellant had carried onthe banking business, in violation of any of the provisions of Regional RuralBank Act 1976. On the other hand, the revenue's case, had been that theappellant carried on the "business of banking", like that of any other bank which did not enjoy the benefit of exemption under section 80P(2)(a)(i).Succinctly speaking, present is the case where the appellant RRB had beencarrying on the 'business of Banking' as per enabling provisions, ascontained in section 18 of Regional Rural Bank Act, 1976 and it had beenspecifically given the status of a ‘Cooperative Society' by virtue of section 22of RRB Act 1976 looking to the preamble of the statute namely RegionalRural Bank Act 1976. 55. It is worthwhile to mention here that in the case of Citizen CooperativeSociety Ltd., as has been referred to by the ld. CIT DR, the Hon'bleSupreme Court had also, referred to its earlier decision in the case of CITvs. Nawanshahar Central Co-op Bank Ltd. reported in (2007) 289 ITR 6wherein it has been held that if a cooperative bank was carrying onbusiness of banking, which required it to place a part of its funds inapproved securities, the income attributable thereto, is deductible undersection 8OP(2)(a)(i) of the Act. 56. Further, in other case of CIT vs. Nawanshahar Central Co- op BankLtd. reported in (2012) 349 ITR 689, the Hon'ble Supreme Court has alsoheld that "the assessee - cooperative society was entitled for deductionunder section 80P(2)(a) (i) of focome Tax Act 961, in respect ofunderwriting commission and interest on PSEB Bonds and IDBI Bonds, assuch is an income, attributable to the business of banking. It is not the caseof revenue that any part of its income had been earned by the “appellantRRB", which is different from “Business of Banking” as defined in section18 of Regional Rural Bank 1976. 56. Further, in other case of CIT vs. Nawanshahar Central Co- op BankLtd. reported in (2012) 349 ITR 689, the Hon'ble Supreme Court has alsoheld that "the assessee - cooperative society was entitled for deductionunder section 80P(2)(a) (i) of focome Tax Act 961, in respect ofunderwriting commission and interest on PSEB Bonds and IDBI Bonds, assuch is an income, attributable to the business of banking. It is not the caseof revenue that any part of its income had been earned by the “appellantRRB", which is different from “Business of Banking” as defined in section18 of Regional Rural Bank 1976. 57. From the discussion made in the foregoing paragraphs, it isabundantly clear that the Assessing Officer and so also the ld. CIT (A), hadgone off the tangent, while deciding/adjudicating the appellant's claim forexemption under section 80P(2)(a)(i), owing mainly to the reason that theyhave failed to interpret the provision contained in section 22 of RRB Act1976 and also the significance of section 32 of the said statute, which hadthe effect of making the overall statute i.e. Regional Rural Bank Act 1976, ofover-riding nature. Both these sections have been reproduced by us earlierin this order. A perusal of the said sections would clearly mean that the"appellant RRB" is a "cooperative society" and accordingly sub-section (4)below section 80P of the Income Tax Act would not operate as a bar to itsclaim for exemption and accordingly, we set aside the findings given in therelated assessment orders as well as appellate orders so far as appellant'sclaim for exemption under section 80P(2)(a)(i) is concerned. The AssessingOfficer would recompute the income after allowing deduction under section80P(2)(a)(i), as per our findings given hereinfore. 58. Before parting with the issue of appellant's claim case for exemptionunder section 8OP(2)(a) (i), we also hold that the case laws referred to andrelied upon by the ld. "CIT(A), while upholding the denial of claim forexemption of income derived from "banking business", she has referred toand relied upon various case laws, as have been discussed by us in para 47hereinfore. Such case laws are not applicable on the facts of the presentcase. Surprisingly enough, the underlying principle in all such case lawssupport the appellant's claim for exemption as it had achieved the objectivefor which it had come into existence in the year 1976. As stated above, the"appellant RRB had come into existence for development and growth ofagricultural sector which had always been on the priority list of the Government of India. In such a situation, the claim for exemption fromincome- tax, gets fully fortified. 61. Thus, we fully concur with the view expressed by the Coordinate Benchat Allahabad in the case of 'appellant RRB' in order dated 08.01.2018 andreverse the orders passed by the authorities below, in relation to theappellant's claim for exemption under section 80P(2)(a)(i). With such anelaboration as has been given by us, we uphold the appellant's claim forexemption under section 80P(2)(a)(i). 10.Income Tax Appellate Tribunal has recorded a clear finding of the factin the afore-noted order that the appellant had come into existence fordevelopment and growth of agricultural sector. This finding of fact has notbeen disputed in the present appeals. 11.Assessing authority, in para no. 2 of the assessment order itself hasrecorded 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 hasnot been disputed that by virtue of deeming provision under Section 22 ofthe Regional Rural Banks Act, 1976, the respondent/assessee is deemedcooperative society. 12.We have perused the impugned common order of the Tribunal arisingfrom the assessment order and we do not find any legal infirmity in it. 11.Assessing authority, in para no. 2 of the assessment order itself hasrecorded 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 hasnot been disputed that by virtue of deeming provision under Section 22 ofthe Regional Rural Banks Act, 1976, the respondent/assessee is deemedcooperative society. 12.We have perused the impugned common order of the Tribunal arisingfrom the assessment order and we do not find any legal infirmity in it. 13.So far as the impugned common order of the Income Tax AppellateTribunal arising out of the penalty order under Section 271(1) (c) of IncomeTax Act, 1961 is concerned, we find that the Tribunal has recorded a findingof the fact that there is no evidence of concealment of income. After detailscrutiny, the Tribunal has concluded in paragraph 26 of the impugnedcommon order, as under:- “26. In short, we hold that the appellant had made a legitimate claimfor exemption under section 80P(2)(a)(i) which was purely a legal innature 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 thefive appeals for the corresponding assessment years have been allowedby us on merits therefore, in terms of our four separate orders of date”. 14.We have perused the impugned common order of the Income TaxAppellate 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. 15.For all the reasons aforestated, we find that no substantial questions oflaw are involved in the present appeals. Consequently, all the appeals aredismissed. Order Date :- 15.3.2022 T.S.