HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 2/2019 Pr. Commissioner Of Income Tax, Ajmer Appellant Versus M/s Bhilwara Zila Dugdh Utpadak Sahakari Sangh Ltd., 5 Km Stone, Ajmer Road Bhilwara (Rajasthan) Respondent For Appellant(s) : Mr. KK Bissa For Respondent(s) : Mr. Sanjeev Johari with Mr. Lalit Parihar HON'BLE CHIEF JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE DINESH MEHTA Judgment 13/08/2019 revenue urges that grant of exemption under Section 80P(2) of Income Tax Act, 1961 (the Act of 1961) to respondent-assessee was not warranted. assessee, milk cooperative society had deposited amounts and earned interest of Rs.2,09,91,701/-. amounts were deposited with Regional Rural Bank i.e., Baroda Rajasthan Regional Rural Bank. disallowance made by Assessing Officer (AO) and confirmed by CIT (Appeals), was set aside by ITAT, which noticed that Section 22 of Regional Rural Banks Act, 1976, that bank s setup under enactment are cooperative societies for purposes of Income Tax Act, 1961. revenue cites CBDT Circular (No.6/2010 dated 20.9.2010) and contends that Board categorically stated that interest income derived from deposits, made with non-cooperative (Downloaded on 21/08/2019 at 10:10:57 AM) (2 of 3) [ITA-2/2019] institutions and more specifically Regional Rural Banks do not qualify for benefit under Section 80P(2) of Act of 1961. Section 22 of Regional Rural Banks Act, 1976 states as follows: 22. Regional Rural Bank to be deemed to be co- operative society for purpose of Income Tax Act, 1961- For purpose of Income Tax Act, 1961 (43 of 1961), or any other enactment for time being in force relating to any tax on income, profits, or gains, Regional Rural Bank shall be deemed to be cooperative society. CBDT reasoning appears to be that Section 80P was amended w.e.f. 1.4.2007 introducing specifically that benefit of exemption would not apply to any cooperative bank other than Primary Agricultural Credit Society or Primary Cooperative Agricultural and Rural Development Bank. circular then stated that in light of this inclusion to Section 80P by way of introduction of Section 80P(4), exemption could not be availed of by banks invested in Regional Rural Banks. This Court is of opinion that revenue s contention is unsustainable. Section 22 in uncertain terms categorically deems Regional Rural Banks (of which description Baroda Rajasthan Regional Rural Banks answer to) as Cooperative Societies for purposes of Income Tax Act. In absence of non-obstante clause, mere fact that restrictive condition was imposed in relation to Cooperative Bank for regulating benefit of Section 80P, does not in any manner, alter pre-existing situation. By virtue of Section 22, Regional Rural Banks continue to be deemed Cooperative Societies and all contingent consequences that flow from it. (Downloaded on 21/08/2019 at 10:10:57 AM) (3 of 3) [ITA-2/2019] For above reasons, this Court is of opinion that there is no substantial question of law involved in present appeal. appeal is, therefore, dismissed. (DINESH MEHTA),J (S. RAVINDRA BHAT),CJ 42-CPGoyal/- (Downloaded on 21/08/2019 at 10:10:57 AM) Powered by TCPDF Pr. Commissioner of Income-tax, Ajmer v. Bhilwara Zila Dugdh Utpadak Sahakari Sangh Ltd