COMMISSIONER OF INCOME TAX V. MS H.P.STATE CO-OP.BANK

ITA/65/2008

AI Insights

The case involves an appeal by the Commissioner of Income Tax (TDS), Chandigarh against M/s Satluj Jal Vidyut Nigam Ltd. concerning the eligibility for tax deduction on interest earned from deposits made from non-SLR funds. The primary legal question was whether such interest income qualifies for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961, which pertains to income earned from normal banking activities. The High Court referenced a similar case, Commissioner of Income Tax vs. M/s H.P. State Cooperative Bank Ltd., where it was established that income from such deposits is part of normal banking business and thus eligible for deduction.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 728081 (HC-HIMACHAL_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 24-04-2012
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax vs. M/s H.P. State Cooperative Bank Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: BHUPINDER GUPTA; JANESH GUPTA
• Assessee Lawyers: VINAY KUTHIALA; VANDANA KUTHIALA
• Keywords: Banking Business; Deduction; Income Tax; Interest; Non-SLR funds
• Section: 260A; 80P(2)(a)(i)

Judgement Text

"IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA ITA No.65 of 2008 Date of Decision: 24th April, 2012 Commissioner of Income Tax (TDS) Chandigarh Appellant Versus M/s Satluj Jal Vidyut Nigam Ltd., V&PO Jhakri, District Shimla, (Former NJPC) through its M.D. Respondent Appeal u/s 260A of the Income Tax Act, 1961 Coram The Hon’ble Mr. Justice R.B.Misra, J. The Hon’ble Mr. Justice Sanjay Karol,J. For the appellant: Mr.Vinay Kuthiala, Senior Advocate with Ms. Vandana Kuthiala, Advocate. For the respondent: Mr. Bhupinder Gupta, Senior Advocate, with Mr. Janesh Gupta, Advocate. Sanjay Karol, J. (oral) Our attention is invited to the judgment rendered by the Division Bench of this Court in Commissioner of Income Tax vs. M/s H.P. State Cooperative Bank Ltd., reported in 2009 (3) SLC 393, wherein the following substantial question of law was answered in favour of the assessee and against the Revenue and the appeals filed by the Revenue were dismissed:- “Whether on the facts and in the circumstances of the case the Hon’ble ITAT was right in law in holding that the assessee bank was entitled to 2 deduction under Section 80P(2)(a)(i) in respect of interest earned on deposits made even out of the non-SLR funds whereas the income so earned cannot be said to be earned from the normal banking business/activities”. 2. It is not in dispute that a bunch of appeals were filed by the Revenue, which were disposed of in terms of judgment rendered in H.P.State Co-operative Bank Ltd. (supra). For some reason, the instant appeal on similar facts was not listed alongwith the said matters and is listed before us. 3. The instant appeal was admitted on the following substantial question of law:- “Whether the assessee bank was entitled to deduction under Section 80P(2)(a)(i) of the Income Tax Act in respect of interest earned on deposits made from the non-SLR funds, especially since the income so earned cannot be said to be earned from the normal banking business/activities?”. 4. The aforesaid substantial question of law, we find, is similar to the one, which stands answered by the Division Bench of this Court in H.P.State Co-operative Bank Ltd. (supra). 5. The instant appeal pertains to the assessment year 2004-05. The order dated 7.12.2006 passed by the Assessing Officer, subjecting the income of the assessee towards the interest earned from non-SLR investment funds, 3 to taxation was assailed by the assessee and in terms of impugned order dated 6.6.2008 passed by the Income Tax Appellate Tribunal Chandigarh Bench (B), assessee is held eligible for exemption from taxation under Section 80P(2)(a)(i) of the Income Tax Act. 6. The instant appeal, as we find, is squarely covered by the judgment of this Court in H.P.State Co- operative Bank Ltd. (supra) and it is held that interest on the deposits made by the Bank is directly attributable to the business of the banking. 7. Substantial question of law is answered in favour of the Assessee as against the Revenue and the present appeal is accordingly rejected. (R.B.Misra), Judge. April 24 , 2012 (Sanjay Karol), (C) Judge. "