The Sri Kannikaparameshwari Co-op Bank Limited, Davangere V. Income-Tax Officer, Davangere

ITA 1364/BANG/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9374 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 01-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S RAMASUBRAMANIAN
• Keywords: Recovery proceedings; Business income; Question of law; Tangible material; Difference of opinion; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH SMC, BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNANT MEMBER ITA NO.1364(BANG) 2016 (ASSESSMENT YEAR : 2004-05) THE SRI KANNIKAPARAMESHWARI CO-OP. BANK LTD., P.J.EXTENSION, ENTRE POINT, DAVAANAGERE NO.AADFV3065F APPELLANT VS THE INCOME TAX OFFICER, WARD-3, DAVANAGERE RESPONDENT ASSESSEE BY : SHRI S. RAMASUBRAMANIAN, CA REVENUE BY : SHRI G. MANOJ KUMAR, ADDL. CIT DATE OF HEARING : 15-09-2016 DATE OF PRONOUNCEMENT : 23-09-2016 O R D E R PER A. K. GARODIA, A. M.: THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), DAVANAGERE DATED 11-03-2016 FOR THE ASSESSM ENT YEAR : 2004-05. 2. GROUND NO.1 TO 4 ARE AS UNDER; 1.THAT THE ORDER OF THE LD.CIT(A) IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF THE APPELLANT, IS B AD AND ERRONEOUS IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE NOTICE U/S 148 I ISSUED ON MERE CHANGE OF OPINION AND WITHOUT ANY TANGIBLE MATERIAL TO PROVE THAT THE INCOME HAS ESCAPED ASSESSMENT. 3. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN PASSING THE ORDER U/S 147 OF THE ACT AND SUCH AN OR DER IS WITHOUT JURISDICTION. ITA NO.1364(BANG)2016 2 4. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT DISPOSING OF THE OBJECTIONS TO THE REASONS RECORDED FOR RE-OPENING OF THE ASSESSMENT.. 3. IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THE REASONS RECORDED BY THE AO FOR RE-OPENING ARE AVAILABLE ON PAGE NO.189 OF THE PAPER BOOK. HE ALSO SUBMITTED THAT IN THE PRESENT C ASE, THE ORIGINAL ASSESSMENT WAS COMPLETED BY AO U/S 143(3) OF THE IT ACT, 1961 AND COPY OF THIS ASSESSMENT ORDER IS AVAILABLE ON PAGE NO.33 OF THE APPEAL MEMO. HE ALSO SUBMITTED THAT UNDER THESE FACTS, RE- OPENING IS BASED ON CHANGE OF OPINION AND THEREFORE, NOT VALID. IN SUP PORT OF THIS CONTENTION, HE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOU NCEMENTS A) SHEO NATH SINGH VS APPELLATE ASST. COMMISSIONER OF IT 82 ITR 147(SC) B) CIT VS ORIENT CRAFTS LTD., 354 ITR 536(DEL.) C) CIT VS RAMAKRISHNA HEGDE 326 ITR 347(KAR.) 4. THE LD. DR OF THE REVENUE SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVALS SUBMISSIONS. FIRST , I REPRODUCE THE REASONS RECORDED BY THE AO FOR RE-OPENING WHICH ARE AVAILABLE ON PAGE- 189 OF THE PAPER BOOK. ITA NO.1364(BANG)2016 3 F.NO.AADTS3885J/ITO/W-3/DVG/09-10 THE OFFIC E OF THE ITO, WARD-3, CR BUILDINGS, DEVERAJ URS L/OUT, DAVANAGERE, DATE: 10-07-2009 TO THE SECRETARY SRI KANNIKAPARAMESHWARI CO-OP. BANK LTD., P J EXTN. 3 RD MAIN, DAVANAGERE SIR, SUB: NOTICE U/S 148 OF THE IT ACT REASONS THEREOF RE G. REF : 1 YOUR LETTER DATED 06-07-2009 PLEASE REFER TO THE ABOVE. AS REQUIRED BY YOU, VIDE YOUR LETTER CITED IN THE ABOVE REFERENCE I AM HEREBY COMMUNICATING HE REASONS FOR RE-OPENING THE ASSESSMENT U/S 147 OF THE ACT, IN RESPECT OF SRI KANNIKAPARAMESHWARI CO-OP. B ANK LTD., DAVANAGERE FOR THE AY: 2004-05 AS UNDER; THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80P(2) OF THE ACT TO THE TUNE OF RS.44,53,500/- BEING THE PROFIT ON SALE OF SECUR ITIES, IS NOT ALLOWABLE, AS THE SAME HAS TO BE CHARGED UNDER THE HEAD CAPITAL GAIN AND IS NOT AN INCOME FROM BANKING BUSINESS. YOURS FAITHFULLY, SD/- (T.MUDALAGIRIYAPPA) INCOME TAX OFFICER,WARD-3, DAVANAGERE 6. NOW, I EXAMINE THE ORIGINAL ASSESSMENT ORDER FR AMED BY THE AO U/S 143(3) OF THE ACT AND AS PER THIS ORDER PASSED BY THE AO ON 06-03- 2006, THIS ASSESSMENT ORDER IS VERY CRYPTIC AND AS PER THE SAME AND SINCE NO OTHER TANGIBLE MATERIAL BROUGHT ON RECORD IN THE FORM OF PAPER BOOK TO SHOW THAT ANY QUERY WAS RAISED BY THE A.O. ON THIS ISSUE AND REPLY WAS GIOVEN TO SHOW THAT THE A.O. FORMED AN OP INION, IT HAS TO BE ITA NO.1364(BANG)2016 4 ACCEPTED THAT THE AO HAS NOT FORMED AN OPINION AT T HE TIME OF MAKING THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT AND THEREFORE, THERE IS NO MERIT IN THIS CONTENTION THA T THE RE-OPENING IS ON THE BASIS OF CHANGE OF OPINION. 7. IN THE LIGHT OF THESE FACTS, NOW I EXAMINE THE A PPLICABILITY OF VARIOUS JUDGMENTS CITED BY THE LD. AR OF THE ASSESS EE. FIRST JUDGMENT CITED BY HIM IS THE JUDGMENT OF THE HONBLE APEX CO URT RENDERED IN THE CASE OF SHEO NATH SINGH VS APPELLATE ACIT (SUPRA) . IN THAT CASE, IT IS HELD BY THE HONBLE APEX COURT THAT THERE IS NO MAT ERIAL OR FACT WHICH HAS BEEN STATED IN THE REASONS FOR STARTING PROCEED INGS OF RE-OPENING. BUT IN THE PRESENT CASE, AS PER THE REASONS REPORTE D BY THE AO AS RE- PRODUCED ABOVE, IT IS STATED THAT DEDUCTION U/S 80P IS NOT ALLOWABLE ON AN INCOME OF RS.44,53,500/- BEING THE PROFIT AN SAL E OF SECURITIES WHICH IS TO BE CHARGED UNDER THE HEAD CAPITAL GAIN AND IS NOT AN INCOME FROM BANKING BUSINESS. IT WAS SUBMITTED BEFORE US B Y THE LD. AR OF THE ASSESSEE THAT THERE IS NO BASIS AS PER WHICH THE AO CAN SHOW THAT THIS INCOME IS TAXABLE UNDER THE HEAD CAPITAL GAIN, BU T EVEN IF THAT BE SO, THE ASSESSEE WILL NOT GET ANY HELP, BECAUSE DEDUCTI ON U/S 80P IS ALLOWABLE ONLY IN RESPECT OF BUSINESS OF BANKING AN D THIS CANNOT BE SAID THAT PURCHASE AND SALE OF SECURITIES IS BUSINESS OF BANKING AND THEREFORE, IN MY CONSIDERED OPINION, THIS JUDGMENT OF THE HONBLE APEX COURT RENDERING NO HELP TO THE ASSESSEE IN THE FACT S OFF THE PRESENT CASE. 8. THE SECOND JUDGMENT ON WHICH RELIANCE HAS BEEN P LACED BY THE LD. AR OF THE ASSESSEE IS THE JUDGMENT OF THE HONB LE DELHI HIGH COURT ITA NO.1364(BANG)2016 5 RENDERED IN THE CASE OF CIT VS ORIENT CRAFTS LTD. (SUPRA). IN THAT CASE, THE SUBSTANTIAL QUESTION OF LAW FRAMED BY THE HONB LE DELHI HIGH COURT WAS THIS AS TO WHETHER THE TRIBUNAL WAS RIGHT IN LA W IN HOLDING THAT IN THE ABSENCE OF ANY TANGIBLE MATERIAL AVAILABLE WITH THE AO TO FORM THE REQUISITE BELIEF REGARDING ESCAPEMENT OF INCOME, TH E RE-OPENING OF THE ASSESSMENT MADE U/S 143(1) IS BAD IN LAW. IN THAT C ASE, IN PARA-18 OF THE JUDGMENT, IT IS OBSERVED BY THE HONBLE DELHI H IGH COURT THAT IN THAT CASE, THE REASONS DISCLOSED THAT THE AO REACHED THE BELIEF THAT THERE WAS ESCAPEMENT OF INCOME ON GOING THROUGH THE RETURN OF INCOME FILED BY THE ASSESSEE AFTER HE ACCEPTED THE RETURN UNDER SECTION 143(1) WITHOUT SCRUTINY AND NOTHING MORE. UNDER THESE FACTS, IT W AS HELD BY THE HONBLE DELHI HIGH COURT THAT THIS IS NOTHING BUT A REVIEW OF THE EARLIER PROCEEDINGS AND AN ABUSE OF POWER BY THE AO. BUT IN THE PRESENT CASE, SUFFICIENT REASONS HAS BEEN GIVEN BY THE AO AND MAT ERIAL HAS BEEN INDICATED ON THE BASIS OF WHICH THE AO WAS OF THE BELIEF THAT THERE IS ESCAPEMENT OF INCOME BY SAYING THAT THE DEDUCTION C LAIMED BY THE ASSESSEE U/S 80P(2) OF THE IT ACT IN RESPECT OF INC OME OF RS.44,53,500/- ON SALE OF SECURITIES IS NOT ALLOWABLE BECAUSE TH IS IS NOT AN INCOME FROM BANKING BUSINESS. HENCE, I FEEL THAT THIS JUDGMEN T OF THE HONBLE DELHI HIGH COURT IS ALSO NOT RENDERING ANY HELP TO THE AS SESSEE IN THE PRESENT CASE. 9. THE THIRD JUDGMENT ON WHICH THE LD. AR OF THE AS SESSEE PLACED RELIANCE WAS THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF RAMKRISHNA HEGDE (SUPRA). IN THAT CA SE, THE ITO FOUND ITA NO.1364(BANG)2016 6 CERTAIN FIXED DEPOSIT RECEIPT IN THE NAME OF THE AS SESSEE WERE FOUND IN THE COURSE OF RECOVERY PROCEEDINGS AND HE RE-OPENED THE ASSESSMENT OF THE ASSESSEE FOR THE YEAR 2000-01 BEING OF THE VIEW THAT THE SOURCE OF INVESTMENT FOR ISSUE OF THE FIXED DEPOSIT RECEIPTS WAS REQUIRED TO BE EXPLAINED PROPERLY. IN THAT CASE, THE TRIBUNAL FOU ND THAT THE FDRS FIGURED IN THE COURSE OF THE ASSESSMENTS OF THE ASS ESSEE IN THE EARLIER YEARS AND THE INTEREST EARNED FROM THE FDS HAVING A LREADY BEEN OFFERED TO TAX. UNDER THESE FACTS, IT WAS HELD BY THE TRIB UNAL THAT THE RE-OPENING OF THE ASSESSMENT WAS BAD IN LAW AND THEREAFTER, IT WAS HELD BY THE HONBLE KARNATAKA HIGH COURT THAT MERE DETECTION OF THE FDR WOULD NOT IN ANY WAY CONSTITUTE INFORMATION FOR RE-OPENING OF THE ORDER FOR UNDER ASSESSMENT. THEREFORE, THE ASSESSMENT PROCEEDINGS W ERE HELD TO BE INVALID. IN THE PRESENT CASE, THE FACTS ARE TOTALL Y DIFFERENT AND THEREFORE, THIS JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT I S ALSO NOT RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE. 10. AS PER THE ABOVE DISCUSSION, I HAVE SEEN THAT NONE OF THE JUDGMENT CITED BY THE LD. AR OF THE ASSESSEE IS RE NDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE AND I ALSO FOUND T HAT THERE IS NO MERIT IN THE CONTENTION OF ASSESSEE THAT RE-OPENING IS ON THE BASIS OF CHANGE OF OPINION AND ACCORDINGLY, ALL THESE GROUNDS BEING GR OUND NO.1 TO 4 ARE REJECTED. 11. GROUND NO.5 & 6 ARE AS UNDER; 5. THAT THE LD. CIT(A) COULD NOT HAVE RECORDED TH E REASON THAT THE PROFIT ON SALE OF SECURITIES IS TAX ABLE ITA NO.1364(BANG)2016 7 UNDER THE HEAD CAPITAL GAINS AND NOT AN INCOME FROM BANKING BUSINESS SINCE IT IS CONTRARY TO THE DECISION OF THE HONBLE SUPREME COURT WHICH WAS IN FORCE ON THE DATE OF WHICH THE REASONS WERE RECORDE D. 6. THAT THE LD. CIT(A) OUGHT TO HAVE FOLLOWED THE CIRCULAR NO.18/2015 DATED 02-11-2015 WHICH IS BINDING ON THE INCOME TAX AUTHORITIES. 12. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE CBDT CIRCULAR NO.18/2015 DATED 02-11-2015 IS AVAILABLE ON PAGE 18 8 OF THE PAPER BOOK AND AS PER THE SAME, THE JUDGMENT OF THE HONBLE AP EX COURT RENDERED IN THE CASE OF CIT VS NAWANSHAHAR CENTRAL CO-OP. BANK LTD.,(2007) 160 TAXMAN 48(SC) WAS REFERRED IN WHICH IT WAS HELD BY THE HONBLE APEX COURT THAT THE INVESTMENTS MADE BY A BANKING CONCER N ARE PART OF THE BUSINESS OF BANKING. THEREFORE, THE INCOME ARISING FROM SUCH INVESTMENTS IS ATTRIBUTABLE TO THE BUSINESS OF BANK ING FALLING UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION . HE SUBMITTED THAT AS PER THIS BOARD CIRCULAR AND THIS JUDGMENT OF THE HONBLE APEX COURT, IT SHOULD BE ACCEPTED THAT THE ACTIVITY OF THE ASSE SSEE OF PURCHASING AND SELLING OF SECURITIES AND EARNING CAPITAL GAIN THER E FROM IS BUSINESS ACTIVITY AND THEREFORE, THIS INCOME IS ELIGIBLE FOR DEDUCTION U/S 80P OF THE IT ACT, 1961. HE ALSO PLACED RELIANCE ON THE JUDG MENT OF THE HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF KARNAT AKA BANK LTD., VS ACIT 356 ITR 549. HE ALSO PLACED RELIANCE ON THE JU DGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS C OCANADA ITA NO.1364(BANG)2016 8 RADHASWAMI BANK LTD., 57 ITR 306(SC). RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS BARODA PEOPLES CO-OP. BANK LTD., 280 ITR 282 (GU J.) 13. THE LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 14. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FI ND THAT THE DISPUTE IN THE PRESENT CASE IS REGARDING THE ALLOWABILITY O F DEDUCTION U/S 80P OF THE ACT IN RESPECT OF INCOME EARNED BY THE ASSESSEE OF RS.44,53,500/- ON ACCOUNT OF ITS ACTIVITIES OF PURCHASE AND SALE OF S ECURITIES. THE AO HELD THAT THIS INCOME IS TAXABLE UNDER THE HEAD INCOME FROM SHORT TERM CAPITAL GAINS AND THEREFORE, THE ASSESSEE IS NOT E LIGIBLE FOR DEDUCTION U/S 80P OF THE ACT IN RESPECT OF THIS INCOME. 15. THERE IS NO DISPUTE REGARDING THE FACTS. ON PAG E -17 OF HIS ORDER, THE LD. CIT(A) HAS REPRODUCED THE DATE WISE DETAILS OF PURCHASE AND SALE OF SECURITIES AND FROM THE SAME, IT IS SEE N THAT THE INVESTMENTS ARE SOLD WITHIN TWO MONTHS OF PURCHASE FOR PROFIT. IN THE LIGHT OF THESE FACTS, IN THE PRESENT CASE, I EXAMINE THE APPLICABI LITY OF VARIOUS JUDGMENTS AND THE BOARDS CIRCULAR CITED BY THE LD. AR OF THE ASSESSEE. AS PER THE BOARD CIRCULAR NO.18/2015 DATED 02-11-20 15, THE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF C IT VS COCANADA RADHASWAMI BANK LTD.(SUPRA) WAS REFERRED AND IT WAS STATED THAT ALTHOUGH THIS JUDGMENT IS IN THE CONTEXT OF CO-OPER ATIVE SOCIETY/BANKS CLAIMING DEDUCTION U/S 80P OF THE ACT BUT THE PRIN CIPLE IS EQUALLY APPLICABLE TO ALL COMMERCIAL BANKS TO WHICH BANKING REGULATION ACT, ITA NO.1364(BANG)2016 9 1949 APPLIES. HENCE, AS PER THIS CIRCULAR, THE BOA RD HAS STATED THAT THIS JUDGMENT IS APPLICABLE TO COMMERCIAL BANKS ALSO. THEREFORE, THIS BOARD CIRCULAR IN ITSELF HAS NOT LAID DOWN ANY NEW GUIDE LINE IT HAS ONLY EXTENDED THE OPERATION OF THE JUDGMENT TO COMMERCIA L BANKS ALSO. HENCE, I CONSIDER THE APPLICABILITY OF THE JUDGMENT OF HONBLE APEX COURT. IN THAT CASE, IT WAS HELD BY THE HONBLE APEX COURT THAT WHERE THE CO- OPERATIVE BANK CARRYING ON THE BUSINESS OF BANKING IS STATUTORILY REQUIRED TO PLACE A PART OF ITS FUNDS IN APPROVED S ECURITIES, THE INCOME ARISING FROM SUCH INVESTMENTS IS ATTRIBUTABLE TO TH E BUSINESS OF BANKING AND DEDUCTIBLE U/S 80P(2) OF THE ACT, 1961. IT IS ALSO STATED BY THE HONBLE APEX COURT IN THIS JUDGMENT THAT IT HAS BEE N SO HELD IN THE CASE OF CIT VS KARNATAKA STATE CO-OP. APEX BANK 169 CTR 486(SC). IN THIS CASE, IT IS HELD BY THE HONBLE APEX COURT THAT THE ASSESSEE COOPERATIVE BANK IS REQUIRED TO PLACE A PART OF ITS FUNDS WITH SBI OR RBI TO ENABLE IT TO CARRY ON ITS BANKING BUSINESS AND THAT BEING SO, ANY INCOME DERIVED FROM FUNDS SO PLACED ARISES FROM BUSINESS CARRIED O N BY IT AND THE ASSESSEE HAS NOT BY REASON OF SEC.80P(2)(I) OF THE ACT, TO PAY INCOME TAX THEREON. HENCE, IT IS SEEN THAT AS PER THESE JUDGM ENTS OF THE HONBLE APEX COURT, IF THE CO-OPERATIVE BANK IS STATUTORILY REQUIRED TO MAKE CERTAIN INVESTMENTS THEN THE INCOME DERIVED FROM SU CH INVESTMENT WILL BE ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT BUT IN THE PRESENT CASE, THIS IS NOT THE CLAIM OF THE ASSESSEE THAT THE IMPUGNED INCOME OF RS.44,53,500/- IS IN RESPECT OF THESE INVESTMENTS W HICH THE ASSESSEE WAS STATUTORILY REQUIRED TO MAKE AND THEREFORE, IN MY CONSIDERED ITA NO.1364(BANG)2016 10 OPINION, NEITHER THE BOARD CIRCULAR NOR THE JUDGMEN TS OF THE HONBLE APEX COURT IS RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE. 16. THE NEXT JUDGMENT ON WHICH RELIANCE HAS BEEN PL ACED BY THE LD. AR OF THE ASSESSEE IS THE JUDGMENT OF THE HONB LE KARNATAKA HIGH COURT RENDERED IN THE CASE OF KARNATAKA BANK LTD., VS ACIT (SUPRA). IN THIS CASE, THE ISSUE IN DISPUTE BEFORE THE HONBLE HIGH COURT WAS REGARDING THE VALUATION OF INVESTMENTS SHOWN AS STO CK IN TRADE. IN THE PRESENT CASE, THE DISPUTE IS ENTIRELY DIFFERENT AND THEREFORE, THIS JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IS NOT RELEVANT IN THE PRESENT CASE. 17. THE NEXT JUDGMENT ON WHICH RELIANCE HAS BEEN PL ACED BY THE ASSESSEE IS THE JUDGMENT OF THE HONBLE APE COURT R ENDERED IN THE CASE OF CIT VS COCANADA RADHASWAMI BANK LTD., (SUPRA). I N THIS CASE, THE DISPUTE WAS THIS AS TO WHETHER THE SECURITIES HELD AS PART OF THE TRADING ASSET AND LOSSES INCURRED UNDER THE HEAD BUSINESS CAN BE CARRIED FORWARD AND SET OFF AGAINST INCOME FROM SECURITIES. IN FACT, IN THIS CASE, THE DISPUTE WAS REGARDING SET OFF OF BROUGHT FORWAR D BUSINESS LOSS AGAINST INCOME UNDER THE HEAD INCOME FROM SECURIT IES. IT WAS HELD BY THE HONBLE APEX COURT THAT BUSINESS INCOME IS BROK EN-UP UNDER DIFFERENT HEADS ONLY FOR THE PURPOSE OF COMPUTATION OF TOTAL INCOME AND BY THAT BREAK-UP, THE INCOME DOES NOT LOOSE THE CHA RACTER OF THE INCOME OF THE BUSINESS. 18. IN MY CONSIDERED OPINION, THIS JUDGMENT IS NOT RELEVANT IN THE PRESENT CASE BECAUSE. I HAVE ALREADY STATED ABOVE T HAT EVEN IF THE ITA NO.1364(BANG)2016 11 IMPUGNED INCOME OF RS.44,53,500/- IS HELD TO BE BUS INESS INCOME, THIS INCOME IS NOT AN INCOME FROM BANKING BUSINESS BECAU SE THE REGULAR PURCHASE AND SALE OF SECURITIES CANNOT BE SAID TO B E BANKING BUSINESS AND HENCE, SUCH INCOME IS NOT ELIGIBLE FOR DEDUCTIO N U/S 80P. CASE MAY BE DIFFERENT IF THE INVESTMENT IN SECURITIES IS PRIMARILY FOR EARNING INTEREST INCOME AND SOME INCIDENTAL INCOME IS EARNE D ON ITS SALE WHEN THE INVESTMENT IS SOLD TO SWITCH OVER TO SOME OTHER INVESTMENT GIVING BETTER YIELD OR TO ADVANCE LOANS ETC. BUT WHEN THE INVESTMENTS ARE BEING SOLD IN SUCH A SHORT TIME WITHOUT ANY REASON SUCH A S SWITHCHING OVER TO SOME OTHER INVESTMENT FOR BETTER YIELD OR FOR ADVAN CING OF LOAN ETC., SUCH PURCHASE AND SALE OF SECURITIES MAY BE A BUSINESS O F THE ASSESSEE BUT THIS CANNOT BE A BANKING BUSINESS ELIGIBLE FOR DEDU CTION U/S 80P. THEREFORE, I HOLD THAT THIS JUDGMENT OF THE HONBLE APEX COURT IS NOT RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT C ASE. 19. THE NEXT JUDGMENT CITED BY THE LD. AR OF THE AS SESSEE IS THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS BARODA PEOPLES CO-OP. BANK LTD., (SUPRA). IN T HAT CASE, THE FACTS WERE THAT THE ASSESSEE, A CO-OPERATIVE BANK EARNED INTEREST FROM INVESTMENTS IN I) IDBI BONDS, II) SBI BONDS, III) S ARDAR SAROVAR NARMADA BONDS AND IV) KISAN VIKAS PATRA. THE AO DISALLOWE D THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80P IN RESPECT OF SUCH I NTEREST INCOME BUT THE TRIBUNAL HELD THAT SUCH INCOME IS ELIGIBLE FOR DEDUCTION U/S 80P AND ON FURTHER APPEAL BY THE REVENUE BEFORE THE HONBLE GUJARAT HIGH COURT, IT HAD APPROVED THE TRIBUNAL ORDER IN THAT CASE. H ENCE, IT IS SEEN THAT IN ITA NO.1364(BANG)2016 12 THAT CASE, THE ISSUE IS DISPUTE WAS REGARDING INTER EST INCOME ON INVESTMENTS WHEREAS IN THE PRESENT CASE, THE ISSUE IN DISPUTE IS FOR INCOME ARISING ON PURCHASE AND SALE OF SECURITIES A ND NOT INTEREST INCOME AND THEREFORE, IN MY CONSIDERED OPINION, THI S JUDGMENTS IS ALSO NOT RELEVANT IN THE PRESENT CASE. AS PER THE ABOVE DISCUSSION, NONE OF THE JUDGMENTS CITED BY THE LD. AR OF THE ASSESSEE IS RENDERING ANY HELP TO THE ASS ESSEE IN THE PRESENT CASE AND I HAVE ALSO SEEN THAT AS PER THE PROVISION S OF SEC.80P OF THE ACT, DEDUCTION IS ALLOWABLE TO THE ASSESSEE BEING A CO-O PERATIVE BANK IN RESPECT OF INCOME FROM BANKING BUSINESS AND THE INC OME FROM PURCHASE AND SALE OF SECURITIES WITHOUT ANY INTENTION TO EA RN INTEREST INCOME FROM SUCH INVESTMENT AND WITHOUT ANY LEGAL OBLIGATION TO HAVE SUCH INVESTMENT TO RUN BANKING BUSINESS, IT CANNOT BE CO NSIDERED AS INCOME FROM BANKING BUSINESS AND THEREFORE, IN RESPECT OF THIS INCOME, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80P OF T HE IT ACT, 1961. I HOLD ACCORDINGLY. THESE GROUNDS ARE ALSO REJECTED. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. (A.K. GARODIA) ACCOUNTANT MEMBER BANGALORE: D A T E D : .09.2016 AM* ITA NO.1364(BANG)2016 13 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR, ITAT, BANGALORE 1. DATE OF DICTATION .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR XEROX & ENDORSEMENT . 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 11 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER 13 DATE OF DISPATCH OF ORDER