The ACIT, 1 (1), V. M/s M.P.Rajya Shakari Bank Mardy.,

ITA 483/IND/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8817 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-07-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 19-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K KARAN
• Section: 250; 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI N.K.SAINI, A.M. AND SHRI BHAVNESH SAINI, J.M. PAN NO. : AAAAM3348L. I.T.A.NO.483/IND/2008. A.Y. : 2005-06 ASSISTANT COMMISSIONER OF INCOME-TAX, M/S. M.P.RAJYA SAHAKARI BANK MARYADIT, 1(1), VS APEX BANK, T.T.NAGAR, BHOPAL. BHOPAL. APPELLANT RESPONDENT DEPARTMENT BY : SHRI V.K.KARAN, ADDL. CIT DR ASSESSEE BY : NONE. O R D E R PER N. K. SAINI, A.M. THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINS T THE ORDER OF THE CIT(A)-I, BHOPAL, DATED 9 TH SEPTEMBER, 2008, 2. IN THE DEPARTMENTAL APPEAL, THE ONLY GROUND RAISED READS AS UNDER :- -: 2 :- 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 13,82,72,013/- MADE BY THE ASSESSING OFFICER CONSIDERING THE INCOME FROM NON BANKING ACTIVITIES NOT ELIGIBLE FOR DEDUCTION U/S 80 P OF THE INCOME-TAX A CT. 3. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO T HE DEDUCTION U/S 80-P OF THE INCOME-TAX ACT, 1961. 4. THE FACTS RELATED TO THE ISSUE IN BRIEF ARE THAT TH E ASSESSEE A COOPERATIVE BANK EARNED INTEREST FROM INVESTMENTS A ND SECURITIES AND UTILIZED ITS INCOME IN THE ORDINARY COURSE OF B ANKING BUSINESS AND THE DEDUCTION WAS CLAIMED U/S 80P(2)(A)(I) OF T HE INCOME-TAX ACT, 1961, ON THE BASIS THAT ENTIRE INCOME WAS ATTR IBUTED TO THE BUSINESS OF BANKING. THE AO, HOWEVER, DENIED THE CL AIM AND HELD THAT THE ACTIVITIES, WHICH NON BANKERS WERE PERMITT ED TO DO E.G. BUYING AND SELLING OF SECURITIES, SHARES ETC. SHOUL D NOT ESSENTIALLY BE CONSIDERED AS BANKING BUSINESS. THE RELIANCE WAS PL ACED ON THE FOLLOWING CASE LAWS :- (I) GUJARAT STATE COOP. BANK LTD. VS. CIT, (2001) 250 ITR 229. -: 3 :- 3 (II) M.P. COOP. BANK LIMITED VS. ADDL. CIT, (1996) 218 ITR 438 ( S. C.) 5. THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT(A) A ND SUBMITTED THAT THE DECISIONS RELIED UPON BY THE ASS ESSING OFFICER HAD BEEN SPECIFICALLY OVERRULED BY THE HON'BLE SUPR EME COURT AND THE ADDITION BASED ON OVERRULED JUDGMENT COULD NOT BE SAID TO BE CORRECT. THE RELIANCE WAS PLACED ON THE FOLLOWING C ASE LAWS :- (A) MEHSANA DISTRICT CENTRAL COOP. BANK LTD. VS. ITO, (2001) 251 ITR 522 ( S. C. ) (B) CIT VS. KARNATAKAK STATE COOP APEX BANK LIMITE D (2001) 251 ITR 194 ( S. C.) IT WAS EXPLAINED THAT THE BANKS ARE REQUIRED TO MAI NTAIN STATUTORY LIQUIDITY RATIO AND FOR THIS PURPOSE ONLY IT IS MAN DATORY FOR THEM TO INVEST IN SECURITIES OF GOVERNMENT AND THE INCOME I N QUESTION PERTAINED TO SUCH MANDATORY INVESTMENTS, WHICH WAS CERTAINLY ATTRIBUTABLE TO BANKING BUSINESS AND HENCE DEDUCTIB LE U/S 80P(2)(A)(I) OF THE INCOME-TAX ACT, 1961. 6. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT ALMOST ALL THE CONTROVERSIES IN SUCH TYPE OF CASES HAD BEEN SET AT REST BY THE HON'BLE SUPREME C OURT IN THE CASE OF CIT VS. NAWANSHAHAR CENTRAL COOP. BANK LIMITED, (2007) 289 -: 4 :- 4 ITR 6 ( S.C. ) AND, ACCORDINGLY, THE AO WAS DIRECTE D TO ALLOW THE CLAIM OF THE ASSESSEE BY HOLDING THAT ALL THE AMOUN T OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO THE BANKING BUSIN ESS IS DEDUCTIBLE, SO IS THE INTEREST INCOME RECEIVED FROM INVESTMENT AND TRADING IN SECURITIES AND SHARES. 7. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT I S NOTICED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE JUDGME NT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. NAWANSHAHAR C ENTRAL COOP. BANK LIMITED (SUPRA). IN THE SAID, CASE, IT HAS BEE N HELD AS UNDER :- WHERE A CO-OPERATIVE BANK CARRYING ON BUSINESS OF BANKING IS STATUTORILY REQUIRED TO PLACE A PART OF ITS FUNDS IN APPROVED SECURITIES, THE INCOME ATTRIBUTAB LE THERETO IS DEDUCTIBLE U/S 80P(2))(A)(I) OF THE INCO ME-TAX ACT, 1961. 8. IN THE INSTANT CASE ALSO, THE ASSESSEE IS CARRYING ON BUSINESS OF BANKING AND STATUTORILY REQUIRED TO PLACE A PART OF ITS FUND IN APPROVED SECURITIES. THE INCOME FROM THOSE SECURITI ES IS DEDUCTIBLE U/S 80P(2)(A)(I) OF THE INCOME-TAX ACT, 1961.WE, TH EREFORE, DO NOT -: 5 :- 5 SEE ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LD.C IT(A) ON THIS ISSUE. GROUND FAILS. 9. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISM ISSED. THIS ORDER HAS BEEN PRONOUNCED ON 21ST JULY, 2009. SD/- SD/- (BHAVNESH SAINI) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21ST JULY, 2009. CPU* 217