Sri Lakshminarayana Co-operative Urban Bank Ltd., Thiruvarur V. ITO, Nagapattinam

ITA 97/CHNY/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1255 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 27-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: S SRIDHAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH D BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A. NOS. 96 & 97/MDS/2009 AND I.T.A. NOS. 244 & 245/MDS/2009 ASSESSMENT YEARS : 2004-05 & 2005-06 SRI LAKSHMI NARAYANA CO-OPERATIVE URBAN BANK LTD. VIJAYAPURAM, TIRUVARUR-610001. PAN AABAS 3004 C VS. THE INCOME-TAX OFFICER, WARD-I(1), NAGAPATTINAM/ THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-I, THANJAVUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.SRIDHAR RESPONDENT BY : SHRI K.E.B.RENGARAJAN, JR. STANDING COUNSEL O R D E R PER DR. O.K.NARAYANAN, VICE PRESIDENT THERE ARE FOUR APPEALS. ALL THE APPEALS ARE FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEARS ARE 2004- 05. ITA 96, 97, 244 & 245/09 :- 2 -: 2. THE FIRST SET OF TWO APPEALS IN I.T.A. NOS. 96 & 97/MDS/2009 ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS), TIRUCHIRAPALLI DATED 18.12 .2008 AND ARISE OUT OF THE ASSESSMENTS COMPLETED UNDER SEC.14 3(3) OF THE INCOME-TAX ACT, 1961. 3. THE NEXT TWO APPEALS IN I.T.A. NOS.244 & 245/MDS/2 009 ARE DIRECTED AGAINST THE CORRIGENDUM ISSUED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 13.02.2009 CORRECTING CERTAIN TYPOGRAPHICAL MISTAKES APPEARED IN HIS EARL IER ORDERS. 4. AS FAR AS THE FIRST TWO APPEALS, WHICH ARE SUBSTANT IAL IN NATURE FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 ARE CONCERNED, THE FIRST ISSUE IS THAT THE LOWER AUTHOR ITIES HAVE ERRED IN NOT GIVING EXEMPTION UNDER SEC.80P(2)(A)(I) ON T HE INCOME ARISING OUT OF THE GOVERNMENT SECURITIES HELD BY IT . 5. THIS ISSUE WAS CONSIDERED BY THE I.T.A.T. C BENCH , CHENNAI IN THE CASE OF MAYURAM CO-OPERATIVE URBAN B ANK LTD. V. INCOME-TAX OFFICER THROUGH THEIR OWN ORDER DATED 7 TH SEPTEMBER, 2007 PASSED IN I.T.A. NOS.208 & 1421/MDS/07 RELATIN G TO THE ASSESSMENT YEARS 2003-04 AND 2004-05, AND HELD IN F AVOUR OF THE ITA 96, 97, 244 & 245/09 :- 3 -: ASSESSEE THAT THE INTEREST ON SECURITIES PURCHASED BY THE ASSESSEE TO MAINTAIN THE STATUTORY LIQUIDITY RATIO (SLR) PRESCRIBED BY THE RESERVE BANK OF INDIA HAS TO BE T REATED AS INCOME EXEMPT UNDER SEC.80P(2)(A)(I). FOLLOWING TH E SAID ORDER OF THE COORDINATING BENCH, WE HOLD THAT IN THESE CA SES ALSO THE ASSESSING AUTHORITY MAY GIVE EXEMPTION TO THE ASSES SEE TO THE INTEREST INCOME OF THE ASSESSEE BANK EARNED FROM SL R LOCKED SECURITIES. THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 6. THE NEXT ISSUE IS THAT THE LOWER AUTHORITIES HAVE W ENT WRONG IN HOLDING THAT THE BANK IS NOT EXEMPT FROM SEC.80P , AS PROFITS ARISING OUT OF THE TRADING OF GOVERNMENT SECURITIES . THE MAIN THRUST OF THE ARGUMENT OF THE ASSESSEE IS THAT SEC. 6(1)(A) OF THE BANKING REGULATION ACT PERMITS SUCH PROFITS AS BUSI NESS PROFITS ARISING FROM BANKING BUSINESS AND THEREFORE, HERE A LSO THE PROFIT ARISING FROM TRADING OF GOVERNMENT SECURITIES SHOUL D BE TREATED AS PROFIT FROM THE BANKING BUSINESS ENTITLED FOR DEDUC TION UNDER SEC.80P(2)(A)(I). 7. IT IS TO BE SEEN THAT SEC.6(1)(A) APPLIES TO THE BA NKS GOVERNED BY THE PROVISIONS OF BANKING REGULATION AC T. IT IS NOT APPLICABLE TO THE ASSESSEE PER SE AS IT IS GOVERNED BY THE ITA 96, 97, 244 & 245/09 :- 4 -: PROVISIONS OF CO-OPERATIVES. THIS IS VERY CLEAR FR OM THE FACT THAT THE DEDUCTIONS AVAILABLE TO A CO-OPERATIVE SOCIETY UNDER VARIOUS SEGMENTS OF SEC.80P ARE NOT AVAILABLE TO A COMMERCI AL BANK GOVERNED BY THE PROVISIONS OF BANKING REGULATION AC T. THEREFORE, THERE IS NO REASONING IN CONNECTING THE BANKING PRO FIT WITH REFERENCE TO THE DEDUCTION AVAILABLE UNDER SEC.80P WITHOUT ANY EXEMPTION. THE PARTICULARS AND DETAILS HAVE TO BE EXAMINED TO ARRIVE AT A DEFINITE CONCLUSION. THIS ISSUE IS THER EFORE REMITTED BACK TO THE ASSESSING AUTHORITY TO DECIDE AFRESH, A FTER HEARING THE ASSESSEE. 8. AS FAR AS THE REMAINING TWO APPEALS ARE CONCERNED, THEY ARE TOO TECHNICAL AS THEY ARE FILED AGAINST THE COR RIGENDUM ISSUED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). THE I SSUES CONTESTED BY THE ASSESSEE ON MERITS HAVE ALREADY BE EN COVERED BY THE FIRST SET OF REGULAR APPEALS IN I.T.A. NOS.9 6 & 97/MDS/2009. THEREFORE, THE APPEALS IN I.T.A. NOS. 244 & 245/MDS /09 ARE TO BE REJECTED. 9. IN RESULT, THE APPEALS FILED BY THE ASSESSEE IN I.T .A.NOS.96 & 97/MDS/2009 ARE ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL FILED IN I.T.A. NOS.244 & 245/MDS/2009 WITH REFEREN CE TO THE ITA 96, 97, 244 & 245/09 :- 5 -: CORRIGENDUM ISSUED BY THE COMMISSIONER OF INCOME-TA X (APPEALS) ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON TUESDAY, THE 18 TH OF JANUARY, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) JUDICIAL MEMBER (DR. O.K.NARAYANAN) VICE-PRESIDENT CHENNAI, DATED : 18 TH JANUARY, 2011 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR