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TMI Blog2010 (1) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... the deduction in respect of the interest income accrued on the investment. According to the assessee, the claim did not qualify for the exemption under section 80P(2) (a) (i) of the Act. The plea of the assessee was not accepted and the assessing authority passed the assessment order and disallowed the claim for exemption. The Commissioner (Appeals) and Tribunal allow it. Held that- it was not the case of the Revenue that the assessee had carried on any other business other than banking business. The deposit exceeding the statutory liquidity ratio was also in relation to banking activity. Hence, the income accrued out of such deposit was also attributable to the banking business and was deductible under section 80P(2)(a)(i). - 86 of 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing authority passed the assessment order and disallowed the claim for exemption. 4. Being aggrieved by the assessment order, the assessee filed the appeal before the Commissioner of Income-tax (Appeals), Muzaffar Nagar, which was allowed. 5. Being aggrieved by the order of the Commissioner of Income-tax (Appeals), Addi. CIT, Range-2, Muzaffar Nagar, filed the appeal before the Income-tax Appellate Tribunal which has been dismissed by the impugned order. 6. The Tribunal has held as follows: "We have heard both the parties and carefully considered the rival contentions, examined the facts, evidence and material placed on record. From the facts discussed above, it is obvious that the Assessing Officer held that interest earned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from banking business and hence entitled to deduction under section 80P(2) (a) (i). Thus, the sum and substance of the aforesaid discussion and legal position is that the interest earned by the bank from investment in SLR and other investments forms part of banking business and is entitled to deduction under section 80P(2) (a) (i) of the Act. As per the Banking Regulation Act, the banks are required to keep certain percentage of their total deposits in the statutory liquidity ratio (SLR) and the total deposits accepted from the public vary from year to year. The fact that in a particular year, the amount of investment made in the Government securities or deposits exceeds SLR would not mean that such investments have not been made in the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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