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TMI Blog2009 (11) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... t in law in holding that the assessee bank was entitled to 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." To appreciate the rival contentions of the parties, it would be appropriate to quote the relevant provisions of Section 80P(2)(a)(i) of the Income-tax Act, 1961 (here-in-after referred to as the Act, which reads as follows:- "80P.(1) Where, in the case of an assessee being a cooperative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84, dealt with the import of the word attributable. In the case before the Apex Court the assessee was carrying on the business of generation and distribution of electricity. It sold out some of its machinery and building. The question which arose was whether the amount earned from the sale of the machines and buildings was attributable to the business of the Industry. The Apex court held as follows: "As regards the aspect emerging from the expression "attributable to" occurring in the phrase "profits and gains attributable to the business of" the specified industry (here generation and distribution of electricity) on which the learned Solicitor general relied, it will be pertinent to observe that the Legislature has deliberately used the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-co-operative bank is required to place a part of its funds with the State Bank or the Reserve Bank of India to enable it to carry on its banking business. This being so, any income derived from funds so placed arises from the business carried on by it and the assessee has not, by reason of section 80P(2)(a)(i), to pay income-tax thereon. The placement of such funds being imperative for the purposes of carrying on the banking business, the income derived therefrom would be income from the assessee's business. We are unable to take the view that found favour with the Bench that decided the case of Madhya Pradesh Co-operative Bank Ltd. (1996) 218 ITR 438 (SC) that only income derived from circulating or working capital would fall with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for us to dilate. We think that it is in the interest of justice that the assessee should have the opportunity to lead evidence before the Commissioner (Appeals) to establish as a fact what is stated above. So far as the second question is concerned, therefore, the matter is stand restored to the Commissioner (Appeals) for being decided afresh. He shall also decide any consequential issue that may arise." On the basis of the aforesaid observation of the Apex Court it is contended that we should remand the matter to the Revenue Authorities to permit the Bank to establish the fact that the interest was earned on account of banking activities and utilized for such activities. We are not inclined to accept this argument. In the case before the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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