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TMI Blog2012 (10) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... ties since no bank would like its reserve funds to remain idle and not earn any interest. This is not only prudent business management but is also a part of the activity of banking. Therefore, the interest earned on such deposits is directly attributable to the business of banking - in favour of assessee. - ITA No.32 of 2008 alongwith ITA No. 39 and 40 of 2008 - - - Dated:- 4-10-2012 - Mr. Deepak Gupta, And Mr. Rajiv Sharma, JJ. For the appellant: Mr. Vinay Kuthiala, Sr. Advocate. with (in all the appeals) Ms. Vandana Kuthiala, Advocate. For the respondent(s): Mr. Vishal Mohan, Mr. Rohan Thakur Mr. Goverdhan Sharma, Advocates. Per Deepak Gupta, J.(oral) 1. These aforesaid Income-tax Appeals are being disposed of by a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on the business of banking or providing credit facilities to its members, or xxx xxx xxx xxx xxx xxx xxx xxx xxx the whole of the amount of profits and gains of business attributable to any one or more of such activities. 3. The facts necessary for determination of the case are that the assessee is a Cooperative Society carrying on banking business. It is registered under the H.P. Cooperative Societies Act and is governed by the Banking Regulation Act, 1949. The assessee in terms of the provisions of the Cooperative Societies Act and the Banking Regulation Act is bound to invest certain amounts in the manner prescribed under the aforesaid Acts. These are known as statutory reserves (SLR). The Bank has also made certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om" been used it could have with some force been contended that a balancing charge arising from the sale of old machinery and buildings cannot be regarded as profits and gains derived from the conduct of the business of generation and distribution of electricity. In this connection it may be pointed out that whenever the Legislature wanted to give a restricted meaning in the manner suggested by the learned Solicitor General it has used the expression "derived from", as for instance in S. 80-J. In our view, since the expression of wider import, namely, "attributable to" has been used, the Legislature intended to cover receipts from sources other than the actual conduct of the business of generation and distribution of electricity. 5. Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of this Court in the case of Madhya Pradesh Cooperative Bank Ltd. (1996) 218 ITR 438 (SC) does not set down the correct law and that the law is as we have put it above. The question, accordingly, is answered in the affirmative and in favour of the assessee. 6. However, this judgement only covers the question relating to reserves invested by the bank pursuant to the statutory directions. Shri Vinay Kuthiala, learned senior counsel for the revenue has also placed reliance on the following portion of the observation made by the Apex Court in Mehsana District Central Co-operative Bank Ltd. vs. Income-tax Officer, (2001) Vol.251 ITR 522. Now, as to the second question, we have heard learned counsel and been referred to various decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-SLR reserves was attributable to normal banking activities. It was in these circumstances that the Supreme Court directed that the matter be remanded to the Commissioner (Appeals). In the present case the Tribunal has already decided this issue in favour of the bank. 8. Any banking institution, carrying on banking business will not keep its reserves uninvested where they earn no income. The question which arises is whether the income earned on account of interest on deposits made out of the non SLR funds can be said to be attributable to the banking activities of the bank. There can be no dispute with the preposition that the word attributable is much wider in scope than derived. The Legislature has used the words attributable to in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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