9911796707
TMI Blog2007 (2) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was right in holding that the income of the assessee bank is assessable at the rate of 55% as against 60%? " 2. The assessee is a banking company. The Commissioner, invoking Section 263 of the Income Tax Act, 1961 assessed the Bank at the rate of 60% on the ground that the assessee company is an investment company, mainly earning interest from securities, which was to be taxed as income from other sources. Aggrieved, the assessee filed an appeal before the Tribunal. By order dated 17.2.2003, the Tribunal allowed the appeal, referring to the decision of the Supreme Court reported in 255 ITR 423 (CIT Vs. RAMANATHAPURAM DISTRICT COOPERATIVE CENTRAL BANK LTD.) that in the case of banking business, interest on securities, divide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision reported in 255 ITR 423 (CIT Vs. RAMANATHAPURAM DISTRICT COOPERATIVE CENTRAL BANK LTD.). 4. Learned counsel for the respondent placed reliance on the decision of this Court reported in 284 ITR 93 LAKSHMI VILAS BANK LTD. Vs. CIT , to which one of us is a party (P.D.Dinakaran,J.), wherein this Court, following the decision of the Supreme Court reported in 240 ITR 355 (UNITED COMMERCIAL BANK Vs. CIT) and 273 ITR 510 (CIT Vs. KARUR VYSYA BANK LTD.), held that the Government securities held by the bank are to be treated as stock in trade and not investment. Further, in the case reported in 240 ITR 355 (UNITED COMMERCIAL BANK Vs. CIT), the Apex Court pointed out that the bank, governed by the Banking Regulation Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income which is chargeable under the heads specified therein. It is not the actual income arising in a particular year under those heads vis-a-vis income falling under other heads that is determinative of the real character of a company. The decisive factor is the nature of the activities of the company which give rise to the income. A company engaged mainly in business or industrial activities cannot be held to be an investment company merely because in a particular year its income from such business or industrial activity is insignificant or a negative figure and most of the income of that year turns out to be income from investment, income from securities, capital gains, etc. The definition nowhere says that if "in any assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short of the income from securities. The status of the assessee has to be looked at from the true nature of activity of the assessee. In the circumstances, we fail to see any substance in the Revenue's contention in this regard. 6. In a recent decision of the Supreme Court reported in 289 ITR 6 (S.C.) ( CIT Vs. NAWANSHAHAR CENTRAL CO-OPERATIVE BANK LTD. ), following the earlier decision in relation to Section 80P(2)(a)(i), the Supreme Court held that the income from investments made by a banking company as part of the business of banking business is attributable to the business of banking falling under the head "profits and gains of business" and hence, deductible. The said decision will have a bearing to the case on hand. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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