9911796707
TMI Blog2011 (9) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... pertains to the assessment year 2002-03. Respondent assessee is a cooperative Bank. The assessee had claimed deduction under section 80P of the Income Tax Act, 1961 ('the Act' for short) on the income derived during the year under consideration. The Assessing Officer disallowed part of the deduction claimed on the ground that the income did not arise out of the banking business. The Assessing Officer was of the opinion that investments made by the assessee in unauthorized cooperative banks and Government securities were not sufficient to meet the requirements of the statutory requirements under the Gujarat Cooperative Societies Act as well as the Banking Regulation Act. Remaining interest income of ₹ 247.46 lacs, according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eties Act. He was, therefore of the opinion that the utilization of the sale proceeds to that extent would fall within the banking business of the assessee and the assessee is entitled to deduction under section 80P of the Act. However, with respect to remaining investments of ₹ 33.67 crores made in the UTI Bank Ltd., HDFC Bank Ltd. etc. the CIT (Appeal) was of the opinion that no deduction under section 80P of the Act would be available since they were not approved investments under section 71 of the Gujarat Cooperative Societies Act. CIT (Appeals), of course was of the opinion that even on the voluntary investments made, the assessee would be entitled to deduction under section 80P of the Act as held by the Tribunal in the case of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he took somewhat a different stand. CIT (Appeals) was of the opinion that certain proceeds on sale of securities were invested by the assessee with Madhavpura Mercantile Coop. Bank Ltd. which was doubtful investments. In any case, the same was not approved under section 71 of the Gujarat Cooperative Societies Act. He, therefore, found that nonutilization of sale proceeds would not fall within the normal banking business and the capital gain would not be eligible for deduction under section 80P(2)(a)(i) of the Act. Once again, the issue reached the Tribunal. The Tribunal by the impugned common judgment allowed the assessee's appeal relying on the decision of the Tribunal in the case of Rajkot Nagrik Sahakari Bank Limited. Revenue, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in the phraseology of section 80P(2)(a)(i) which makes it applicable only to income derived from working or circulating capital. It was further observed that from investment made, in compliance with statutory provisions to enable it to carry on banking business out of reserve fund by a cooperative society is exempt under section 80P(2)(a) (i) of the Act and placement of such funds being imperative for the purpose of carrying on banking business, income therefrom would be income from the assessee's business. In that view of the matter, the Revenue's objection to the deduction claimed by the assessee to its so called non-banking profits must rest here. With respect to the second aspect, counsel for the Revenue vehemently contend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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