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TMI Blog2016 (10) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... substantive grounds:- (1) The learned Commissioner of Income Tax (Appeals) VI, Ahmedabad has erred both in law and on facts of the case in framing appellate order u/s.250 of the I.T. Act for A.Y. 2006-07 on 28th day of March, 2011 (2) The Learned CIT(A) XVI, Ahmedabad has erred in confirming the additions made by Assessing Officer as under on the finding that said activities are not banking business. Sr. No. Nature of disallowance Amount (a) Demat charges Rs.1,58,61,020 (b) Commission on Sp. Adhesive Stamps Rs.36,30,480 (c) Interest on loan given to employees Rs.23,44,098 (3) The learned CIT(A) has erred in not adjudicating upon ground relating to initiation of penalty proceeding" 3. The assessee is a C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore all other activities undertaken by the bank cannot be treated as banking activity just because RBI allows banks to carry oh these activities in addition to business of banking. Therefore allowability of deduction under section 80 P in respect of income from these activities is to be discussed separately. 1- As regards income from GEB Bill collection commission, appellant submitted decision of Pune Tribunal in the case of Ahmednagar district central co-operative bank Ltd. Vs. ITO, 33 ITD 683. This decision is confirmed by Bombay High Court reported in 132 taxman 226. In the said decision commission income from Electricity Company for collection of bills was treated as income attributable to business of banking and deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided by stockbrokers and SEBI as against RBI regulates the services, I do not find any merit in appellant's argument. The decision relied upon does not apply to income from D mat services. Accordingly appellant is not entitled to claim deduction under section 80 P on this income. The disallowance is therefore confirmed. 3- As regards income on account of special adhesive stamp, this activity also started much later and the same is not mentioned in rule 6 (1). The services can be provided by stamp vendors or any person authorized to provide the services. These are not exclusively provided by banks therefore if cannot be said that income from the service is from banking business. Since there is no banking activity involved in selling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Depositories and Participants) regulations. The assessee collects demat charges in question in furtherance thereof for opening demat accounts i.e. dematerialised form of its customers' account in relation to security transactions and depositories services. The assessee has to follow a fee schedule in this regard for collecting the impugned demat charges. We deem it appropriate to extract section 6(1) of the Banking Regulation Act reading as follows :- "6. Form and business in which banking companies may engage (1) In addition to the business of banking, a banking company may engage in any one or more of the following forms of business, namely,- (a) the borrowing, raising, or taking up of money; the lending or advancing of money ei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acted provision makes it clear that these demat charges are for maintaining dematerialised form of assessee's investments made in securities at its customers' behest. Learned Departmental Representative seeks to cover the same in the "constituents" category hereinabove. We find no merit in this plea since it is not a case of constituents demat charges collection. Hon'ble apex court in (2001) 251 ITR 522 (SC) Mehsana District Co-operative Bank vs. ITO allows section 80P deduction in case of safe deposit vaults covered under section 6 extracted hereinabove. We draw support therefrom to observe that the assessee's demat charges in question are very much covered under the said statutory provision making it entitled to claim section 80P deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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