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TMI Blog2003 (10) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... come received by the respondent by letting out the premises belonging to it; and (2) the interest received out of the funds deposited in the Reserve Bank and other banks are exempted from payment of tax in terms of section 80P(2)(a)(i) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The assessments relate to the years 1989-90, 1990-91 and 1991-92. The facts in brief, which may be relevant for disposal of these appeals, may be stated as follows: The respondent is the Grain Merchants Co-operative Bank (hereinafter referred to as "the assessee"), engaged in banking activity. The assessee filed its return for the assessment years 1989-90, 1990-91 and 1991-92. The Assessing Officer, while completing the assessment, took the view that the rental income received by the assessee in letting out the portion of the building partly occupied by it and the interest received from setting apart certain funds as reserve fund, does not come within the purview of section 80P(2)(a)(i) of the Act and as such are not deductible while computing the income of the assessee. Aggrieved by the said assessment order, the assessee preferred an appeal to the Commissioner of Income-tax (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of a co-operative society, not being a housing society or an urban consumers society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, wherein the gross total income does not exceed Rs. 20,000, the amount earned by way of interest on securities on any income from certain property is chargeable under section 22 of the Act. He pointed out that clause (f) of sub-section (2) of section 80P of the Act should be understood as making an exception to clause (a)(i) of sub-section (2) of section 80P of the Act wherein it is provided that if a co-operative society carrying on banking business receives income from house property, such an income is liable to be taxed under section 22 of the Act. It is his submission that when Parliament had made a distinction between the income received from banking business and the income received from non-banking business by way of rental income on account of letting out of premises belonging to the assessee, it is not permissible for the assessee to claim exemption relying upon clause (a)(i) of subsection (2) of section 80P of the Act. It is also his submission that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of their submission that clause (1) of sub-section (1) of section 6 of the Regulation Act must be understood as banking business, they referred to us the decision of the hon'ble Supreme Court in the case of Gujarat State Co-operative Bank Ltd. v. CIT [2001] 251 ITR 522 and referred to us the observation made at page 524 of the judgment; and the judgment of the hon'ble Supreme Court in the case of Kerala State Co-operative Marketing Federation Ltd. v. CIT [1998] 231 ITR 814 and referred to us the observation made at page 819 of the judgment. They also relied upon the judgment of the hon'ble Supreme Court in the case of CIT v. Ramanathapuram District Co-operative Central Bank Ltd. [2002] 255 ITR 423 and drew our attention to pages 424 and 425 of the judgment. Now, we will proceed to consider each one of the contentions advanced by Sri Sesachala. So far as the first contention is concerned, the same is covered against the Revenue by our earlier decision rendered in the case of Karnataka Central Co-operative Bank Ltd. [2004] 266 ITR 635. In the said decision, we have taken the view that the income received out of the reserve fund is exempted from payment of tax. The said decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of the company; (l) selling, improving, managing, developing, exchanging, leasing, mortgaging, disposing of or turning into account or otherwise dealing with all or any part of the property and rights of the company;" From the reading of clauses (k) and (l) of section 6 of the Regulation Act, to our mind, it appears that in addition to the business of banking set out in clause (b) of section 5 of the Regulation Act, acquisition, construction, maintenance and alteration of any building or works necessary or convenient for the purpose of the banking company and also selling/improving or leasing or otherwise dealing with all or any part of the property and rights of the company, also should be treated as a banking business. No doubt, it is true, as contended by Sri Sesachala that the businesses referred to in clauses (a) to (o) of sub-section (1) of section 6 of the Regulation Act cannot be treated as a banking business within the meaning of clause (b) of section 5 of the Regulation Act. But as noticed by us earlier, section 6 of the Regulation Act intends to make several businesses referred to in clauses (a) to (o) of sub-section (1) of the Act as "banking business" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the correct way of reading the different heads of exemption enumerated in the section would be to treat each as a separate and distinct head of exemption. Whenever a question arises as to whether any particular category of an income of a cooperative society is exempt from tax what has to be seen is whether the income fell within any of the several heads of exemption. If it fell within any one head of exemption, it would be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is not free from tax under that head of exemption. The expression 'marketing' is an expression of wide import. It involves exchange functions such as buying and selling, physical functions such as storage, transportation, processing and other commercial activities such as standardisation, financing, marketing intelligence, etc. Such activities can be carried on by an apex society rather than a primary society." In our view, the provisions contained in clause (f) of sub-section (2) of section 80P of the Act strongly relied upon by Sri Sesachala, are of no assistance to him. The said clause provides that the income derived by the housing society is cha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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