9911796707
TMI Blog2003 (7) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... PADIA., J. P. DEVADHAR. JUDGMENT The judgment of the court was delivered by S.H. KAPADIA J.-The above four references under section 256(1) of the Income-tax Act, 1961, raise a common question of law which has been referred to us for our opinion. I.T.R. No. 153 of 1998 concerns the assessment year 1982-83, I.T.R. No. 280 of 1997 concerns the assessment years 1988-89 and 1989-90, I.T.R. No. 428 of 1997 concerns the assessment years 1986-87 to 198990 and I.T.R. No. 149 of 1998 concerns the assessment year 1991-92. For the sake of convenience, the facts in Income-tax Reference No. 153 of 1998 are set out hereinbelow. The assessee Ahmednagar District Central Co-operative Bank Ltd., is a cooperative society carrying on business of bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from MSEB and MPCS is attributable to business of banking and as such relief under section 80P(1) read with section 80P(2)(a)(i) was allowable to the assessee?" Arguments: Mr. R.V. Desai, learned senior counsel appearing on behalf of the Department, invited our attention to section 5(b) as also section 6(1)(b) of the Banking Regulation Act, 1949. He submitted that the word "banking" .has been defined under section 5(b) to mean acceptance of deposits from public repayable on demand or otherwise whereas, section 6(1) states that in addition to the business of banking, a banking company may engage in one or more forms of business enumerated in section 6(1)(a) to (o). He, therefore, contended that for the purposes of granting relief to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment. Section 5(b) defines "banking" to mean acceptance of deposits for the purpose of lending or investment whereas, section 6(1) states, inter alia, that in addition to the business of banking, a banking company may engage in the following forms of business as enumerated in section 6(1)(a) to (o). Therefore, there is a clear dichotomy between the business of banking and other forms of business. To take an example, under section 6(1)(a) providing of safe deposit vaults to the customer is mentioned. In the case of Mehsana District Central Co-operative Bank Ltd. v. ITO [2001] 251 ITR 522, the Supreme Court has held that the income derived by the co-operative bank by way of rent from the customer for enjoying safe deposit vault as a facilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the activity of the bank collecting charges for and on behalf of MSEB, MPCS for commission/fees. The construction put by the Department on the word "banking" is very narrow. It is true that, in this case, we are required to consider the benefit of exemption under section 80P(2)(a)(i). It is equally true that the said section is required to be read in the strict sense. However, the judgment of the Supreme Court in the case of Mehsana District Central Co-operative Bank Ltd. [2001] 251 ITR 522 shows that the word "banking" is not restricted only to accepting deposits from customers for the purposes of lending and that the word "banking" has been interpreted by the Supreme Court to cover even rent charged by the banks for hiring out safe depo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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