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TMI Blog2003 (7) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 banking. The whole amount of profits and gains attributable to the business of banking was not included by the assessee in its income under section 80P(1) read with section 80P(2)(a)(i) of the Act. During the assessment year 1982-83, the assessee-bank earned income by way of commission from the Maharashtra State Electricity Board and from Mula Pravara Co-operative Soci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee under section 80P(2)(a)(i) of the Income-tax Act, one has to interpret the word "banking" in section 80P(1) read with section 80P(2)(a)(i) in the light of section 5(b) alone and the words "business of banking" in section 80P(2)(a)(i) of the Income-tax Act are not referable to the forms of business of banking as enumerated in section 6(1)(a) to (o). In other w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 facility, would squarely come under section 6(1)(a) of the Banking Regulation Act and that such income derived by the assessee-bank from hiring out safe deposit vaults was income from the business of banking and, therefore, deductible under section 80P(2)(a)(i) of the Income-tax Act. Now, in the present case, MSEB and MPCS are the public undertakings. Both these public undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 deposit vaults to its customers. In the circumstances, we hold that income earned by the assessee-bank by way of commission/fees from its customers being public sector undertakings would be exempt under section 80P(2)(a)(i). Our view is also supported by section 6(1)(b) of the Banking Regulation Act, 1949, which states that in addition to the business of banking, a banking c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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