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TMI Blog1988 (2) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ident funds is not income from business and, as such, is not exempt under section 81 (i) (a) of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the expenses like commission and exchange were not in the nature of banking business ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the income from commission, exchange and miscellaneous income in the hands of the assessee co-operative bank was not exempt under section 81(i)(a) of the Incometax Act, 1961, particularly when the Banking Regulation Act was not in force and applicable during the relevant period to the assessee-co-operative bank?" The m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness was exempt, was rejected by the Commissioner of Income-tax (Appeals). Aggrieved by the order passed by the Commissioner, the assessee preferred appeals before the Tribunal. The Tribunal dismissed these appeals. The assessee, therefore, sought a reference and it is at the instance of the assessee that the aforesaid questions of law have been referred to this court for its opinion. Now, as regards question No. (1) referred to us, learned counsel for the assessee conceded that the matter was covered by a decision of this court in M. P. State Co-operative Bank Ltd. v. Addl. CIT [1979] 119 ITR 327. In view of that decision, it must be held that the Tribunal was right in holding that the interest on securities earmarked against reserve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r business of providing credit facilities to its members by a co-operative society. Judged by this test, income earned by the assessee from commission and brokerage by dealing in bills of exchange, subsidy from Government, admission fee from members, incidental charges and financial penalties, is all attributable to the business of banking or providing credit facilities to its members and, hence, deductible under section 80P of the Act." We respectfully agree with the aforesaid observations. In view of the decision in CIT v. Dhar Central Co-operative Bank [ 1984] 149 ITR 438 (MP), our answers to questions Nos. (2) and (3) are in the negative and against the Revenue. For all these reasons, our answer to question No. (1) is in the affirma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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