9911796707
TMI Blog1984 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Income-tax Act, 1961, were not applicable to the interest received by the assessee on Government securities which were held by it as part of its stock-in-trade ?" The Rajasthan State Co-operative Bank limited, (hereinafter referred to as "the assessee") is a co-operative society registered under the Rajasthan Co-operative Societies Act, 1953. In functions as an apex bank to take loans from the Government and from the Reserve Bank of India and in its turn, advances loans to Central Co-operative Banking institutions. In the accounting years relevant to the assessment years in question, the assessee was holding securities and was also holding cash and bank balances. The assessee earned interest on the securities held by it. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from tax. The Tribunal, therefore, held that the income derived by the assessee by way of interest from the securities was exempt from tax. Thereupon the Additional Commissioner of Income-tax moved the Tribunal for referring the question of law arising out of the order of the Tribunal to this court and the Tribunal has referred the question mentioned above for the opinion of this court. We have heard Shri R. N. Surolia, the learned counsel for the Department and Shri S. M. Mehta, the learned counsel for the assessee. The question as to whether the income derived from securities or deposits held by a co-operative banking institution can be regarded as income from business and is exempt under section 80(1)(i)(a) of the Act, has come up fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Addl. CIT [1974] 93 ITR 168 and the Gujarat High Court in Addl. CIT v. Ahmedabad District Co-operative Bank Ltd. [1975] 101 ITR 733. In view of the aforesaid decisions, the legal position is well settled that income by way of interest earned on Government securities held by a banking institution are exempt from income-tax under section 81(i)(a) of the Act if the said securities were held by the assessee as part of its stock-in-trade. In the present case, the Tribunal has found that the Government securities that were held by the assessee were part of its stock-in-trade. In these circumstances, the Tribunal was justified in holding that the income earned by the assessee from the Government securities held by it were exempt from tax under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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