Locker rent is not banking income for section 80P, while collection charges remain deductible in property income computation.

Collection charges were treated as deductible in computing income from property, since they were an outgoing not shown to have been allowed under another head and were directed to be allowed in accordance with law. Locker rent received by a co-operative bank was held not to qualify for exemption under section 80P, because income from providing lockers or safe deposit facilities does not form part of banking business or provision of credit facilities to members. The permissive scope of the Banking Regulation Act did not convert locker hire into banking income. The assessee therefore obtained only partial relief, succeeding on the collection-charges issue but failing on the locker-rent exemption claim.

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Issues: (i) Whether collection charges of Rs. 962 were deductible in computing income from property. (ii) Whether locker rent received by a co-operative bank was exempt under section 80P as income attributable to banking or provision of credit facilities to members.

Issue (i): Whether collection charges of Rs. 962 were deductible in computing income from property.

Analysis: The deduction had not been allowed by the assessing authority, and the appellate record did not disclose any reason for the disallowance. The amount was treated as a deductible outgoing and was not shown to have been allowed under any other head.

Conclusion: The collection charges were directed to be allowed in accordance with law, if not already allowed, in favour of the assessee.

Issue (ii): Whether locker rent received by a co-operative bank was exempt under section 80P as income attributable to banking or provision of credit facilities to members.

Analysis: The exemption under section 80P was confined to income from banking or from providing credit facilities to members. The activity of providing lockers was held not to form part of banking itself, and safe custody or safe deposit vault facilities were treated as falling outside the concept of provision of credit facilities. The permissive scope of the Banking Regulation Act did not convert locker hire into banking income, and income from lockers was not treated as attributable to the banking business for section 80P purposes.

Conclusion: Locker rent was not exempt under section 80P and the disallowance of exemption was upheld, against the assessee.

Final Conclusion: The appeal succeeded only on the collection-charges issue and failed on the locker-rent exemption issue, so the assessee obtained only partial relief.

Ratio Decidendi: Income from locker hire or safe deposit facilities is not, by itself, income from banking or from providing credit facilities to members for the purpose of section 80P.

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