1986 (5) TMI 87

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.... central bank at Raipur. For the year ended 30th June, 1976 relevant to the asst. yr. 1977-78, it had among other receipts received a sum of Rs. 74,075 as commission receipts. Out of these commission receipts, a sum of Rs. 34,119,60 was added to the income of the assessee as 'fertiliser sales commission'. The ITO was of the view that the receipt of fertiliser sales commission was on account of some other business activity of the bank which did not form part of regular banking business. It is in this view of the matter the addition was made. 3. The CIT(A) deleted the addition of Rs. 34,119.60. Sri Charles for the Department submitted that the fertiliser sales commission was not earned in the course of banking business and, therefore, in ter....

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.... the account of Vipanan Sangh and the bank has only earned a sum of Rs. 1 per thousand for this service. In our view, such services are part of services provided by a bank to its customers in the course of its banking activities. In this connection, we may recall the decision of the Madhya Prades High Court in CIT vs. Dhar Central Co-operative Bank, Dhar 11 ITC 382 (MP). In that case, the question as to whether the income from commission, brokerage, subsidy from Government, admission fee and incidental charges can be held to be income attributable to business of banking carried on by the assessee. Their Lordships held that "in our opinion, what is material for the purpose of section 80P of the Act is whether the income, in respect of which ....

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....rned as it is only a reimbursement and, therefore, the ITO was not justified in treating the same as income earned ignoring the fact that it represented only reimbursement. Therefore, we uphold the order of the CIT(A). 7. The assessee had claimed the following amounts as expenditure in its accounts: Rs. 81,875 being the provision for gratuity payable to its employees Rs. 15,272 being contribution to District Co-operative Union. Rs. 60.048 being depreciation on securities. Rs. 1,57,195 Total As far as gratuity is concerned, the ITO applied the provisions of s. 40A(7) of the it Act and as approved gratuity fund was not established, he disallowed the gratuity provision. The contribution to District Co-operative Union in a sum of Rs. ....