TaxTMI 
TaxTMI 
2014 (1) TMI 21
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the taxpayer is eligible for deduction under section 80P(2)(a)(i) of the Act. The learned representative placed his reliance on the decision of the Mumbai Special Bench of this Tribunal in Maharashtra State Co-operative Bank Ltd. v. Asst. CIT [2010] 2 ITR (Trib) 543 (Mumbai) and submitted that on identical circumstances, the Mumbai Special Bench of this Tribunal found that there was a commercial and casual connection between the interest on income-tax refund and the banking business. The Special Bench further found that the expression "attributable to" has been used in section 80P(2)(a) which has a wider connotation. Therefore, according to the learned representative, interest on income-tax refund is attributable to banking business as found by the Special Bench of this Tribunal. Hence, the Administrative Commissioner is not justified in revising the order of the Assessing Officer. 3. The learned representative has also placed his reliance on the judgment of the Andhra Pradesh High Court in CIT v. Andhra Pradesh State Cooperative Bank Ltd. [2011] 336 ITR 516 (AP) and found that the judgment of the apex court in Togar's Co-operative Sales Society Ltd v. ITO [2010] 322 ITR 28....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Fertilizers Ltd. [1997] 227 ITR 172 (SC) and Totgar's Co-operative Sales Society Ltd. [2010] 322 ITR 283 (SC), this bench referred the matter to the hon'ble President of this Tribunal for constitution of a Larger Bench consisting of more than three members for reconsideration of the issue in accordance with law. However, the hon'ble President of this Tribunal returned the reference, observing that there is no need for making reference to the Special Bench. Accordingly, this appeal is posted again for final disposal. 6. We have carefully gone through the provisions of section 80P(1) and 80(P)(2)(a)(i) of the Act, which read as follows : "80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in subsection (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely : (a) In the case of a co-operative society engaged in (i) Carrying on the business of banki....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... payment of income-tax except for classification of head of income for the purpose of computation. The Income-tax has to be paid on the net assessable income. Hence, this Tribunal is of the considered opinion that payment of income-tax is an application of income which would come only after completion of all transactions of a business/ activity. That is why, the income-tax paid on the income/profit is not allowed as deduction on the computation of total turnover. 10. We have also carefully gone through the judgment of the apex court in the case of Totgar's Co-operative Sales Society Ltd. [2010] 322 ITR 283 (SC). The apex court after considering the language employed by the Legislature in "attributable to any one or more of such activities" found that "the whole of the amount of profit and gains of business" emphasise that the income in respect of which deduction is sought must constitute "operational income" and not the other income. In fact, the apex court has observed as follows on pages 290 and 291 of the ITR : "An alternative submission was advanced by the assessee(s) stating that, if interest income in question....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n rightly taxed by the Department under section 56 of the Act." 11. No doubt, this judgment of the apex court was delivered in the case of a co-operative sales society. The learned representative for the taxpayer made an attempt to distinguish the judgment of the apex court on the ground that the taxpayer in this case is a bank and not a society ; therefore, the judgment of the apex court in the case of Totgar's Co-operative Sales Society [2010] 322 ITR 283 (SC) is not applicable. This Tribunal is unable to accept the contention of the learned representative for the taxpayer. Under article 141 of the Constitution of India, the law laid down by the apex court is binding on all authorities in the country including the taxpayer. The apex court has laid down a law, after interpreting section 80P(2) of the Act that deduction under section 80P(2)(a) is only in respect of income which constitutes the operational income and not other income. However, in the facts of that case, the apex court found that interest on short-term deposit with banks and on Government securities cannot be business of the cooperative sales society ; therefore, such income has to be classified as "other income" ....