2017 (3) TMI 1610

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.... from other sources'' and was not business income. When the issue reached this Tribunal, this Tribunal relying on the judgment of Hon'ble Apex Court in the case of Totgar's Co-operative Society Ltd vs. ITO 322 ITR 283 held that interest on fixed deposits held with Sub-Treasury, Meenachili, Kadappattoor and SBI Pala aggregating to Rs. 20,21,909/- were out surplus funds of the assessee and could not be treated as business income entitled for deduction u/s. 80P(2)(a) (i) of the Act. Assessee thereupon moved the Hon'ble Jurisdictional High Court. Their lordship in judgment in ITA No.72 of 2016 dated 18th October, 2016 held as under:- ''2. Learned counsel for the appellants submits that the issue relatable to the applicability of Section 80P of....

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.... are vacated and the cases are remitted to the Tribunal for reconsideration. Parties are directed to mark appearance before the Tribunal on 15.11.2016. These income tax appeals are ordered accordingly''. 2. Accordingly, appeal was taken up today. Ld. Counsel for the assessee submitted that by virtue of Circular No. 18/2015 dated 02.11.2015, when assessee was doing a business akin to banking then interest on deposits received could be treated only as part of business income. 3. Per contra, ld. Departmental Representative submitted that assessee for deduction u/s. 80P(2)(a) (i) of the Act assessee claimed itself to be a primary agricultural credit society whereas for the purpose of claiming interest income as part of business receipts, it ....

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....erative Bank Ltd. [2007] 160 Taxman 48 (SC), the apex court held that the investments made by a banking concern are part of the business of banking. Therefore, the income arising from such investments is attributable to the business of banking falling under the head "Profits and gains of business and profession". 3.2 Even though the abovementioned decision was in the context of co-operative societies/Banks claiming deduction under section 80P(2)(a)(i) of the Act, the principle is equally applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies. 4. In the light of the Supreme Court's decision in the matter, the issue is well settled. Accordingly, the Board has decided that no appeals may henceforth be filed ....