TaxTMI 
TaxTMI 
2023 (1) TMI 1088
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.... the circumstances of the case the Tribunal was right in holding that the income from investments should be assessed under the head ' income from other sources', as against head ' Profits and Gains from Business or Profession' as offered by the appellant, and hence not eligible for deduction under Section 80P of the Act?" 2. Brief facts of the case are: The appellant is a co-operative society engaged in carrying on the business of banking and returns were processed under Section 143(1) of The Income Tax Act, 1961 (in short, "the Act") and it was selected for scrutiny through CASS. Notice under Section 143(2) of the Act was issued to the assessee/appellant and an assessment order was made under Section 143(3) of the Act. 3. The short question that arises for consideration is whether the appellant is entitled to claim the benefit of deduction under Section 80P(2)(a)(i) of the Act in respect of investments made in TIDCO and TNEB Bonds. 4. While it is the case of the appellant that Section 80P(2)(a)(i) of the Act does not limit or confine the benefit of deduction only in respect of investments made in SLR, to the contrary, it is submitted by the learned counsel for ....
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....ction,- (a) -co-operative bank and -primary agricultural credit society shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949); (b) -primary co-operative agricultural and rural development bank means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities. [Inserted by the Finance Act 21 of 2006, s. 19 (w.e.f. 1-4-2007).]" 7. While it is the case of the assessee that once the sums referred to in sub-section(1) fall under any of the clauses (i) to (vii), in the case of a Co-operative Society engaged in carrying on the business of banking, it would be entitled to the whole of the amount of profits and gains of business attributable to any one or more of such activities of Co-operative Society engaged in carrying on the business of banking. To the contrary, the case of the respondent is that the entitlement in respect of Non SLR investment would have to be decided on the basis of Section 80(2)(d) which confines to investment made in "any other co-operative society" and the appellant may not be entitled ....
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....t be extended. Section 80(2)(d) would come into play only in respect of investments made by Co-operative Societies engaged in activities other than Banking Business which are set out under Section 80P(2)(a)(ii) to 80P(2)(a)(vii), which is unconnected with Banking Business. The above construction would avoid repugnancy and conflict between the various clauses of Section 80 P. On the other hand, if the submission of learned counsel for the respondent were to be accepted, it would give rise to a conflict between Section 80P(2)(a)(i) and 80(2)(d), which ought to be avoided. (b) Having found that the construction placed by the learned counsel for the Revenue insofar as Section 80P is concerned is unacceptable as it would result in conflict between different clauses of the said Section. We find that the question as to whether the benefit under Section 80P(2)(a)(i) is available only in respect of SLR investments and not to non- SLR investments has engaged the attention of various Courts on earlier occasions. It has been consistently held by various Courts that as long as it is Banking Business, the investment, whether it is SLR or non SLR may not make a difference. In this regard, it may....
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....bonds, scrips or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities" and under s.6(1)(n) of the BR Act, the doing of all such other things as are incidental or conducive to the promotion or advancement of the business of the company. Thus reading of ss.5(b), (c) and s.6 of the BR Act along with s. 80P(2)(a) of the Act, it becomes clear that the income received by a co-operative bank from deposits, whether or not they are made in discharge of a statutory obligation or otherwise being income from banking business, would be eligible for exemption under the said provision. 11. Does s.80P(2)(a) of the Act make a distinction between income received by a co-operative bank from statutory deposits and the income from non-statutory deposit of surplus funds? The answer must be in the negative. The income earned by the co-operative bank either by deposit of the prescribed percentage of its reserves or by deposit of their surplus funds is exempted. The income from either category of the deposits is certainly attributable to the business of banking. Indeed as a prudent business practice, no bankin....