AI Drafter 
TaxTMI 
TaxTMI 
2014 (3) TMI 1252
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....1) of the Act. For this, assessee has raised following grounds: "1. For that on the facts of the case, the order passed by the Ld.CIT (A) is completely arbitrary, unjustified and illegal. 2) For that on the facts of the case, the Ld. CIT (A) was wrong in not allowing provision for gratuity amounting to Rs. 20,00,000/- which is completely arbitrary, unjustified and illegal. 3) For that on the facts of the case, the Ld. CIT (A) was wrong in not considering the fact that the gratuity amounting to Rs. 20,00,000/- was paid before filing the return of income u/s. 139(1) of the I. T. Act, therefore, the order passed by Ld. CIT (A) is completely arbitrary, unjustified and illegal." 3. We have heard rival contentions and gone through facts and circumstances of the case. We find that the assessee is eligible for deduction u/s. 80P of the act and payment of gratuity is also out of eligible income and that also gross total income of the Co-operative Society. As pointed out by Ld. Counsel for the assessee to the provisions of section 80P(1) of the Act that the gross total income includes any income referred to in sub-section (2) means the deduction will b....
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....t and in such a situation, all other banking activity of RRB not be given the benefit of deduction except the income which is in conformity with the aims and objects enshrined in sec. 3(1) and the preamble of the RRB Act. 5. On the facts and circumstances of the case Ld. CIT (A) has erred in concluding that expenses incurred in connection with or apportionable to activities in violation of the RRB Act or in violation of public policy can be allowed as a deduction. 6. On the facts and circumstances of the case Ld. CIT (A) has erred in not taking cognizance of the fact that section 18 of the RRB Act is simply an enabling provision and can neither act to the prejudice of provision laid down in section 3(1) of the said Act, nor can defeat the aims and objectives enshrined in the Preamble of the RRB Act." 5. At the outset Ld. Counsel for the assessee filed copy of Tribunal's order in assessee's own case in ITA No. 1771/K/2008 for AY 2005-06 and submitted that the issue is squarely covered in favour of assessee. We find that the Tribunal in ITA No. 1771/K/2008 for AY 2005-06 in assessee's own case has held as under: "11. We have heard r....
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....l business of banking. Like other banks money is its stock-in-trade or circulating capital and its normal business is to deal in money and credit. It cannot be said that the business of such a Bank consists only in receiving deposits and lending money to its members or such other societies as are mentioned in the objects and that when it lays out its moneys so that they may be readily available to meet the demand of its depositors if and when they arise, it is not a legitimate mode of carrying on of its banking business. The Privy Council in the Punjab Cooperative Bank Ltd. v. The Commissioner of Income-tax, Lahore [1940] 8 I.T.R. 635 where the profits arose from the sale of Government securities pointed out at p.645 that in the ordinary cases the business of a Bank essentially consists of dealing with money and credit. Depositors put their money in the Bank at a small rate of interest and in order to meet their demands if and when they arise the Bank has always to keep sufficient cash or easily realizable securities. That is a normal step in the carrying on of the banking business. In other words that is an act done in what is truly the carrying on or carrying out of a business. I....
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....Under the bye-laws 68 one of the objects of the appellant bank is to carry on the general business of banking and therefore subject to the Co- operative Societies Act. it has to carry on its business in the manner that ordinary banks do. It may be added that the various heads under s. 6 of the Income Tax Act and the provisions of that Act applicable to these various heads are mutually exclusive. Section 12 is a residuary section and does not come into operation until the preceding heads are excluded. Commissioner of Income-tax v. Basant Rai Takhat Singh [1933] 1 I.T.R. 197." 9. The Bombay High Court in the Goa Urban Co-operative Bank Ltd.'s case (supra) has held in paras 2 and 3 as follows :- 2. The facts are hardly in controversy. The investment by the assessee Bank is in excess of statutory liquidity ratio i.e. 25% of demand and liabilities in terms of Section 24 of the Banking Regulation Act. However, the excess investment made in SLR securities were subjected to taxation by the Assessing Officer vide his order dated 24th February, 1999 which was upheld in appeal by the Commissioner of Income Tax (Appeals). It was felt by the authorities that the income fro....