TaxTMI 
TaxTMI 
TaxTMI 
2008 (1) TMI 418
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....r providing credit facilities to its members was exempt from taxation under s. 80P(2)(a)(i) of the Act and the income by way of interest and dividend derived from its investment in any other co-operative society was exempt under s. 80P(2)(d) of the Act. Accordingly, any other income could not be allowed as deduction under s. 80P. According to him, the income on account of parking and visiting charges as well as sale of scrap could not be treated as income derived from carrying on the business of banking and consequently, the deduction could not be allowed under s. 80P(2)(a)(i) of the Act. Thus the total income was determined at Rs. 3,11,606. 3. The matter was carried in appeal before the CIT(A) before whom it was contended that the income on account of parking and visiting charges as well as income from sale of scrap was attributable to the carrying on of business of banking and therefore, the claim under s. 80P(2)(a)(i) should be allowed. It was explained that the assessee had advanced loans to its clients for buying vehicles. In certain cases, the clients of the assessee were not able to make the payments and as a result thereof the assessee had to seize such vehicles and park ....
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....tt. CIT vs. H.P. State Co-operative Agriculture & Rural Development Bank Ltd. (2006) 104 TTJ (Chd) 864 wherein interest on NPA was considered as income from banking business being incidental to the banking activity. It was also contended that the legislature has used the expression "attributable to" which is wider than the expression "derived from" and therefore, the lower authorities were not justified in denying the deduction under s. 80P on the ground that such income was not derived from the banking business. Regarding the decision of Hon'ble Andhra Pradesh High Court it was submitted that the same is distinguishable on facts. Particular attention was invited to p. 623. On the other hand, the learned Departmental Representative has relied on the orders of lower authorities by submitting that there is no nexus between the income earned by way of parking charges and visiting charges as well as sale of scrap and the business of banking activity carried on by the assessee. Therefore, the deduction under s. 80P was rightly refused by the lower authorities. 6. Rival submissions of the parties have been considered carefully. The question for our consideration is whether the assessee....
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....that interest on securities purchased in accordance with the provisions of sub-para 2 of para IV of 6th Schedule to the Electricity (Supply) Act would fall within the ambit of 'profits and gains attributable to priority industry' under s. 80-I as was applicable to asst. yr. 1970-71. The relevant observations of their Lordships in this case are being reproduced as under: "In Cambay Electric Supply Industrial Co. Ltd. vs. CIT 1978 CTR (SC) 50 : (1978) 113 ITR 84 (SC), it has been held that since the expression of wider import, namely 'attributable to' has been used, the legislature intended to cover receipts from sources other than the actual conduct of the business of generation and distribution of electricity. This would mean that it is not necessary that the income should have been earned from the actual conduct of the business of generation and distribution of electricity. What is required, is that the activity from which the income was earned must have a direct and proximate connection with the priority industry of generation and distribution of electricity." 8. In the case of Ashok Leyland Ltd. vs. CIT (1997) 138 CTR (SC) 287 : (1997) 224 ITR 122 (SC), the Hon'ble Supreme C....
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....to main activity would be considered as profits attributable to/profits relating to the main activity. 11. In the case before us, admittedly, the assessee is engaged in the business of banking and profits from such activity are eligible for deduction under s. 80P(2)(a)(i) of the Act. In the course of its banking activity, the assessee gave loans to its clients for purchase of vehicles. Whenever the clients could not pay the repayment of instalments of loan, the assessee used to seize the vehicles and park the same in paid parking lots. The assessee used to charge certain amount from its clients so as to recover the said parking charges. The difference between parking charges paid and received resulted in some income. In our humble opinion, the activity of seizure of vehicles in the above mentioned cases and parking the same had a direct nexus with the main activity of banking i.e., granting of loans. Therefore, in our opinion, such income was attributable to the main activity and consequently the assessee was entitled to deduction under s. 80P(2)(a)(i) of the Act. 12. Similarly, the visiting charges in connection with granting of loans and sale of scrap related to the main acti....