TMI Blog1994 (4) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee being a company governed by the Banking Regulations Act, 1949, its income from investment would have to be treated as in the nature of business income. Adverting to the definition of "banking" as per the Banking Regulations Act, 1949, it is contended that the same would include accepting deposits for the purpose of lending, or investments or deposits. This definition should put at rest the unseemly controversy generated by the revenue authorities. The income accruing to a banking institution from its investments, as per the above definition, would constitute its business income and, therefore, it would be exempt under section 80P(2)(a)(i) of the Act. Our attention, in this connection, has been invited to the decision of the apex court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(i) of the Act was granted by the Tribunal. In this connection, the assessee referred to the decisions of the Tribunal in the case of Ahmednagar Dist. Central Co-op. Bank Ltd. v. ITO [1990] 33 ITD 683 (Pune) and Maharashtra State Co-operative Land Development Bank Ltd. v. ITO [1992] 41 ITD 491 (Bom.). The decision of the Supreme Court in CIT v. Bombay State Co-operative Bank Ltd. [1968] 70 ITR 86, on which a lot of store is laid by the revenue authorities is totally inapplicable to the facts of the case. In that case, the decision went against the taxpayer only for the reason that the Notification No. F.D.(C.R.) R. Dis. No. 291-I.T./25, dated August 25, 1925 issued under section 60 of the Indian Income-tax Act, 1922, liberally granting cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The learned Departmental Representative, on the other hand, relies on the orders of the revenue authorities. 4. We have heard the parties to the dispute and, in our view, the relief claimed by the assessee has been denied without appreciating the relevant provisions of the Income-tax Act. Under section 80P(2)(a)(i) of the Act, where a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members, the whole of the amounts of profits and gains of the business would be exempt from tax. Section 5 of the Banking Regulations Act defines "banking" as accepting deposits for the purpose of lending; or investments or deposits of money from the public repayable on demand or otherwise, etc. Thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can easily be distinguished on facts. That decision went in favour of the revenue only because the exemption was claimed by the assessee in that case under a Notification issued under section 60 of the Indian Income-tax Act and under the terms of this Notification, exemption was made inapplicable to interests received from Government securities. It was in those circumstances the Supreme Court had no difficulty in holding that the income by way of interest received from Government securities would not be exempt under the said Notification. There is also force in the other arguments of the assessee, namely, that the interest received by the assessee was mostly by way of interest deposits from co-operative banks which is exempt under clause (d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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