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2011 (11) TMI 180 - AT - Income TaxDeduction u/s 80P on banking business – cancellation of banking license in preceding year - deduction under section 80-P(2)(a) in respect of the income on investments - income arising on the sale of investments as long term capital gain – exclusion of the write off of unclaimed dividend from the taxable income – Held that:- The use of word 'or' in Section 80P(2)(a)(i) indicate that these two are mutually exclusive deductions. Either a cooperative society is engaged in carrying on the business of banking or it is engaged in providing credit facilities to its members. Interest earned on providing credit facilities to its members is allowed. Since assessee is not in the banking business therefore, income on investments cannot be allowed as a deduction under section 80P(2)(a)(i). Incomes arising on sale of capital assets cannot be considered as income from regular banking transactions. Therefore, the order of CIT (A) in treating the amounts as long term capital gain/short term capital is upheld. Since, the assessee has not claimed expenditure when dividend was paid, the write back of the unclaimed dividend cannot be treated as income under the provisions of the Act, just because the same was credited to the P&L account. - Revenue's appeals are partly allowed.
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