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2014 (1) TMI 21 - AT - Income TaxDeduction u/s 80P(2)(a)(i) of the Act – Held that:- In case of a co-operative society the whole of the amount of profit and gains of business attributable to anyone or more of such activities is eligible for deduction under this section - The Legislature employed the words "the whole of the amount of profit and gains of business attributable to anyone or more of such activities” - Rule of ejusdem generis or noscitur a sociis would come into operation for interpreting the words "any such activities" - the words "any such activities" employed by the Legislature have to be in connection with the business of the taxpayer - An activity which is not connected with banking operation cannot come or fall within the phrase "any such activities" - Thus, any profit or gain of the taxpayer which is attributable to banking business or which has nexus with the banking business is eligible for deduction under section 80P(2)(a)(i) of the Act. Nexus between interest on income-tax refund with the business of banking – Held that:- Following Totgar's Co-operative Sales Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] - interest on income-tax refund cannot be considered to be operational income. The interest on such refund of income-tax has to be assessed under the head "Income from other sources” - Payment of income-tax has nothing to do with any business/activity - Payment of income-tax comes much after the completion of the entire transaction/activity - Total income would include all incomes irrespective of the source from which it was derived - However, deduction under section 80P(2)(a)(i) is only on the operational income from banking activity - Payment of income tax is a statutory liability on the total income irrespective of the source from which it was earned - The payment of income-tax is an application of income after it was earned to discharge the statutory liability under the Income-tax Act - The interest on income-tax refund has to be classified as "income from other sources" and it cannot be considered as "operational income" from banking activity – decided against Assessee.
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