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2016 (7) TMI 193 - HC - Income TaxDeduction u/s.80P(2)(a)(i) - A.O. disallowed the exemption to short term / long term capital gains and restricted the deduction under Section 80P on profits relating to business of banking - Held that:- By virtue of the decision of the Apex Court in the case of C.I.T. v. Karnataka State Coop. Apex Bank [2001 (8) TMI 9 - SUPREME Court] , the entire issue has been settled and decided in favour of the assessee as observed that there is nothing in the phraseology of section 80P(2)(a)(i) which makes it applicable only to income derived from working or circulating capital. It was further observed that from investment made, in compliance with statutory provisions to enable it to carry on banking business out of reserve fund by a cooperative society is exempt under section 80P(2) (a)(i) of the Act and placement of such funds being imperative for the purpose of carrying on banking business, income therefrom would be income from the assessee's business. In that view of the matter, the Revenue's objection to the deduction claimed by the assessee to its so called non-banking profits must rest here. The assessee had derived income from sale of Government securities and other approved investments. Such proceeds were thereafter invested in securities and deposits which may not have been approved under section 71 of the Gujarat Cooperative Societies Act. What we are concerned with is the treatment that such income out of sale proceeds and securities should receive and not what income from further investments should receive. In short, claim for deduction under section 80P(2) of the Act raised by the assessee related to income derived from sale of approved securities.That being the position, the assessee was justified in claiming deduction as available under law. See ITO WARD-1 ANAND Versus ANAND MERCANTILE CO OP BANK LTD [2011 (9) TMI 1085 - GUJARAT HIGH COURT]- Decided in favour of assessee
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