TMI Blog1979 (3) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's regular course of business. The assessee had not advanced money to anyone else for construction of property. This sort of a loan is only a concession show to the staff. He held that the interest from this does not form part of the assessee's business activities and it does not qualify for exemption under s. 80P. The second item is the penal interest, which amounted to Rs. 5,636 in 1976-77 and Rs. 1,945 in 1977-78. The ITO noticed that this interest is charged on belated payment of recurring deposits etc. He held that the exemption is allowable only on interest on income out of investments. In his view, it could hardly be said that the charging of penal interest on defaulted payments are interest on investments. In this view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incidental to the business. Collecting interest is not incidental to its business The Departmental Representative read though s. 80P and submitted that cl. (d) has no relevance here. The AAC was also in error in holding that the interest payment received on account of belated payments of instalments to Recurring Deposits is exempt under s. 80P (2)(d). 4. On behalf of the assessee it was submitted that the assessee is a co-operative society doing banking business. What is meant by banking business is not defined in the Act, but however the business of the assessee comes under the purivew of the Banking companies Act. The assessee is authorised to lend money. There was no bar to the assessee lending money to its staff. The interest receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erative banks. However, interest receipts on loans to individuals amounted to Rs. 1,73,067 in the first year. In that year the staff housing loan interest received amounted to Rs. 75,215. Similarly, in the latter year the total interest receipts according to the printed profits and loss account amounted to Rs. 9.6 crores. The break-up details show as in the last year that the bulk of the receipts are from other co-operative banks, but loans to individuals gave an interest of Rs. 1,70,790. Interest from staff on housing loans amounted to Rs. 86,190. We, therefore, hold that these loans are part of its business activities and the mere classification under the various heads does not alter its true character. The Bank had advanced loans to indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taken into consideration was worked out at Rs.3,917. The excess amounting to Rs. 11,413 was added back to the property income. 9. On appeal, the AAC seems to have taken the view that the let out portion of the property also fetched income by way of amenities and that the disallowance was not warranted. The insurance premium paid was for the property which is let out and therefore the assessee is entitled to the full deduction under s. 24(1)(ii). The AAC deleted the addition of Rs. 11,413 from the property income. 10. The Revenue has come on appeal. The Departmental Representative submitted that what the ITO did was the proper thing to do. The assessee itself has apportioned the Municipal tax in the proportion of the receipts between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss account. In computation of the property income, the assessee took the rentals received excluding the rentals for amenities for consideration, i.e. it took the sum of Rs. 2,56,800 and deducted the proportionate tax of Rs. 82,744. From the working it appears that the total property tax and urban tax paid by the assessee amounted to Rs. 2,40,044. The assessee took the municipal valuation plus 1/9th of it to arrive at a figure of Rs. 7,44,987. The taxes were divided in the ratio of Rs. 2,56,800; 7,44,987, which gave a figure of Rs. 82,744. The ITO applied the same ratio. In our opinion, the procedure adopted by the ITO is proper and has to be upheld. s. 22 deals with the charge of income from house property. Such portion of the property as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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