TMI Blog2009 (11) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... non reserves were part of the banking activities since no bank would like its reserve funds to remain idle and not earn any interest - herefore, the interest earned on such deposits is directly attributable to the business of banking - Deduction allowed. - 40,41,42,43,44/2006 and 3 of 2007 - - - Dated:- 3-11-2009 - Mr.Justice Deepak Gupta, Mr. Justice V.K.Ahuja, JJ. For the appellant: Mr. Vinay Kuthiala, Advocate. For the respondent: Mr. Surinder Sharma, Mr. Bhupinder Gupta, Mr. Ajay Mohan Goel, Advocate. Per Deepak Gupta, J. These aforesaid Income-tax Appeals are being disposed of by a common judgement since the following identical question of law is involved in all these cases:- "Whether on the facts and in the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Regulation Act, 1949. The assessee in terms of the provisions of the Cooperative Societies Act and the Banking Regulation Act is bound to invest certain amounts in the manner prescribed under the aforesaid Acts. These are known as statutory reserves (SLR). The Bank has also made certain investments out of its reserves funds not on the basis of any statutory directions but as investment per-se. These are termed as non SLR investments. The question that arises is whether the interest earned on deposits made out of non SLR funds can be said to be attributable to normal banking business/activities and therefore eligible for deduction under Section 80P(2)(a)(i) referred to above. The Apex Court in Cambay Electric Supply Industrial Co. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom", as for instance in S. 80-J. In our view, since the expression of wider import, namely, "attributable to" has been used, the Legislature intended to cover receipts from sources other than the actual conduct of the business of generation and distribution of electricity." Shri Vinay Kuthiala, learned counsel for the Revenue has placed reliance on the judgement of the Apex Court in Commissioner of Income-tax vs. Karnataka State Co-operative Apex Bank, (2001) Vol.251 ITR 194, wherein the Apex Court after dealing with conflicting judgements delivered by two learned Judges in Madhya Pradesh Co-operative Bank Ltd, vs. Addl. CIT (1996) 218 ITR 438 (SC) and CIT vs. Bangalore District Cooperative Central Bank Ltd. (1998) 233 ITR 282 SC, held a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the following portion of the observation made by the Apex Court in Mehsana District Central Co-operative Bank Ltd. vs. Income-tax Officer, (2001) Vol.251 ITR 522. "Now, as to the second question, we have heard learned counsel and been referred to various decisions including the decision of this court in Bihar State Co-operative Bank Limited vs. CIT (1960) 39 ITR 114. To be able to answer the question, it is necessary to ascertain, as a fact, whether the income derived by the assessee from the investment of its voluntary reserves has been utilized by it in the course of its ordinary banking business. Though the assessee placed before the assessing authority its books of account and balance sheets, the fact aforesated was not consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the non SLR funds can be said to be attributable to the banking activities of the bank. There can be no dispute with the preposition that the word attributable is much wider in scope than derived. The Legislature has used the words "attributable to" in conjunction with the phrase "any one or more of such activities". The words used by the legislature are very important. The first word used is attributable, which is much wider in scope than the word derived. The second phrase used is any one or more of such activities. Any banking business providing credit facilities to its members and investing the sums deposited by the members of the society is part of banking business. We are, therefore, of the considered view that the investment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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