TMI Blog2011 (1) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... M.L. Joseph Francis, JJ. JUDGMENT Ramachandran Nair, J 1. The appellant is a Scheduled Bank governed by the provisions of the Banking Regulation Act. In the income tax return filed for the assessment year 2004-2005, the appellant claimed deduction under section 36(1)(viii) of the Income Tax Act (hereinafter called "the Act") contending that it falls within the definition of "financial corporation" entitling it for deduction provided therein. However, the Assessing Officer disallowed the claim for the reason that appellant being a Scheduled Bank does not fall within the meaning of "financial corporation" referred to in section 36(1)(viii) of the Act. In the appeal filed against assessment, the CIT(Appeals) agreed with the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to section 36(1)(viii) by Finance Act, 2006 with effect from 1.4.2007, wherein among other financial institutions Banking Companies are also granted the benefit of deduction under the said provision. Admittedly the amendment extending the benefit of deduction under section 36(1)(viii) is given only prospective effect from 1.4.2007 and so much so, if the specific inclusion of Banking Companies through the amendment in 2007 only entitles Scheduled Banks for claiming deduction, then certainly the assessee would not be entitled to the benefit of deduction for the year 2004-2005. For easy reference we extract hereunder section 36(1)(viii) as it stood at the relevant time: "S.36. Other deductions:-(1) The deductions provided for in the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... canvassed is that since it is a public company falling within the definition under clause (b) of Explanation to the abovereferred provision and is engaged in long term financing of infrastructural facility, it is entitled to be treated as a "financial corporation" and so much so, it is entitled to deduction. Standing Counsel appearing for the respondent on the other hand contended that the definition clauses in section 36(1)(viii) underwent a sea change and it is only after the amendment various financial institutions like Banking Companies, Co-operative Banks etc. were brought within the meaning of specified entity defined under the said provision. The contention of the Revenue is that unless the assessee answers the description of "finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks are specifically referred to in the sections made applicable to them, it cannot be assumed that the Legislature wanted to cover Scheduled Banks within the meaning of public companies engaged in financing making them financial corporations. If the assessee's contention that a Scheduled Bank engaged in long term financing including advance for infrastructural development falls within the definition of public company and in turn financial corporation within the meaning of section 36(1)(viii) is accepted, then there was no need for the amendment introduced in 2007 referred to above whereunder banking companies are also specifically granted deduction under section 36(1)(viii) of the Act. As already pointed out by us, the Legislature made spec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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