9911796707
TMI Blog2012 (8) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case are that the assessee is a Regional Rural Bank ('RRB' for short), with its principal constituents being the Government of India, Bank of Baroda and Government of Rajasthan, their respective share holding company at 50%, 35% and 15%. It returned its income for the year at nil, setting off the entire income of Rs. 214.91 lacs against brought forward business losses for the assessment year 1994-95. In the assessment proceedings, the Assessing Officer (AO) found inter alia that the assessee had claimed deduction u/s. 80P of the Act on the following incomes: (Amount in Rs. lacs) 1. Profit on sale of investment Rs. 62.01 2. Profit on sale of old records Rs. 0.01 3. Other receipts Rs. 0.25 &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investments out of surplus funds with the assessee in computing its taxable income arose. The apex court held that deduction u/s. 80P was available only on the operational income of the assessee-society. The income under reference could not be said to be attributable to the activities of the society, namely; carrying on the business of providing credit facilities to its members or the marketing of agricultural produce of its members. It was not the case that benefit of sec. 80P had been disallowed on interest received from the members. Only the income from activities as specified u/s. 80P(2) would qualify for deduction there-under, and the income under reference could neither be attributed to the activities mentioned in sec. 80P(2)(a)(i) no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular No. 319 dated 11-01-1982 by CBDT clarifies that the RRBs were, by virtue of section 22 of the RRB Act, deemed to be a cooperative society and, accordingly, section 80P is applicable to RRBs. However, on the Bench drawing his attention to the fact of the absence of any gross total income; both the assessee's returned and assessed income, in view of the adjustment of brought forward losses, being nil, so that there was no positive gross total income, a pre-requisite for allowance of deduction u/c. VI-A of the Act, including sec. 80P, he fairly conceded thereto. 4. We have heard the parties, and perused the material on record. 4.1 Without doubt section 80P is applicable to RRBs, and which position is undisputed in the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, acquiring, holding, purchasing or selling or dealing in any other manner. This is even considering, and which may not perhaps be incorrect to say, that investment under reference forms part of the capital or reserve funds of the assessee. Surplus on the sale of investment would yet only be assessee-bank's operational income which, in sum, is the ratio of the decision in the case of Totgars Co-operative Sale Society Ltd. (supra) It is a matter of common knowledge that investments yield regular income by way of interest, dividend, etc., as also irregular income on account of capital appreciation. The two are para materia as far as the person dealing in investments as part of his business, as the assessee-bank, is concerned. It is in fact a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to its banking business by the assessee-bank. We hold accordingly, approving the claim for deduction u/s. 80P thereon. 4.3 So however, as afore-stated, no claim for deduction u/s. 80P would be exigible in the admitted facts of the instant case, much less on the impugned incomes. This is as admittedly the assessee's gross total income and, therefore, total income, is nil in view of set off of brought forward business losses, which stand both claimed as well as allowed in assessment. As afore-stated, the principal disallowance of Rs. 56.81 lacs stands deleted in appeal, reducing the business income as assessed further, implying that the unabsorbed business losses (i.e., which would stand to be carried forward) would stand to increase by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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