TMI Blog2011 (6) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... on-SLR investments. 3. Briefly stated the facts are as follows:- The assessee is a cooperative bank. It is engaged in the business of banking. For the concerned asst. year, return of income was filed declaring NIL income after claiming deduction u/s 80P to the tune of ₹ 62,57,450/-. The case of the assessee was selected for scrutiny and the assessment u/s 143(3) was completed vide order dated 19.11.2007 determining the total income at ₹ 17,10,000/-. In the scrutiny assessment completed, the claim of deduction u/s 80P was restricted to ₹ 45,47,450/- instead of ₹ 62,57,450/- claimed by the assessee. The reason for restricting the claim u/s 80P was that the assessee had earned interest income from investment in Non-S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Bang/2007) 6. The CIT(A), following the Hon ble jurisdictional High Court judgement in the case of CIT v Sri Ram Sahakari Bank 266 ITR 632 and also the order of the Tribunal in ITA No.257/2007 dated 18.12.2007 in the case of Deepak Sahakari Bank Ltd., allowed the appeal of the assessee. 7. The revenue being aggrieved by the order of the first appellate authority is in appeal before us. 8. The learned DR submitted that the first appellate authority has erred in allowing the appeal of the assessee by referring to the order of the Tribunal and the High Court. It was submitted that in the latest judgment of the Hon ble Supreme Court in the case of The Totgars Cooperative Sale Society Limited v ITO 322 ITR 283, it has been categorica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Registration Under the Banking Regulation Act, 1949 and Cooperative Societies Act, 1959. Cooperative Societies Act, 1959. Nature Of business 1. As defined in section 6 of Banking Regulation Act. 2. Can open savings bank account, current account, overdraft account, cash credit account, issue letter of credit, discounting bills of exchange, issue cheques, demand drafts (DD), Pay Orders, Gift cheques, lockers, bank guarantees etc. 3. Cooperative Banks can act as clearing agent for cheques, DDs, pay orders and other forms. 4. Banks are bound to follow the rules, regulations and directions issued by Reserve Bank of India (RBI). 1. As per the bye laws of the coo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which can be attributable to the banking activity shall stand exempt u/s 80P. The words attributable to has a wider impact and indicate legislative intention to cover receipt from source other than actual conduct of the business which have a proximate connection with a main business or are incidental activity closely related to the main activity. Non-SLRs are the funds required and are necessary for conducting the banking activity. Investment of these funds in the manner prescribed by RBI is necessary to comply with the statutory provisions. Income arising from these investments is attributable to the banking activity. 10.2 Income from investments in government securities, fixed deposit with banks, investment in Indira Vikas Patra/Kisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f our order (para 10). At the cost of repetition, we state that the assessee, being a cooperative bank, though received interest from Non-SLR investments, the same continues to be part of the business funds which are required for the banking business of the assessee. These are funds are invested in the manner provided/specified by the provisions of Banking Regulation Act and also by the provisions of Karnataka State Cooperative Societies Act, 1959. In this context, it cannot be said that the interest received from Non-SLR investments are not forming part of the banking business of the assessee cooperative bank. In the light of the above reasoning, we are of the view that the CIT(A) is justified in granting deduction u/s 80P(2)(a)(i) in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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