2002 (9) TMI 15

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..... estment in National Savings Certificates, Indira Vikas Patras, Kisan Vikas Patras, short-term fixed deposits in banks and shares of Maharashtra State Finance Corporation of India. The assessee is a co-operative bank within the meaning of section 2(b-1) of the Karnataka Co-operative Societies Act, 1959, and is registered as such under the provisions of the said Act. It is a regional rural bank within the meaning of the Regional Rural Banks Act, 1976. As per section 22 of the latter Act it is to be deemed to be a co-operative society for the purpose of the Act. It appears that the above investments were made by the assessee-bank out of its surplus funds. The Assessing Officer disallowed the deduction claimed by the assessee under section 80 .....

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..... ssessee placed before the assessing authority its books of account and balance-sheets, the fact aforestated was not considered at any stage, for one or other reason on which it is not necessary for us to dilate. We think that it is in the interests of justice that the assessee should have the opportunity to lead evidence before the Commissioner (Appeals) to establish as a fact what is stated above. So far as the second question is concerned, therefore, the matter is stand restored to the Commissioner (Appeals) for being decided afresh. He shall also decide any consequential issue that may arise." A bare reading of the above passage from the judgment of the Supreme Court makes it clear that the court has not laid down any law with regard to .....

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..... e a part of the circulating capital of the appellant nor would they cease to form part of its banking business. The returns flowing from them would form part of its profits from its business. In a commercial sense the directors of the company owe it to the bank to make investments which earn them interest instead of letting moneys lie idle. It cannot be said that the funds of the bank which were not lent to borrowers but were laid out in the form of deposits in another bank to add to the profit instead of lying idle necessarily ceased to be a part of the stock-in-trade of the bank, or that the interest arising therefrom did not form part of its business profits. " In the above view of the matter, we hold that the view ultimately taken by t .....

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