TMI Blog2023 (1) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... and compelling reasons for consistency in taxing enactments is important. We do not find any compelling reason, for this Court to deviate from the views taken by other Courts. Reference made to Section 80P(2)(4) by the learned counsel for the Revenue may not have any bearing for the assessment year 2005-06 and 2006-07 for the above provision was made effective only from 01.04.2007. It is a cardinal principle of construction that every statute is prospective unless it is expressly or by necessary implication made to have retrospective operation [Keshvan vs. State of Bombay [ 1951 (1) TMI 32 - SUPREME COURT] - This presumption of prospectivity of any law is articulated in the following legal maxim viz., nova constitutio futuris formam imponere debet non praeteritis ( A new law ought to regulate what is to follow, not the past). The above maxim has been quoted with approval repeatedly by Indian Courts. Thus the benefit under Section 80P(2)(a)(i) is available to both SLR and non-SLR investments as long as it constitutes Banking Business . Decided in favour of assessee. - T.C.A. No. 1203 of 2010 - - - Dated:- 13-12-2022 - Hon'ble Mr. Justice S. Vaidyanathan And Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction /benefit under Section 80(P)(2)(a)(i) would be applicable to Non SLR investment or otherwise. 6. The following facts are not in dispute: (a) The petitioner is a co-operative society engaged in banking; (b) The petitioner thereby falls under Section 80(P)(2)(a)(i); (c) The petitioner has made SLR and Non SLR investments in TIDCO and TNEB Bonds. These investments were made on the basis of sanction/permission obtained by Reserve Bank of India and in compliance with the regulations under the RBI Act and Banking Regulations Act, 1969. These investments would thereby constitute banking business. The only issue at controversy is whether the benefit of Non SLR investments would fall within Section 80(P)(2)(a)(i) or would it be covered by Section 80(2)(d). To resolve this controversy, it would be relevant to refer Section 80(P)(2)a)(i) which reads as hereunder: Deduction in respect of income of co-operative societies 80(P)(1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in subsection (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the year 2007 with regard to the co-operative societies which should be entitled to the benefit. 8. Having heard both sides, we find it difficult to agree with the submissions made by the learned counsel for the appellant for the following reasons: (a) It is trite law that any provision must be read as a whole and clauses in a section cannot be read in isolation. The different clauses in a provision must be construed with reference to other clauses so as to make a consistent enactment of the whole provision. The construction which would avoid inconsistency or repugnancy either within a Section or between a Section and other parts of the statute ought to be adopted. It is the duty of the Courts to avoid a head-on clash between clauses in the same provision, between provisions in the same enactment and to construe the clauses in a provision in a manner that they harmonise. In this regard, it may be relevant to refer to the following judgment: Krishan Kumar v. State of Rajasthan, (1991) 4 SCC 258 at page 267: 11. It is settled principle of interpretation that where there appears to be inconsistency in two sections of the same Act, the principle of harmonious const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 336 ITR 0516 : 9. Sec. 80P of the Act grants deduction in respect of various categories of income of a co-operative society. If any co-operative society carries on the business of banking, the interest income received by a co-operative society on its investment/deposits is attributable to banking business. The provision does not make any distinction insofar as the interest earned by deposit in a bank and interest earned on the compulsive deposit which is made as required under the relevant statute. It is no doubt true that a co-operative society may be required to earmark some portion of its capital for exclusive deposit in Government prescribed securities or banks. A co-operative society may earn profits by way of interest by parking their funds in high-yielding deposits or may earn income by circulating its capital among its members in the course of their banking business. All the income from banking business which is referable to s.80P(2)(a)(i) of the Act would quality for deduction under the Act. 10. 'The business of banking' is one of many expressions not defined in the Act. Which are the activities that can be considered attributable to the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest can be earned to the benefit of the co-operative society. Every co-operative society is expected to make profits for the benefit of its members. As long as the deposit of the surplus funds in the other banks for the purpose of earning interest is not unauthorized or not barred by any of the applicable statutes, the income is certainly attributable to the business of banking. There is no concept of voluntary or non-statutory reserves as urged by the Revenue. In so far as the profits and gains from the business of baning by deposit of surplus funds of the bank is concerned, there cannot be any distinction between SLR reserves and non-SLR reserves although the maintenance of cash reserve and SLR are obligatory under below referred provisions of the RBI Act and the BR Act. (emphasis supplied) (ii) Commissioner of Income Tax V. Muzaffar Nagar Kshetriya Gramin Bank Ltd., reported in 323 ITR 202 (All): 7. We are of the opinion that the issue involved in the present case is no more res integra and is covered by the decision of the apex Court in the cases of CIT Vs. Karnataka State Co-operative Apex Bank (2001) 169 CTR (SC) 486; (2001) 251 ITR 194 (SC), Mehsana Dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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