The Commissioner Of Income-Tax, Panchkula v. M/S Haryana State Co-Op Apex Bank Ltd., Sector-17 B, Chandigarh

Income Tax Appeal No. 62 of 2010(O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH Income Tax Appeal No. 62 of 2010(O&M)Date of decision: 15[th] February, 2010 The Commissioner of Income-Tax, Panchkula ........Appellant Versus M/s Haryana State Co-op Apex Bank Ltd., Sector-17 B, Chandigarh .........Respondent Coram: HON'BLE MR. JUSTICE M.M.KUMARHON'BLE MR. JUSTICE JITENDRA CHAUHAN Present: Mr. Yogesh Putney, Senior Standing Counselfor Income Tax Department, for the appellant. 1.To be referred to the Reporters or not?2.Whether the judgment should be reportedin the Digest?2.Whether the judgment should be reportedin the Digest? M.M.Kumar, J. This instant appeal by the Revenue has been preferredunder Section 260(A) of the Income Tax Act, 1961(for brevity'the Act') challenging order dated 26.06.2009, passed by theIncome Tax Appellate Tribunal, Chandigarh(for brevity “theTribunal”) Bench in ITA No. 555/CHD/2009 for the assessmentyear 2006-2007. The Tribunal while upholding the order of theCommission of Income Tax(appeal) has reached the conclusionthat the assessee-respondent, which is a cooperative apex bank,cannot be subjected to income tax in respect of the interest Income Tax Appeal No. 62 of 2010(O&M) -2- received by it on the refund of excess income tax paid. It hasfurther been found that the assessee-respondent would beentitled to deduction under Section 80P(2)(a)(i) of the Act. TheTribunal has also placed reliance on a judgment of the MadrasHigh Court in the case of “CIT Vs. Madhurai DistrictCooperative Bank Ltd.” (1999)239, ITR 700. It has come onrecord that the respondent bank has been carrying on businessof banking and also provide credit facility to its members. We arenot impressed with the argument that the interest on refund ofincome tax paid in excess was not attributable to the incomederived from the business of banking within the meaning ofSection 80P(2)(a)(i) of the Act. Once the income tax paid wasderived from the business income then interest income wouldpart-ake the character of the principal amount because theinterest paid to the assessee-respondent is compensation onaccount of deprivation of the use of money. In view of the above, we do not find any merit in theappeal. The order passed by the Tribunal does not suffer fromany legal infirmity, warranting interference of this Court. Theappeal is accordingly dismissed. [M.M.KUMAR] Judge Judge