The Income Tax Commissioner -I v. The Mahanaghar Co-Operative Bank Ltd

IN THE HIGH COURT OF JDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO.123 OF 2010 The Income Tax Commissioner -I Vs. The Mahanaghar Co-operative Bank Ltd. ...Appellant. ..Respondent Mr. Vimal Gupta for the Appellant. Mr. Nishant Thakkar i/by Mint & Confreres for the Respondent. CORAM : J.P. DEVADHAR AND A.A. SAYED, JJ. P.C. DATE : 28TH JULY, 2011. 1.The question of law raised in this appeal by the Revenue reads thus : “Whether on facts and circumstances of the case and in law the Hon'ble ITAT was right in holding that interest income being Interest on Fixed Deposits placed with other banks other than co-operative banks amounting to Rs. 25,10,449/- qualifies for deduction u/s 80P(2)(a)(i) of the Income Tax Act, 1961?" 2.The assessee is a Cooperative Bank. The assessment year involved herein is A.Y. 2003-04. In the assessment year in question the Assessing Officer disallowed the interest on fixed deposit received by the assessee from State Bank of India, Punjab National Bank and HDFC Bank Ltd. while computing deduction under section 80P(2)(a)(i) of Income Tax Act, 1961. The appeal filed by the assessee was dismissed by CIT (A). On further appeal filed by the assessee, the ITAT by the impugned order dated 11[th ]February, 2009 allowed the claim of the assessee by relying upon the decision of the Apex Court in the case of CIT Vs. Nawanshahar Central Co-operative Bank Ltd. (2007) 289 ITR 6 (S.C.). 3.The argument advanced by the learned Counsel for the Revenue is that in the light of the Judgment of the Apex Court in the case of The Totgars Co-operative Sale Society Ltd. V/s Income Tax Officer, reported in (2010) 322 ITR 283, the decision of ITAT needs reconsideration. 4.In our opinion, there is no merit in the above contention because in the case of Totgars Cooperative Sale Society Ltd (Supra), the Apex Court in para 11 of its judgment has held that the decisions relating to the Cooperative banks are distinguishable from the cases relating to the Cooperative Sale Society. Moreover, the Apex Court in the case of Nawanshahar Central Cooperative Bank (Supra) has held that the investments made by the Cooperative banks with a view to earn interest constitutes banking business. As the income arising from investments are attributable to the business of banking assessable under the head "profits and gains of business", deductible u/s 80P(2)(a)(i) of Income Tax Act, 1961 would be allowable to the assessee. Thus, the decision of the Apex Court in the case of Totgar's Cooperative Sale Society Ltd. (Supra) would not be applicable to the facts of the present case. 5. In the result the appeal is dismissed with no order as to costs. ( A.A. SAYED, J. ) ( J.P. DEVADHAR , J.)