Bombay High Court
Bharat Co-Op. Bank (Mumbai) Ltd. vs Union Of India on 7 November, 2001
Equivalent citations: 2002 122 TAXMAN 264 Bom
ORDER
Rule. The respondents waive service. By consent, rule is made returnable forthwith.
2. The petitioners challenge the notices under section 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act) for the assessment years 1990-91 to 1997-98. Notices were issued basically on two grounds : (i) that interest on investment. earmarked for reserve fund is not eligible for deduction under section 80P(2)(a)(i) of the Act in view of the decision of the Supreme Court in Madhya Pradesh Co-op. Bank Ltd. v. Addl. CIT (1996) 218 ITR 438 (SC) and (ii) income from commission, brokerage and other receipts is not eligible for deduction under section 80P(2)(a)(i), The Additional Commissioner has approved the proposal in respect of the assessment years 1990-91 to 1995-96 only in regard to the first ground, i.e., deduction of interest on investment under section 80P(2)(a)(i).
2. The petitioners challenge the notices under section 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act) for the assessment years 1990-91 to 1997-98. Notices were issued basically on two grounds : (i) that interest on investment. earmarked for reserve fund is not eligible for deduction under section 80P(2)(a)(i) of the Act in view of the decision of the Supreme Court in Madhya Pradesh Co-op. Bank Ltd. v. Addl. CIT (1996) 218 ITR 438 (SC) and (ii) income from commission, brokerage and other receipts is not eligible for deduction under section 80P(2)(a)(i), The Additional Commissioner has approved the proposal in respect of the assessment years 1990-91 to 1995-96 only in regard to the first ground, i.e., deduction of interest on investment under section 80P(2)(a)(i).
3. As far as the issue of interest on investment is concerned, the Supreme Court has now held in CIT v. Karnataka State Co-op. Apex Bank (2001) 251 ITR 194 (SC), that the society is entitled to deduction under section 80P(2)(a)(i) in respect of interest earned from funds utilised for statutory reserves. Similar is the view taken by the Supreme Court in Mehsana District Central Co-op. Bank Ltd. v. ITO (2001) 251 ITR 522 (SC). In view of the above decisions, the issue of interest on statutory reserves does not survive, as the same stands concluded.
3. As far as the issue of interest on investment is concerned, the Supreme Court has now held in CIT v. Karnataka State Co-op. Apex Bank (2001) 251 ITR 194 (SC), that the society is entitled to deduction under section 80P(2)(a)(i) in respect of interest earned from funds utilised for statutory reserves. Similar is the view taken by the Supreme Court in Mehsana District Central Co-op. Bank Ltd. v. ITO (2001) 251 ITR 522 (SC). In view of the above decisions, the issue of interest on statutory reserves does not survive, as the same stands concluded.
4. As far as the second reason is concerned, i.e., income from commission, brokerage and other receipts is not eligible for deduction under section 80P(2)(a)(i), the Commissioner has not agreed with the assessing officer and restricted the approval only to the issue of deduction of interest on statutory reserves. Having regard to the fact that the Commissioner has refused approval on the said ground, we feel that there is no point in permitting the department to proceed with the notices. Accordingly, the impugned notices are quashed and set aside. Rule is made absolute in terms of prayer clauses (a) and (b). No order as to costs.
4. As far as the second reason is concerned, i.e., income from commission, brokerage and other receipts is not eligible for deduction under section 80P(2)(a)(i), the Commissioner has not agreed with the assessing officer and restricted the approval only to the issue of deduction of interest on statutory reserves. Having regard to the fact that the Commissioner has refused approval on the said ground, we feel that there is no point in permitting the department to proceed with the notices. Accordingly, the impugned notices are quashed and set aside. Rule is made absolute in terms of prayer clauses (a) and (b). No order as to costs.
