High Court Of Bombay
CIT vs. Maharashtra State Cooperative Bank Ltd.
Sections 80P(2)(a)(i), 256(2)
Asst. Year 1992-93
V.C. Daga & J.P. Devadhar, JJ.
IT Appln. No. 189 of 2000
16th August, 2005
Counsel Appeared
Dr. P. Daniel with A.S. Rao i/b R.N. Bandopahyay, for the Applicant
JUDGMENT
V.C. Daga, J. :
Heard the learned counsel for the applicant. This is application under s. 256(2) of the IT Act, 1961 (‘the Act’ for short). The year relevant is 1992-93. The returns filed by the respondent were processed under s. 143(1)(a) and the claim of the respondent in respect of deduction under s. 80P (2)(a)(i) was allowed.
The AO, subsequent to the above decision, having noticed the judgment of the apex Court in the case of Madhya Pradesh Co-op. Bank Ltd. vs. Addl. CIT (1996) 134 CTR (SC) 92 : (1996) 218 ITR 438 (SC), issued a notice under s. 148 to the respondent-assessee which was served on the respondent-assessee on 16th Jan., 1997.
The reassessment pursuant to above notice was completed under s. 143(3) r/w s. 148 on 21st Feb., 1997. The deduction under s. 80P(2)(a)(i) claimed by the assessee with respect to interest received on Government securities earmarked against statutory reserve fund came to be disallowed.
The respondent-assessee had impugned the above order of reassessment passed by the AO in appeal filed before the CIT(A). The CIT(A) directed the AO to restrict the disallowance only to interest relatable to Government securities which forms part of reserve fund.
The respondent-assessee not being satisfied with the above part of the order, impugned the order passed by the CIT(A) in the appeal being appeal No. 7115/Mum/1997 filed before the Tribunal, Mumbai Bench ‘D’, Mumbai.
The Tribunal by its order dt. 12th Aug., 1998, allowed the above appeal holding that r. 54(1) of the Maharashtra Co-operative Societies Rules, does not apply in the case of the respondent as the assessee is covered under s. 70(b) of the Maharashtra Co-operative Societies Act, 1960. The Tribunal held that the respondent-assessee is not within the scope of r. 54(2) of the Maharashtra Co-operative Societies Rules. The Tribunal held that the reassessment is invalid because notice under s. 148 of the Act was issued beyond time prescribed under s. 148 of the Act.
The Revenue not being satisfied with the above order of the Tribunal had moved an application under s. 256(1) of the IT Act with a prayer to refer question of law for the opinion of this Court. This prayer of the Revenue met with little success.
The Revenue has now moved this application under s. 256(2) with a prayer that the Tribunal be directed to state the case and refer the question of law arising out of the order of the Tribunal dt. 12th Aug., 1998, to this Court for decision. That is how, the Revenue is seeking directions against Tribunal. The questions of law raised at the instance of the Revenue are as under :
1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the interest on Government securities earmarked for statutory reserve fund was a part of banking business and accordingly the assessee is eligible for deduction under s. 80P(2)(a)(i) of the IT Act, 1961 ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling levy of interest under s. 234B of the IT Act, 1961 ?
The learned counsel appearing for the Revenue fairly brought to our notice that the judgment of the apex Court in the case of CIT vs. Karnataka State Co-operative Apex Bank (2001) 169 CTR (SC) 486 : (2001) 251 ITR 194 (SC), wherein the apex Court held that interest arising from investment made in compliance with statutory provisions to enable it to carry on banking business, out of reserve fund by a co-operative society engaged in banking business, is exempt under s. 80P (2)(a)(i) of the Act. In this view of the judgment of the apex Court, we do not see any reason to issue directions to the Tribunal to set out the case. The application is without any merits. So far as the second question is concerned it being consequential, the same will be covered by the judgment of the apex Court.
Application stands disposed of accordingly with no order as to costs.
[Citation : 282 ITR 581]
