C I T CHANDIGARH vs. M/S PUNJAB STATE COOP. BANK LTD.

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ITA/210/2009HC Punjab & HaryanaPHHC01084294200901 July 2009Author: MR. JUSTICE ADARSH KUMAR GOEL,MRS JUSTICE DAYA CHAUDHARY2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court relied on its own previous decision in Commissioner of Income Tax v. Punjab State Cooperative Bank Limited, (2008) 300 ITR 24. In that precedent, the High Court had held that income earned by a Cooperative Bank from interest on loans advanced to its members and nominal members constitutes income from its banking business and is therefore eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Court found that the present appeal raised an identical substantial question of law. Consequently, following the earlier judgment, the High Court found no merit in the Revenue's appeal. No issue was expressly left undecided.

What were the facts?

The Revenue, Commissioner of Income Tax I, Chandigarh, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated 21.06.2006 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench 'B'. The appeal pertains to Assessment Year 2003-04 and challenges the ITAT's decision regarding the eligibility of income earned from banking business with 'nominal' members for deduction under Section 80P(2)(a)(i) of the Act. The High Court noted a delay in refilling the appeal, which was condoned.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Hon'ble ITAT was right in law in holding that income earned from banking business with 'nominal' members is eligible for deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961? Assessee's Contention: The judgment does not record any specific arguments made by the assessee. The ITAT's decision, which is under challenge, held that income earned from banking business with 'nominal' members is eligible for deduction under Section 80P(2)(a)(i). Revenue's Contention: The revenue argued that an identical issue had already been decided by the High Court in Commissioner of Income Tax v. Punjab State Cooperative Bank Limited, (2008) 300 ITR 24. In that case, it was held that income of the Cooperative Bank derived from loans advanced to members/nominal members is not to be treated as income from other sources but as income from banking business eligible for deduction under Section 80P(2)(a)(i) of the Act.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 80P(2)(a)(i)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No.210 of 2009(O&M) Date of decision: 01.7.2009 Commissioner of Income Tax I, Chandigarh -----Appellant Vs. M/s Punjab State Cooperative Bank Limited, Chandigarh Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:- Ms. Urvashi Dhugga, Standing Counsel for the revenue. Adarsh Kumar Goel,J.

1.

Delay in refilling the appeal is condoned.

2.

This appeal has been preferred by the revenue under section 260-A of the Income Tax Act, 1961 (in short, ‘the Act’) against the order of the Income Tax Appellate Tribunal, Chandigarh, Bench ‘B’ dated 21.6.2006 in ITA No.454/Chandi/2005 for the assessment year 2003-04, proposing to raise following substantial question of law:- “Whether on the facts and circumstances of the case, the Hon’ble ITAT was right in law in holding that income earned from banking business with ‘nominal’

ITA No.210 of 2009 members is eligible for deduction under section 80P(2) (a)(i) of the Income Tax Act, 1961?”

3.

Learned counsel for the revenue submits that identical issue has already been decided by this Court in Commissioner of Income Tax v. Punjab State Cooperative Bank Limited, (2008) 300 ITR 24 and it has been held that income of the Cooperative Bank towards interest derived from loan advanced to members/nominal members will not be income from other sources but will be income from banking business eligible for exemption under section 80P(2)(a)(i) of the Act.

4.

In view of the above, this appeal is dismissed. (Adarsh Kumar Goel) Judge July 1, 2009 (Daya Chaudhary) ‘gs’ Judge 2

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