SHREE CHANNABASAVA PATTINA SOUHARDHA SAHAKARI NIYAMITHA,GANGAVATHI vs. INCOME TAX OFFICER, BANGALORE

Per Sunil Kumar Yadav, Judicial Member

1. The Learned Assessing officer as well as the 1 t Appellate authority not justified in considering the law on point that the interest earned on the deposit made by the Assessee in banking activities is exempted under Section 80P of Income Tax Act, as held in Commissioner of Income Tax and Anrs Vs Grain Merchants Co-operative Bank Ltd as well in Sri Renukadevi Urban Credit Co-op Society Ltd.

2. The Learned Assessing officer as well as the 1st Appellate authority not considered the provision of Section 80 (2) (a) (1) not only income from business of banking or providing credit facility to its member is eligible for deduction but also any income "attributable" to such activities is eligible for deduction under section 80 P (2) (a). Wherefore commission earned, penal charges collected from pigmy agents and miscellaneous income earned in course of credit business are considerable income attributable to activities of banking. Hence both the authorities committed an error in disallowing the. deduction in respect of miscellaneous incomes, commission as well as the penal charges and pigmy. 3. For all these grounds and other reasons that may be urged at the time of arguments, the appeal may be allowed.