Law:

Section:

Section 81 (Now section 80P) of the Income-tax Act, 1961 – Deductions – Income of co-operative societies – Assessment years 1954-55 and 1957-58 to 1966-67 – Whether only a dealer in securities is entitled to benefit under section 81 - Held, no - Whether where petitioner co-operative bank invested its available funds in securities and received some interest thereon, exemption in regard to such interest under section 81 could be denied to it merely on ground that it was not dealer in securities – Held, no FACTS The petitioner, a co-operative bank, claimed that it had invested part of its funds in Government securities; that the securities were its trading asset; and that, therefore, the interest on such securities would be entitled to exemption under section 81. The ITO, however, passed the assessment orders and also issued demand notices. On revision, the Commissioner rejected the petitioner's claim holding that the petitioner was not a dealer in securities and, as such, any investment in securities could not have been a trading investment. On writ : HELD It was not necessary that the petitioner need have been primarily or exclusively a dealer in securities in order to qualify for the exemption under section 81. All that it was necessary for the petitioner to show was that the interest was received from Government securities, which had been invested by the co-operative bank as its trading assets, in other words, thatthe securities represented the funds of the petitioner, which were part of its circulating capital. Of course, all investments may not necessarily be part of the circulating capital of a bank. A bank may conceivably have certain securities which are its circulating capital and some which are not. In other words, any investment by a banking concern would not necessarily represent its trading assets. There may well be cases where certain funds are idle or not utilised by the bank, in which case such funds will not be trading assets. However, the proposition enunciated and relied on by the Commissioner that unless the petitioner was a dealer in securities and had been regularly buying and selling securities, itwould not be entitled to the exemption…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492