Law: Income Tax Act, 1961

Section: 80,80P(2)(a)(i)

Income-tax----Special deduction--Cooperative-Society-Banking business---Interest on securities---Subsidies from Government---Dividend---Are business income---Deduction available---Supreme Court---Earlier decisions on these points---Do not require reconsideration--Indian Income Tax Act, 1961, S. 80P(2)(a)(i). Held, that (i) interest on securities, (ii) subsidies from the Government, and (iii) dividend received by the assessee, a cooperative society carrying on banking business, were business income of the assessee, and the assessee was entitled to deduction under section 80P(2)(a)(i) of the Income Tax Act, 19.61, in respect thereof. CIT v. Karnataka State Cooperative Apex Bank (2001) 251 ITR 194 (SC) and Mehsana District Central Cooperative Bank Ltd. v. ITO (2001) 251 ITR 522 (SC) fol. Held also, that CIT v. Karnataka State Cooperative Apex Bank (2001) 251 ITR 194 (SC) and Mehsana District Central Cooperative Bank Ltd. v. ITO (2001) 251 ITR 522 (SC) are correctly decided. United Commercial Bank Ltd. v. CIT (1957) 32 ITR 688 (SC) ref. At the instance of the Revenue, the Appellate Tribunal has stated a case and referred the following common question of law under section 256(1) of the Income Tax Act, 1961, for the assessment years 1977-78, 1978-79 and 1979-80 for the opinion of this Court: "Whether, on the facts and in the, circumstances of, the case, the Appellate Tribunal was correct in law in. holding that the interest on securities, subsidies received from the Government and dividend business income of the assessee entitled to deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961?" Three assessment years are involved in these cases. The common question that arises is whether (i) interest on securities, (ii) subsidies received from Government; and (iii) dividend income received should be regarded as business income and whether the assessee is entitled to deduction under section 80P(2)(a)(i) of the Act. A similar question came tip for consideration before this Court in the case of another cooperative society in the case of CIT v. Madurai District Central Cooperative Bank Ltd. (1984) 148 ITR 196, wherein this Court has held that the assessee would be…

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