INCOME TAX ACT, 1961

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

Deduction under section 80P(2)(a)(i) - Co-operative society - Allowability as regards non-SLR investment -

Assessee a co-operative society engaged in the business of banking, claimed deduction under section 80P(2)(a)(i) in respect of investments made in TIDCO and TNEB Bonds. As per AO, it is only SLR investment which is entitled to the benefit of deduction under section 80P(2)(a)(i), while non-SLR investments are to be tested on the basis of section 80(2)(d). AO denied deduction. Held: Section 80P(2)(d) if read as a whole, leaves no room for any doubt that once an investment constitutes 'Banking Business', the benefit must be extended. Section 80(2)(d) would come into play only in respect of investments made by Co-operative Societies engaged in activities other than Banking Business which are set out under section 80P(2)(a)(ii) to 80P(2)(a)(vii), which is unconnected with Banking Business. Therefore, benefit under section 80P(2)(a)(i) was available to both SLR and non-SLR investments as long as it constituted 'Banking Business'.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

IN THE MADRAS HIGH COURT

S. VAIDYANATHAN & MOHAMMED SHAFFIQ, JJ.

Chennai Central Co-operative Bank Ltd. v. ITO

T.C.A. No. 1203 of 2010

13 December, 2022

Appellant by: R. Venkatanarayanan

Respondent by: M. Swaminathan, Senior Counsel and V. Pushpa Junior Counsel

S. Vaidyanathan & Mohammed Shaffiq, JJ.

In this tax case appeal, the appellant had originally raised the following substantial questions of law :--

'1. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is not eligible for deduction under section 80P of the Act in respect of the investments made in TIDCO and TNEB Bonds?

2. Whether on the facts and circumstances of the case, the Tribunal was justified in following the judgment of the Hon'ble Apex Court in the case of Totgar's Co-operative Sale Society Limited v. ITO (2010) 322 ITR 283 (SC) : 2010 TaxPub(DT) 1466 (SC)which is applicable only to credit society and not to a banking society?

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