- (1.) THE judgment under challenge by the revenue is dated 13th November, 2009 passed by the learned Income Tax Appellate Tribunal pertaining to the assessment year 2006 -2007. The Assessing Officer without spending a word, in the computation made by him in his order under Section 143(3) of the IT Act, deducted the interest earned by the assessee from the non -statutory funds. The aforesaid deduction was made because the Assessing Officer was not inclined to give the benefit under Section 80P(2)(a)(i). Naturally the deduction made by him was taxed in the ordinary manner. Being aggrieved the assessee preferred an appeal. The C.I.T.(A) following an earlier judgment of the Tribunal allowed the contention of the assessee and reversed the order of the Assessing Officer. In an appeal preferred by the revenue, the learned Tribunal upheld the order of the C.I.T.(A) following its earlier judgment. It appears that none of the three authorities discussed the issue.
(2.) MR . Bhowmik, learned Advocate, appearing for the revenue submitted that the business income of the assessee is amenable to the benefit under Section 80P(2)(a)(i) but the income earned from interest from non -statutory funds was not amenable to an identical benefit under the aforesaid section. Mr. Bharadwaj, learned Advocate, appearing for the assessee submitted that the assessee is a primary cooperative bank and is engaged in the business of banking. He relied upon Clause (b) of Section 5 of The Banking Regulation Act, 1949 in order to show the definition of the expression 'banking' which provides as follows: "(b) "banking" means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise."
(3.) HE also drew our attention to section 56(c) of the Banking Regulation Act, 1949 by which Clause (cci) has been added to Section 5 of the Banking Regulation Act, 1949 which reads as follows; "(cci) "Co -operative Bank" means a State Co -operative Bank, a Central Co -operative Bank and a primary Co -operative Bank.";