- (1.) THESE three appeals, arise in identical circumstances, and involved, common question of law, though arise from different orders of the ITAT. The appeal Nos. 56/07 and 105/06, arise out of the common judgment of the Tribunal, dated 25 -1 -2006, for the assessment years 1998 -99 and 2000 -01. whereas appeal No. 31 /2007, arise out of the judgment of the Tribunal, dated 9 -6 -2006 relating to the assessment year 2003 -04. All the three appeals relate to same assessee. These appeals were admitted on different dates, framing substantial question of law, though in different language, however the substantial question of law, involved in all the three appeals is as under: Whether in the facts and circumstances of the case, the amount of interest earned by the respondent Bank on various loans extended to its employees from deposit of P.F. and Housing loan is eligible to be exempted under Section 80P(2)(a)(i) of the Act, 1961.
(2.) THE necessary facts are that the assessee is a co -operative society, and carries on banking activities, including providing credit facilities to its members. In the relevant assessment years, certain additions were made by the Assessing Officer on account of interest, received by the assessee, on loans, given to the staff of the assessee, being PF loans, and House loans. The Assessing Officer, denied the claim of exemption of these amounts, under Section 80P(2)(a)(i). Then on appeal, in some matters, learned Commissioner accepted the contention of the assessee, and found it to be exempted, while in another cases, the view taken by the Assessing Officer, was upheld. The matters were then, carried to the Tribunal, by both the sides, in respect of the orders passed, regarding respective years, and in all the cases, the learned Tribunal has held, that such amount is exempted from tax, under Section 80P(2)(a)(i). The learned Tribunal has held that the interest, earned on the loan, given to staff members, whether it be against PF deposit, or for housing building, is exempted under Section 80P(2)(a)(i). It was noticed that, that Bench had also taken a similar view, in the case of the assessee, in other years, therefore, the claim of the assessee was accepted. Likewise, in the judgment of the Tribunal dated 9 -6 -2006, this judgment of the Tribunal dated 25 -1 -2006 (which is under challenge), in Appeal Nos. 56/07 and 105/06 has been followed.
(3.) ARGUING the appeal, it is contended by the learned Counsel for the revenue, that under Section 80P(2)(a)(i), only such amount of profit and gains of business, as are attributable to the carrying on business of banking, or providing credit facilities to its members, by the assessee, is exempt, while income by way of interest received by the assessee, on loan given to its employees, against PF, or for house building loan, does not fall within the said definition, and is therefore, not exempt.;