Commissioner of Income Tax vs Madurai District Central Co-operative Bank Ltd.

Thanikkachalam, J.—At the instance of the Department, the Tribunal referred the following question for the opinion of this court u/s 256(1)

of the Income Tax Act, 1961 :

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that : (i) interest on securities, (ii) subsidies

received from the Government, and (iii) dividends received by the assessee, were business income of the assessee entitled to deduction u/s 80P(2)

(a)(i) of the Income Tax Act, 1961 ?

The point for consideration is whether interest on securities, subsidies received from the Government and dividends received by the assessee

were business income entitled to deduction u/s 80P(2)(a)(i) of the Income Tax Act, 1961.

So far as deduction claimed under items Nos. (i) and (ii) are concerned, namely, interest on securities and subsidies received, the deduction of

the same came up for consideration before this court in the case of the same assessee for the assessment years 1970-71 to 1973-74, wherein this

court in COMMISSIONER OF Income Tax Vs. MADURAI DISTRICT CENTRAL CO-OPERATIVE BANK LTD., held that the assessee is

entitled to deduction of interest on securities and subsidies received from the Government u/s 80P(2)(a)(i) of the Income Tax Act, 1961. In so far

as item No. (iii), namely, the dividend received by the assessee is concerned, it came up for consideration before this court in T.C. Nos. 1153 and

1154 of 1982 in the case of Commissioner of Income Tax Vs. Ramanathapuram District, Central Co-operative Bank Ltd., , wherein by a

judgment dated January 10, 1996, this court held that the assessee is entitled to deduction with regard to dividend received by the assessee u/s

80P(2)(a)(i) of the Act. In view of the decisions cited supra, we answer the question referred to us in respect of all the three items in the affirmative

and against the Department. No costs.