1 IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 11 OF 2004 The Commissioner of Income Tax, Having office at Aayakar Bhavan, Patto-Plaza, Panaji Goa. ... Appellant V e r s u s The Goa Urban Co-operative Bank Ltd., Dr. Atmaram Borkar Road, Panaji Goa. ... Respondent Mrs. Asha Dessai, Advocate for the Appellant. Mr. R. G. Ramani, Advocate for the Respondent. CORAM : D. G. KARNIK, & F.M. REIS, JJ. DATED : 9 th SEPTEMBER, 2010. ORAL JUDGMENT ( Per D. G. KARNIK, J ) By an order dated 26th July, 2004, the appeal was admitted as to the following two substantial questions of law : “(A) Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that the assessee is entitled to claim deduction under Section 80P(2)(a)(i) of IT Act, in respect of interest income derived on investment out of building fund, dividend equalization fund, charity fund and gratuity fund ? 2 (B) Whether on the facts and in the circumstances of the case, the interest income derived by the assessee from the investment of its statutory reserve fund, building fund, dividend equalization fund, charity fund and gratuity fund, has been utilized by it in the course of its ordinary banking business, in order to claim deduction under Section 80P(2) (a)(i) of the Act ?” 2. In our view, the matter is covered by the decision of the Hon'ble Supreme Court in CIT V/s Karnataka State Co-operative Apex Bank (2001) 251 ITR 0194. In the said case, the three learned Judges' Bench was constituted in view of the apparent conflict in two earlier decisions of two learned Judges' Bench of the Hon'ble Supreme Court. The three learned Judges approved the decision in the case of Madhya Pradesh Co-opearative Bank Ltd., Jabalpur V/s Additional CIT ( 1996) 218 ITR 438. 3. In the case of CIT V/s Karnataka State Co-operative Apex Bank ( supra ), the question which was referred to the three learned Judges' Bench was “Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the interest income arising from the investment made out of reserve fund is exempted under Section 80-P(2)(a)(i) of the Income Tax Act ?”, the Supreme Court 3 answered the question in the affirmative i.e. in favour of the assessee and against the revenue. 4. The said decision is squarely applies to the facts of the present case. Hence, we answer the point nos. (A) and (B) raised in this appeal in the affirmative i.e. in favour of the assessee and against the revenue. Accordingly, the appeal is dismissed. D. G. KARNIK, J F. M. REIS, J at*