I.T.A.No.280 of 2005 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No. 280 of 2005 Date of decision : 17.5.2007 Commissioner of Income Tax, Hisar ....Petitioner through Mr.Yogesh Putney, Advocate Versus Hisar Sirsa Kshetriya Gramin Bank Ltd.,Hisar ...Respondent through Mrs.Tarun Jain, Advocate CORAM : HON'BLE MR. JUSTICE VIJENDER JAIN, CHIEF JUSTICE HON'BLE MR.JUSTICE MAHESH GROVER .... 1. Whether Reporters of Local Newspapers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? ... Vijender Jain, Chief Justice (Oral) This order will dispose of ITA Nos.280 of 2005 and 115 of 2007 as both the cases contain similar question of law and facts. The following questions of law has been raised by the revenue : “Whether on the facts and in the circumstances of the case the ITAT was right in law in directing the Assessing Officer to assess the interest income of Rs.1,54,73,000/- as income from banking business and I.T.A.No.280 of 2005 -2- allow exemption u/s 80P(2)(a)(i)?” The ITAT while dismissing the appeal relied upon the judgment of a Division Bench of this Court in Commissioner of Income-Tax v. Nawanshahar Central Co-oprative Bank Ltd. (2003)263 ITR 320(P&H). The revenue had taken the judgment in Nawanshahar Central Co-oprative Bank Ltd. case to Supreme Court in SLP which was dismissed and the following order was passed : “Delay condoned. Leave granted. This court has consistently held that investme- nts made by a banking concern are part of the business of banking. The income arising from such investments would, therefore, be attributable to the business of bank falling under the head “Profits and gains of business” and thus deductible under section 80P(2)(a)(i) of the Income-tax Act, 1961. This has been so held in Bihar State Co-operative Bank Ltd. v. CIT (1960)39 ITR 114 (SC), CIT v. Karnataka State Co-operative Apex Bank (2001)Supp.(2) SCR 35; (2001) 251 ITR 194 (SC) and CIT v. Ramanathapuram Distrit Co-operative Central Bank ltd. (2002) 255 ITR 423 (SC). The principle in these cases would also cover a situation where a co-operative bank carrying on the business of banking is statutorily required to place a part of its funds in approved securities. The appeals are I.T.A.No.280 of 2005 -3- accordingly dismissed without costs.” In view of the decision of the Hon'ble Supreme Court in Nawanshahar's case (supra) , there is no merit in this appeal and the same is hereby dismissed. (VIJENDER JAIN) CHIEF JUSTICE 17.5.2007 (MAHESH GROVER) JUDGE dss