LexTHE BIHAR STATE CO-OPERATIVE BANK LTD. versus THE COMMISSIONER OF INCOME-TAX
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
58 SUPREME COURT REPORTS [1960] z960 view of this Mr. Palkiwala for the Managed Company did not press C. A. No. 323 of 1957, which is therefore Commissioner af b "11 b h · · Income-tax. dismissed ut the parties w1 ear t. eir own costs m Bombay North that case because the result of that appeal is rea.lly v. dependent upon the result in C. A. No. 145 of 1958. ~i1 /s H arivallabhdas Kaliaas Appeals dismissed Kapur J. Ig6o February 32 THE BIHAR STATE CO-OPERATIVE BANK LTD. v. THE COMMISSIONER OF INCOME-TAX (J. L. KAPUR, A. K. SARKAR AND M. HIDAYATULLAH, JJ.) Income Tax-Co-operative Bank-Interest received on deposits with other banks-Exemption from taxation under Notification- Indian Income-tax Act, r922 (XI of r922) ss. IO, I2. The Appellant Bank which was registered under the Co- operative Societies 'Act, 1922, received, in the relevant account years, by way of interest on deposits with the Imperial Bank of India certain sums of money. The Income-tax Officer assess- ed the aforesaid sums under s. 12 of the Indian Income-tax Act 1922, as income from other sources, but the appellant claimed that the deposits were made not with the idea of making investments but for the purpose ·of carrying on its business as a bank and that as the interest received on the deposits was profit attributable to its business activities it was not subject to income- tax because of the Notification issued by the Central Government under s. 60 of the Act. Under the Notification profits of any Co-operative Society are exempt from the tax payable under the Act but not income derived from "other sources" referred to in s. 12 ofthe Act. IIeld, that the interest from <leposits received by the Appel- lant Bank in the present case arose out of a transaction entered into for the purpose of carrying on its banking business and fell within the income exempted under the Notification. The Punjab Co-operative Bank Ltd. v. The Commissioner of Income-tax, Punjab, [1940] 8 I.T.R. 635, relied on. CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 228 to 230 of 1958. Appeals from the judgment and decree dated July 2, 1957, of the Patna High Court in Misc. Judicial Case No. 640 of 1955. 3 S.C.R. SUPREME COURT REPORTS 59 N. A. Palkhivala, Thakur Prasad and R. 0. Prasad Z960 for the appellant. Bihar State 0. K. Daphtary, Solicitor :General of India, R. Gana- Co-operative Bank pathy Iyer and D. Gupta, for the respondent. Ltd. 1960. February 22. The Judgment of the Court v. d 1. d b Commissioner of WaS e lVere y Income Tax KAPUR, J.-The appellant is a Bank registered under the Co-operative Societies Act, 1912 (Act II of Kapur J. 1912) 11>nd is deemed to be registered under the Bihar & Orissa Co-operative Societies Act, 1935 (Bihar Acb VI of 1935) which in Bihar has replaced the Co- operative Societies Act of 1912. It was carrying on banking business in the State of Bihar. One of the objects of the Bank is to carry on general business of banking not repugnant to the provisions of the Bihar Act and rules framed thereunder for the time being in force (Bye-Law 3(a)vi). In the calendar years 1945, 1946 and 1947, the appellant Bank received by way of interest on deposits with the Imperial Bank of India the sums of Rs. 7,192, R(l. 20,250 and Rs. 22,600 respectively. It is these sums which are the subject matter of dispute in these three appeals which relate to the respective assessment years 1946-47, 1947-48 and 1948-49. These sums were not assessed when assessment was made under s. 23(3) of the Income-tax Act, but subsequently under s. 34 they were assessed as being ' income ' under the head 'other sources'. This order was upheld by the Appellate Assistant Commissioner and by the Income-tax Appellate Tribunal. A case was then stated to the High Court under s. 66(1) of the Act, but was decided against the appellant. The appella.nt brought three appeals in this Court in regard to the three assessment years. In each one of them the respondent is the Commissioner of Income-tax, Bihar & Orissa. As the appeals involve a common ques- tion of law they were consolidated and can convenient- ly be disposed of by one judgment: In its return the appellant showe\l these various sums as ' other sources ', but nothing turns on the manner in which the appellant chose to show this income in itlil return. The Income-tax Officer, however, assessed the interest for these three years 60
Excerpt shown. Read the full judgment & AI analysis in Lexace.