Income Tax - Interest from Non-SLR securities of Banks - CBDT clarifies
IN the case of CIT Vs Nawanshahar Central Cooperative Bank Ltd. - , the Apex Court held that the investments made by a banking concern are part of the business of banking. Therefore, the income arising from such investments is attributable to the business of banking falling under the head "Profits and Gains of Business and Profession".
Even though the above mentioned decision was in the context of co-operative societies/Banks claiming deduction under section 80P (2)(a)(i) of the Act, the principle is equally applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies.
In the light of the Supreme Court's decision in the matter, the issue is well settled. Accordingly, the CBDT has decided that no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, on this ground before Courts/Tribunals may be withdrawn/ not pressed upon.
CBDT Circular No. 18/2015, Dated., November 2, 2015