The Visnagar Nagrik Sahakari Bank Ltd. (Under Liquidation) v/s. The Assistant Commissioner of Income Tax, Circle Gandhinagar

Parties Involved

Facts Summary

The assessee, a co-operative bank registered under the Gujarat Co-operative Societies Act, 1961, was placed under liquidation by the Reserve Bank of India in 2003. The Government of Gujarat appointed a liquidator, under whose supervision the assessee continued to carry on recovery operations from borrowers, deposit management, and incidental functions required under the liquidation proceedings. The assessee filed returns declaring Nil income for the assessment years 2013-14, 2014-15, and 2015-16. The Assessing Officer disallowed the deduction claimed under section 80P of the Income-tax Act, 1961, and added the amount to the total income of the assessee. The assessee appealed to the Commissioner of Income Tax (Appeals), who dismissed the appeal. The assessee then appealed to the Income Tax Appellate Tribunal.…

Legal Issues

• 1. Whether the amounts in question represent real income chargeable to tax in the hands of the assessee-bank under liquidation, or whether such amounts stand diverted at source by overriding statutory title in favour of the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the scheme of the DICGC Act, 1961 and section 115A of the Gujarat Co-operative Societies Act, 1961.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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