South Indian Bank Ltd. Vs ACIT (Kerala High Court)
Kerala High Court held that even after 01.04.2010, Bank would be entitled to the deduction envisaged u/s. 36(1)(viii) of the Income Tax Act in respect of the long term finance provided by it for construction and purchase of houses in India for residential purpose.
Facts- The appellant is engaged in the banking business. The issue relates to disallowance u/s. 36(1)(viii) of the Act. Notably, the disallowance arose consequent to an amendment that was effected to the provisions of Sections 36(1)(viii) with effect from 01.04.2010 through the Finance (No.2) Act, 2009.
The appellant-Bank was engaged in the business of providing housing loans for purchase or construction of houses, and had been obtaining the benefit of the deduction contemplated u/s. 36(1)(viii) of the Act in the years prior to the amendment. On account of the amendment, and the change in the definition of eligible business, the assessing authority found that eligible business in relation to a Banking Company included only the business of ‘providing long term finance for developing of housing in India’ and hence, the appellant would not get the benefit if it ‘provided long term finance for construction or purchase of houses in India for residential purposes’.
