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Issues: (i) Whether interest on securities received by a co-operative bank was deductible as business income under section 80P(2)(a)(i) of the Income-tax Act, 1961; (ii) whether dividend income received by the assessee was entitled to deduction under section 80P(2)(c) of the Income-tax Act, 1961.
Issue (i): Whether interest on securities received by a co-operative bank was deductible as business income under section 80P(2)(a)(i) of the Income-tax Act, 1961.
Analysis: The claim for deduction in respect of interest on securities was governed by the earlier binding decision of the Court holding such income to be eligible for deduction under section 80P(2)(a)(i).
Conclusion: The assessee was entitled to deduction of the interest on securities under section 80P(2)(a)(i), in favour of the assessee.
Issue (ii): Whether dividend income received by the assessee was entitled to deduction under section 80P(2)(c) of the Income-tax Act, 1961.
Analysis: The dividend income fell within the monetary limit prescribed under section 80P(2)(c), and the assessee satisfied the conditions for exclusion from taxable profits and gains to that extent.
Conclusion: The assessee was entitled to deduction of the dividend income under section 80P(2)(c), in favour of the assessee.
Final Conclusion: The reference was answered for the assessee on both questions, and the deductions claimed in respect of interest on securities and dividend income were upheld.
Ratio Decidendi: Income of a co-operative society from interest on securities and qualifying dividend receipts is deductible where the governing provision and statutory conditions for exemption are satisfied.
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