Co-operative credit society interest on bank deposits held deductible as attributable to eligible credit business under section 80P.

Interest earned by a co-operative credit society on bank deposits was treated as attributable to its credit business where the deposits were linked to that business activity, so the income qualified for deduction under section 80P(2)(a)(i) rather than being assessed as income from other sources. Applying the jurisdictional High Court view, the Tribunal held that such interest fell within the scope of the statutory deduction. The deduction was therefore allowable in favour of the assessee.

---

---

Issues: Whether interest earned by a co-operative credit society on bank deposits was deductible under section 80P(2)(a)(i) of the Income-tax Act, 1961.

Analysis: The assessee was engaged in the business of providing credit facilities to its members and claimed deduction on interest received from deposits with banks. The governing question was whether such interest formed part of income attributable to the eligible business under section 80P(2)(a)(i), or whether it was assessable as income from other sources. Relying on the jurisdictional High Court decision, the Tribunal accepted that the deposits were linked to the society's credit business and that the interest earned therefrom fell within the scope of the statutory deduction.

Conclusion: The deduction under section 80P(2)(a)(i) was allowable and the issue was decided in favour of the assessee.

Ratio Decidendi: Interest earned by a co-operative society engaged in providing credit facilities to its members from deposits made in the course of its banking or credit activity is attributable to the eligible business and is deductible under section 80P(2)(a)(i).

---