Section 80P deduction extends to incidental deposit income linked to a co-operative society's credit business.

Income earned by a co-operative society from deposits made in the course of its credit business, including interest and dividend from investments with co-operative banks or societies, is stated to qualify for deduction under section 80P of the Income-tax Act, 1961. The text explains that the expression "attributable to" has a wider scope than "derived from", and covers income that is incidental to and inextricably linked with the society's business of providing credit facilities to members. On that basis, the Tribunal sustained the assessee's claim and the disallowance was deleted.

---

---

Issues: Whether interest and dividend income earned from deposits with co-operative banks/societies qualified for deduction under section 80P of the Income-tax Act, 1961.

Analysis: The assessee was a co-operative society engaged in providing credit facilities to its members. The interest income arose from deposits made as part of the statutory and business requirements for carrying on that activity. The expression "attributable to" in section 80P has a wider connotation than "derived from", and income that is incidental and inextricably linked with the business activity of providing credit facilities falls within the deduction. The Tribunal also accepted that, where the income is from investments with co-operative banks or societies, deduction under section 80P(2)(d) is attracted.

Conclusion: The interest and dividend income was deductible under section 80P, and the Revenue's challenge failed.

Final Conclusion: The Tribunal upheld the allowance of the assessee's claim and sustained deletion of the disallowance.

Ratio Decidendi: Income from deposits that is incidental to and attributable to the business activity of a co-operative society, including income from investments with co-operative banks or societies, is eligible for deduction under section 80P of the Income-tax Act, 1961.

---