Section 80P deduction allowed on bank deposit interest after Tribunal followed earlier favourable precedent.

Deduction under section 80P was held allowable on interest earned from deposits with nationalised banks, as the Tribunal treated the issue as no longer res integra and followed earlier decisions granting the deduction. It preferred the Karnataka High Court view over the contrary Delhi High Court view where no jurisdictional High Court ruling was shown to exist. The denial of deduction was therefore set aside in favour of the assessee.

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Issues: Whether deduction under section 80P of the Income-tax Act, 1961 was allowable on interest earned from deposits kept with nationalised banks.

Analysis: The issue was treated as no longer res integra in view of earlier Tribunal decisions. Those decisions followed the view that interest income from bank deposits qualified for deduction under section 80P, preferring the Karnataka High Court view over the contrary Delhi High Court view where no jurisdictional High Court decision on the point was shown to exist.

Conclusion: Deduction under section 80P on the impugned interest income was allowable, and the denial of deduction was set aside in favour of the assessee.

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