Deduction under section 80P for bank interest upheld where co-operative society followed favourable precedent amid conflicting High Court views.

Interest income earned by a co-operative society from fixed deposits with nationalised banks was held eligible for deduction under section 80P(2)(a)(i) because earlier coordinate bench decisions had allowed the claim in similar circumstances. Faced with conflicting High Court views and no direct jurisdictional High Court ruling, the Tribunal followed the interpretation favourable to the assessee. The Revenue's challenge therefore failed, and the deduction was allowed.

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Issues: Whether interest income earned from fixed deposits with nationalised banks by a co-operative society engaged in providing credit facilities to its members is eligible for deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961.

Analysis: The Tribunal noted that the issue had already been considered in earlier coordinate bench decisions, where deduction under section 80P was allowed in similar circumstances. It also noted the conflicting views of different High Courts and followed the view favourable to the assessee in the absence of any direct jurisdictional High Court ruling on the point.

Conclusion: The interest income from the bank deposits was held eligible for deduction under section 80P(2)(a)(i), and the Revenue's appeal failed.

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