Co-operative society deduction on bank interest allowed where no binding jurisdictional precedent exists and favourable view is followed.

A co-operative credit society's entitlement to deduction under section 80P(2)(a)(i) on interest income from deposits with a nationalised bank was considered in light of conflicting High Court views. The Tribunal treated the issue as settled in favour of deduction where no binding jurisdictional High Court precedent exists, and followed earlier Pune Bench decisions supporting the assessee. It preferred the view favourable to the co-operative society over the contrary Delhi High Court view, while noting the Karnataka High Court had allowed the deduction. On that basis, the interest income from bank deposits qualified for deduction under section 80P(2)(a)(i).

---

---

Issues: Whether the assessee-co-operative credit society was entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 on interest income earned from deposits kept with a nationalised bank.

Analysis: The issue was treated as no longer res integra. The Tribunal noted earlier Pune Bench decisions allowing similar deduction and considered the conflicting views of the Karnataka High Court, which allowed the deduction, and the Delhi High Court, which disallowed it. In the absence of any contrary jurisdictional High Court decision, the Tribunal followed the view favourable to the assessee.

Conclusion: The assessee was held entitled to deduction under section 80P(2)(a)(i) on the interest income earned from deposits with the nationalised bank.

Ratio Decidendi: Where no binding jurisdictional precedent exists, the Tribunal may follow the view favourable to the assessee on deduction under section 80P(2)(a)(i) for interest income from bank deposits earned by a co-operative society.

---