Deduction for interest from bank deposits accepted for cooperative society under section 80P, following coordinate bench reasoning.

Interest income earned by a cooperative society from deposits of surplus funds with a cooperative bank and scheduled banks was treated as eligible for deduction under section 80P(2)(a)(i) and section 80P(2)(d) of the Income-tax Act, following the Tribunal's coordinate bench view. The contrary approach of the lower authorities was not accepted, and the deduction was allowed in respect of that interest income.

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Issues: Whether interest income earned by a cooperative society on deposits made with a cooperative bank or scheduled bank qualifies for deduction under section 80P(2)(a)(i) and section 80P(2)(d) of the Income-tax Act, 1961.

Analysis: The Tribunal followed its coordinate bench decision and held that interest income earned by a cooperative society from deposits out of surplus funds with cooperative banks, and also with scheduled banks, is eligible for deduction. It accepted the view that such income falls within the scope of the deduction provisions and that the contrary view taken by the lower authorities could not be sustained.

Conclusion: The deduction under section 80P(2)(a)(i) and section 80P(2)(d) was held allowable to the assessee in respect of the interest income.

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