Depreciation on subsidised assets and 80P deduction on co-operative bank interest were both sustained under settled precedent.

Depreciation on fixed assets acquired with project subsidy was upheld in line with the Tribunal's earlier view in the assessee's own case and the jurisdictional High Court precedent, so the Revenue's challenge failed on that issue. Interest earned by a co-operative society from investments with co-operative banks was held eligible for deduction under section 80P(2)(d), since the bank was treated as a co-operative society for that purpose, and the deduction was allowed. The appeal succeeded only in part, while the remaining grounds were remitted for fresh consideration.

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Issues: (i) Whether depreciation on fixed assets acquired with project subsidy was allowable to the assessee. (ii) Whether interest income earned from investments with co-operative banks qualified for deduction under section 80P(2)(d).

Issue (i): Whether depreciation on fixed assets acquired with project subsidy was allowable to the assessee.

Analysis: The issue was covered by the Tribunal's decision in the assessee's own case for the immediately preceding year and by the jurisdictional High Court decision relied upon therein. Following the consistent view already taken on the allowability of depreciation on such assets, the Revenue's challenge to the deletion of the addition did not survive.

Conclusion: The deletion of the disallowance of depreciation was upheld and the issue was decided against the Revenue.

Issue (ii): Whether interest income earned from investments with co-operative banks qualified for deduction under section 80P(2)(d).

Analysis: The provision allows deduction for interest derived by a co-operative society from investments with any other co-operative society. The finding below proceeded on the basis that a co-operative bank continues to be a co-operative society for this purpose, and the Tribunal followed the consistent line of authority treating interest from deposits or investments with co-operative banks as eligible for deduction under section 80P(2)(d).

Conclusion: The deduction under section 80P(2)(d) was allowed and the issue was decided against the Revenue.

Final Conclusion: The appeal succeeded only in part, with one substantive issue decided in favour of the assessee and the remaining substantive issue decided against the Revenue; the other grounds were sent back for fresh consideration.

Ratio Decidendi: Interest earned by a co-operative society from investments with a co-operative bank is deductible under section 80P(2)(d) where the bank is treated as a co-operative society for the purpose of that provision, and depreciation on subsidised fixed assets follows the binding precedent already applied in the assessee's own case.

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