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Issues: Whether the interest earned on fixed deposit receipts and other investments made out of surplus funds by a co-operative society was eligible for deduction under section 80P.
Analysis: The interest income arose from investments of surplus funds and the issue was examined in the light of the settled view that such income, when earned by a co-operative society from co-operative banks or similar investments, can qualify for deduction under section 80P. The Tribunal applied the prevailing legal position and accepted that the assessee's interest income was covered by the deduction claim.
Conclusion: The deduction claim under section 80P was allowed in favour of the assessee, and the Assessing Officer was directed to grant the consequential relief.
Final Conclusion: The appeal succeeded and the assessee obtained relief on the taxability of interest income from surplus-fund investments.
Ratio Decidendi: Interest earned by a co-operative society on investments made out of surplus funds is eligible for deduction under section 80P where it falls within the statutory ambit of income attributable to the society's eligible activities.
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