Section 80P deduction on interest from co-operative bank deposits upheld, with relief limited to the original claim.

A primary credit co-operative society is entitled to deduction under section 80P on interest income earned from investments or deposits with co-operative banks that are themselves co-operative societies, and the benefit cannot be denied merely on that basis. The Tribunal followed the binding view approved by the Supreme Court and held the lower authorities' disallowance unsustainable. It also clarified that any deduction allowed under section 80P(2)(d) would remain confined within the overall deduction originally claimed under section 80P(2)(a)(i).

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Issues: Whether interest income earned from deposits/investments with co-operative banks qualifies for deduction under section 80P, and whether the deduction can be restricted to the amount of deduction originally claimed in the return.

Analysis: The Tribunal followed the binding view that a primary credit co-operative society is entitled to deduction under section 80P on interest income earned from investments with co-operative banks which are also co-operative societies. It relied on the later Supreme Court approval of the proposition that such credit societies are not to be treated as co-operative banks for the purpose of denying the benefit under section 80P. On that basis, the disallowance made by the lower authorities was held unsustainable. The Tribunal, however, directed that the deduction allowed under section 80P(2)(d) would remain confined within the overall deduction originally claimed under section 80P(2)(a)(i).

Conclusion: The assessee was held entitled to deduction on the interest income from co-operative banks, and the Revenue's denial of the claim was set aside.

Ratio Decidendi: A primary credit co-operative society is entitled to deduction under section 80P on interest income earned from investments with co-operative banks that are co-operative societies, and such benefit cannot be denied merely because the income arises from deposits with co-operative banks.

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