The HC held that interest income earned by the appellant...

The HC held that interest income earned by the appellant cooperative society from investments in nationalized banks is deductible under section 80P(2)(a)(i) of the Income Tax Act, as such income is 'attributable to' the society's business activities and retains its character. The AO, CIT(A), and Tribunal erred in denying the deduction and misapplied precedent. However, interest on house building loans to staff is not deductible, affirming the lower authorities' view. Interest earned on personal loans granted to Class D members qualifies for deduction under section 80P, given the society's registration and membership structure under the West Bengal Co-operative Societies Act. Consequently, substantial questions of law regarding the deduction of interest income from investments and personal loans were decided in favor of the appellant, while the question concerning staff housing loan interest was decided against it.