1989 (2) TMI 42

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....rs 1974-75 and 1975-76 received interest on the short-term call deposits. In the assessment proceedings for both the years, it claimed deduction of the amount of interest received against short-term call deposits in view of section 80P(2)(d) of the Income-tax Act, 1961 (for short" the Act"). The Income-tax Officer and the first appellate authority did not give the relief but, on further appeal to the Income-tax Appellate Tribunal, Delhi, relief was granted, after recording a finding that short-term call deposits amounted to investment by a co-operative society with another co-operative society and the income by way of interest derived therefrom was deductible under the aforesaid provision. At the instance of the Revenue, the following....

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....d, has reference to investment by one co-operative society with another and in the interest or dividend earned therefrom as a whole is to be excluded from the income of the recipient society. In this sense, the word "investment" assumes importance. The assessee-society had a cash credit account with the co-operative bank and the amount which was not needed was taken out from that account and was put in a short-term call deposit which is in the nature of a fixed deposit for a period of three months, renewable from time to time. It is true that the amount could be withdrawn even before the three months by encashing the short-term deposit, as is possible in the case of long-term fixed deposit receipts also. The difference is, the moment you wa....

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....e action of the board in opening of call deposit and current accounts with the Rohtak Central Co-operative Bank Ltd. and authorised the general manager and chief accounts officer of the appellant society to operate on these accounts. In view of the decision of the Supreme Court in Nawn Estates Pvt. Ltd. [1977] 106 ITR 45, it is not necessary for us to consider the other decisions referred to above and relied on by the assessee's learned counsel. We would respectfully follow this decision of the Supreme Court and hold that the interest income in question qualifies for deduction under section 80P(2)(d) of the Income-tax Act. Accordingly, we direct the Income-tax Officer to allow the said deduction in respect of the amount of Rs. 49,461 in res....