1982 (3) TMI 125 - AT - Income Tax

Summary

Issues involved: Interpretation of the term 'investment' u/s 80P(2)(d) of the Income-tax Act, 1961 for a co-operative society's funds in a savings bank account.

Summary:
The Appellate Tribunal ITAT Chandigarh considered an appeal regarding the deduction of interest income earned by a co-operative society from funds invested in a savings bank account with another co-operative society u/s 80P(2)(d) of the Income-tax Act, 1961. The assessee, a co-operative society, received share capital and purchased shares, placing funds in a co-operative bank and earning interest. The Income Tax Officer (ITO) and the Appellate Authority for Commissioner (AAC) rejected the claim for exemption under section 80P(2)(d) on the grounds that the funds did not qualify as 'investment'. However, the Tribunal accepted the assessee's claim based on the interpretation of the term 'investment'. The Tribunal noted that the savings bank account had restrictions on withdrawals, indicating it was for earning interest on savings. They referenced definitions of 'investment' from dictionaries and legal sources to support their decision. Ultimately, the Tribunal reversed the lower authorities' decision and directed the interest income to be treated as exempt u/s 80P(2)(d) for the relevant year.

In conclusion, the appeal was allowed in favor of the assessee, granting the deduction for interest income earned on funds invested in a savings bank account with a co-operative society.