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Section 80P of the Income-tax Act, 1961 read with section 57 of the H.P. Co-operative Societies Act, 1968 - Deductions - Income of co-operative societies - Assessee was a co-operative bank created under H.P. Co-operative Societies Act, 1968 - Under section 57 of 1968 Act, every co-operative society is required by law to keep a percentage of its profits in a reserve fund which can only be invested or deposited in a certain manner - In view of that provision, assessee had invested amount available in its reserve fund in H.P. State Co-operative Bank which was also a co-operative society and earned interest on said deposits - Whether interest earned by assessee would be eligible for deduction under section 80P(2)(a)(i) - Held, yes CASE REVIEW CIT v. Nawanshahar Central Co-operative Bank Ltd. [2007] 289 ITR 6/ 160 Taxman 48 (SC) [Para 9]followed. CASES REFERRED TO Madhya Pradesh Co-operative Bank Ltd. v. Addl. CIT [1996] 218 ITR 438/ 84 Taxman 640 (SC) [Para 5], CIT v. Karnataka State Co-operative Bank Apex Bank [2001] 251 ITR 194/ 118 Taxman 321 (SC) [Para 6], CIT v. Ramanathapuram Distt. Co-op. Central Bank Ltd. [2002] 255 ITR 423/ 123 Taxman 222 (SC) [Para 8], CIT v. Sri Ram Sahakari Bank Ltd. [2004] 266 ITR 632/ 138 Taxman 45 (Kar.) [Para 8] and CIT v. Nawanshahar Central Co-operative Bank Ltd. [2007] 289 ITR 6/ 160 Taxman 48 (SC) [Para 8]. Vinay Kuthiala and Ms. Vandana Kuthiala for the Appellant. K.D. Sood for the Respondent. JUDGMENT Deepak Gupta, J. - This appeal has been admitted on the following question of law : "Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that the interest income earned by the assessee on deposits made with H.P. State Co-operative Bank in the shape of FDRs is income derived from banking business and therefore eligible for deduction under section 80P(2)(a)(i ) of the Income-tax Act?" 2. The brief facts necessary for decision of the case are that the assessee is a co-operative bank created under the H.P. Co-operative Societies Act, 1968. Section 57 of the Act reads as follows : "57. Reserve funds.-(1) Every society shall maintain a reserve fund in respect of the profits, if any, derived from…

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