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Section 80P of the Income-tax Act, 1961 - Deductions - Income of Co-Op. Societies - Assessment year 2002-03 - Interest earned by co-operative bank on deposits of its non-SLR funds qualifies for deduction under section 80P(2)(a)(i) [In favour of assessee] In view of the decision of the Apex Court in the case of CIT v.Nawanshahar Central Co-operative Bank Ltd.[2007] 289 ITR 6 and the decision of the instant court in Gorakhpur Kshetriya Gramin Bank v.CIT[2007] 292 ITR 205 (All.) interest earned by the co-operative bank on deposits of its non-SLR funds qualifies for deduction under section 80P(2)(a)( i). CASE REVIEW CIT v. Karnataka State Co-operative Apex Bank [2001] 251 ITR 194 (SC) followed and relied upon. CASES REFERRED TO : CIT v. Bangalore District Co-operative Central Bank Ltd.[1998] 233 ITR 282 (SC) (para 6), CIT v. Karnataka State Co-operative Apex Bank[2001] 251 ITR 194 (SC) (paras 6, 8), CIT v. Nawanshahar Central Co-operative Bank Ltd.[2007] 289 ITR 6 (SC) (para 8), Gorakhpur Kshetriya Gramin Bank v. CIT[2007] 292 ITR 205 (All.) (para 8), Gujarat State Co-operative Bank Ltd. v. CIT [2001] 250 ITR 229 (Guj.) (para 6),Madhya Pradesh Co-operative Bank Ltd. v. Addl. CIT [1996] 218 ITR 438 (SC) (para 6) and Mehsana District Central Co-operative Bank Ltd. v. ITO [2001] 251 ITR 522 (SC) (paras 6, 8). JUDGMENT This is an appeal filed by the Commissioner of Income-tax, Muzaffar Nagar, under section 260A of the Income-tax Act, 1961, relating to the assessment year 2002-03. 2. The following question has been raised : Whether on the facts and circumstances of the case, the Income-tax Appellate Tribunal is legally correct in holding that the interest earned by the co-operative bank on deposits of its non-SLR funds qualify for deduction under section 80P(2)(a)( i) of the Income-tax Act 1961 ? 3. The assessee is a regional rural bank set up under the provisions of the Regional Rural Banks Act, 1976. This bank is declared to be a co-operative society for the purpose of the Income-tax Act, 1961 (hereinafter referred to as the Act). For the assessment year under consideration, the assessee filed the return of income on July 31, 2001, and claimed the deduction of its…

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