Punjab-Haryana High Court
Commissioner Of Income Tax vs Haryana State Co-Operative Housing ... on 4 March, 1989
Equivalent citations: [1998]234ITR714(P&H)
JUDGMENT N.K. Agrawal, J.
1. The following question has been referred by the Tribunal under s. 256(1) of the IT Act, 1961 (for short "the Act") :
Asst. yr. 1981-82 :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the short-term deposits are 'investment' of the assessee within the meaning of the provisions of s. 80P(2)(d) and interest earned on these deposits is exempt under s. 80P(2)(d) ?"
2. The assessee, a co-operative society, earned certain income in the form of interest on certain deposits and investments and claimed exemption under cl. (d) of s. 80P(2) of the Act.
3. Interest or dividend, derived from investment with another co-operative society, is required to be deducted from the total income of the assessee-society. In other words, such income is exempt from payment of income-tax.
4. A similar question was considered by a Division Bench of this Court in CIT vs. Haryana Co-operative Sugar Mills Ltd. (1989) 180 ITR 631 (P&H) : TC 26R.839, and it was held that short-term call deposits made by the assessee-co-operative society in a co-operative bank were "investments" within the meaning of cl. (d) of s. 80P(2) of the Act and qualified for deduction from the taxable income of the assessee-society.
5. We are inclined to take the same view as in the case of CIT vs. Haryana Co-operative Sugar Mills Ltd. (supra), and answer the question in the affirmative, i.e., against the Department and in favour of the assessee-society subject to verification by the AO if the investments were made by the assessee-society with another co-operative society.