Judgment

Srinivasan, J.-The respondent here­inafter referred to as the ‘asses­see’ is a Cooperative Society engaged in banking business. For the assessment years 1977-78, 1978-79 and 1979-80, the assessee claimed deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961 on the income by way of interest on Government Securities and Dividends on shares of Industrial Financial Corporation. The Income Tax Officer held that the investments were made out of reserves and disallowed the claim. On appeal, the Appellate Assistant Commissioner observed in his order that the Reserve Fund of the assessee was about Rs. 33 lakhs and the circulating capital was about Rs. 22 lakhs and held that the investment was out of the Reserve Fund. Consequently, he confirmed the order of the I.T.O.

2. On further appeal, the Tribunal accepted the contention of the assessee that interest income was attributable to the assessee’s business income. The Tribunal followed its earlier order in I.T.A. Nos. 665 to 668/Bang./1981 dated 30th July, 19821. Conse­quently the appeal was allowed and the matter was remitted to the I.T.O. to determine the deduction available to the assessee under Section 80P(2)(a)(i). On a