Thanikkachalam, J. - (1.) AT the instance of the Department, the Tribunal referred the following common question for the asst. yrs. 1973-74 and 1976-77 for the opinion of this Court under s. 256(1) of the IT Act, 1961 : "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the interest on securities and dividend were business income of the assessee entitled to deduction under s. 80P(2)(a)(i) of the IT Act, 1961 ?" The point for consideration in these Tax Cases is whether the assessee is entitled to deduction under s. 80P(2)(a)(i) of the IT Act, 1961 with regard to interest on securities and dividend income ?
(2.) INSOFAR as the deduction claimed under s. 80P(2)(a)(i) of the Act with regard to the interest on securities is concerned, the assessee is entitled to deduction as claimed in view of the earlier decision of this Court in the case of CIT vs. Madurai District Central Co-operative Bank Ltd. (1989) 148 ITR 196 (Mad) : TC 26R.711. Insofar as the deduction claimed with regard to the dividend is concerned, the deduction was granted by the Tribunal under s. 80P(2)(c) of the Act. The assessee was receiving dividend on shares in companies to the extent of Rs. 2,705 for the asst. yr. 1973-74 and Rs. 3,205 for the asst. yr. 1976-77. Since these amounts fall below the exemption limit of Rs. 20,000 under s. 80P(2)(c) of the Act, deduction was granted by the Tribunal. The conclusion arrived at by the Tribunal is supported by the provisions contained in s. 80P(2)(c) of the Act wherein it is stated that in the case of a co-operative society engaged in activities other than those specified in cl. (a) or cl. (b) (either independently of, or in addition to, all or any of the activities specified), so much of its profits and gains attributable to such activities as does not exceed twenty thousand rupees is not includible. Exemption is available inasmuch as the assessee satisfied the conditions prescribed in the above said provisions. Therefore, the assessee is entitled to deduction of dividend income in both the assessment years under consideration. Accordingly, we answer the question referred to us in the affirmative and against the Department.;