- (1.) THE assessee is the Haryana Co-operative Sugar Mills Ltd. , Rohtak. It deposited its surplus funds lying in its cash credit account with the Rohtak Central Co-operative Bank Ltd. in call deposits with the same co-operative bank for a period of three months and during the accounting period relevant to the assessment years 1974-75 and 1975-76 received interest on the short-term call deposits. In the assessment proceedings for both the years, it claimed deduction of the amount of interest received against short-term call deposits in view of Section 80p (2) (d) of the Income-tax Act, 1961 (for short "the Act" ).
(2.) THE Income-tax Officer and the first appellate authority did not give the relief but, on further appeal to the Income-tax Appellate Tribunal, Delhi, relief was granted, after recording a finding that short-term call deposits amounted to investment by a co-operative society with another co-operative society and the income by way of interest derived therefrom was deductible under the aforesaid provision.
(3.) AT the instance of the Revenue, the following two questions have been referred for opinion: " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the word 'investment' in Section 80p (2) (d) of the Income-tax Act includes call deposits made by the assessee-co-operative society in the Rohtak Central Co-operative Bank Ltd. , Rohtak, out of its surplus funds ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the interest income of Rs. 49,461 in 1974-75 assessment year and of Rs. 1,36,438 in 1975-76 assessment year qualified for deduction under Section 80p (2) (d) of the Act?";