1. This appeal by the assessee is directed against the order of the AAC dated 15-1-1981 relating to the assessment year 1974-75. The issue that has come up before us for consideration is, whether the assessee, which is a co-operative society and had invested funds in a savings bank account with another co-operative society, is entitled to deduction in respect of income by way of interest earned on such funds under Section 80P(2)(d) of the Income-tax Act, 1961 ('the Act').
2. We have heard the parties. Undisputed facts are that the assessee, known as The Punjab State Federation of Co-operative House Building Societies Ltd., is a co-operative society. It is an apex body of house building societies of the State of Punjab. The assessee received share capital amounting to Rs. 10 lakhs from the Government of Punjab and it purchased shares from member-societies worth Rs. 1,43,000. The assessee had placed funds with the Punjab State Co-operative Bank, Chandigarh.
On these funds, it received interest of Rs. 30,521. In the return filed on 31-7-1979, a claim for exemption under Section 80P(2)(d) was made.
3. The ITO rejected this claim on the ground that these funds were not investments within the meaning assigned to this word 'investment' used in Section 80P(2)(d). This has been confirmed by the AAC.4. We have heard the parties and we are inclined to accept the claim of the assessee for the following reasons.
5. The fact that the assessee as well as the bank with which the deposits were placed are co-operative societies is not controverted.
Insofar as the meaning of the word 'investment' is concerned, we do not have any help from the definitions given in the statute itself. The learned counsel for the assessee has relied upon the meaning of the word 'investment' found in the Chambers Twentieth Century Dictionary as any placing of money to secure income or profit. We also find that the word 'invest' (in the investment clause in a will) has been interpreted to mean, inter alia, to apply money in the purchase of some property from which interest or profile is expected, and which property is purchased in order to be held for the sake of the income which it will yield : Stroud's Dictionary, 4th edition, p. 1419.
6. The savings bank account which the assessee had opened has to be understood in contrast to what the assessee could have done by placing the money in the current account. In the savings bank account, there are restrictions on withdrawals. For example, Rule 6 of the Savings Bank Rule regarding deposits, stipulates that a depositor may withdraw money from his account not more than 12 times a month. The very name of the account is savings account and, therefore, by implication it is for the purpose of earning interest on savings. In our opinion, the narrow interpretation given by the authorities below to deny the assessee deduction under Section 80P(2)(d) is not justified. We, therefore, reverse their orders and direct that the said amount of interest be treated as exempt under Section 80P(2)(d) for the year under appeal.