ITAT Upholds Co-op Society’s Tax Exemption, Cites ‘Operational Funds’ to Reject Revenue’s Appeal on Interest Income

The ITAT has upheld a co-operative society's tax exemption, citing "operational funds" to reject the Revenue's appeal on interest income. Section 80P provides deductions for certain incomes of cooperative societies. This ruling clarifies that interest earned by a cooperative society from deposits made as part of its core operational activities (e.g., maintaining reserves, working capital) is eligible for tax exemption. The ITAT distinguished these funds from idle investments, ensuring that legitimate operational income of cooperative societies remains tax-exempt, promoting their financial stability.