cooperative bank

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p.hepsiba (Querist)
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21 February 2008 urban cooperative bank has invested funds as fixed deposit in other coperative bank.
it has invested with a condition that at the time of maturity the interest will be added to principal amount & again will be reinvested.what will be the treatment of interest accrued for the financial year 2006-07?
will it not be claimed u/s 80p from the profit of the bank as income derived by the cooperative society from investment made in other cooperative society?

CA Hemant T Dewani

CA Hemant T Dewani (Expert)
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21 February 2008 you will treat accrual income in you a/c
and interes is credited in your p&l a/c
if amount is deposited in other bank and iterest is receive it is exempted u/s 80p
of the act
or when you receveied interest on receipt basis you credit interest in p&l a/c
it is also exemted from tax