This is an appeal filed by the commissioner of Income Tax, Muzaffarnagar under Section 260A of the Income tax Act, 1961 relating to the assessment year 2002-03. 2. the following question has been raised;- Whether on the fact and circumstances of the case, the ITAT is legally correct in holding that that the interest earned by the Co­operative Bank on deposits of its non-SLR funds qualify for deduction u/S. 80 P(2)(a)(i) of I.T. Act 1961? 3. The assessee is a Regional Rural Bank set up under the provisions of Rural Banking Act. 1976. This bank is declared to a Coop­erative Society for the purpose of Income-tax Act, 1961 (hereinafter referred to as 'the Act'). For the assessment year under consid­eration, the assessee filed the return of income on 31.07.2001 and claimed the deduction of its entire income amounting to Rs.6,586/-under Section 80P(2)(a)(i) of the Act. The return was accepted under Section 143(1)(a) of the Act. Subsequently, a notice under Sec­tion 148 of the Act was issued and the case was reopened with the view to disallow the deduction in respect of the interest income accrued on the investment. According to the assessee, the claim did not qualify for the exemption under Section SOP (2)(a)(i) of the Act. The plea of the assessee was not accepted and the Assessing Authority passed the as­sessment order and disallowed the claim for exemption. 4. Being aggrieved by the assessment or­der, the assessee filed the appeal before the Commissioner of Income Tax, (Appeal), Muzaffarnagar which was allowed. 5. Being aggrieved by the order of C.I.T. (Appeal), Addl. CIT., Range-2, Muzaffarnagar filed the appeal before the Income Tax Ap­pellate Tribunal which has been dismissed by the impugned order. 6. The Tribunal has held as follows:-"We have heard both the parties and care­fully considered the rival contentions, exam­ined the facts, evidence and material placed on record. From the facts discussed above, it is obvious that the AO held that interest earned on investment exceeding the percent­age required under the Statutory Liquidity Ratio (SLR) was not entitled to deduction under section 80-P (2)(a)(i). For this purpose, the AO has heavily relied on the order of Gujarat High Court in the case of Gujarat State Co-op. Bank Ltd. v. CIT 250ITR 229. He has also referred to the judgment of Hon'ble Su­preme Court in the case of Madhya Pradesh Co-op. Bank Ltd. v. Addl. For this purpose, the AO has heavily relied on the order of Gujarat High Court in the case of Gujarat State Co-op. Bank Ltd. v. CIT 250ITR 229. He has also referred to the judgment of Hon'ble Su­preme Court in the case of Madhya Pradesh Co-op. Bank Ltd. v. Addl. CIT reported in 218 ITR 438. This judgment was overruled by the Apex Court in the case of CIT v. Karnataka Co-op. Apex Bank (supra), where it was held that interest arising from investment made in compliance with the statutory provisions to enable it to carry on banking business out of reserve funds by a Co-operative Society en­gaged in banking business was exempted u/S. 80P(2)(a)(i) of the Act. In the case of CIT v. Bangalore Distt. Co-op. Central Bank Ltd; reported in 233 ITR 282: ( AIR 1998 SC 2955 ) the Hon'ble Apex Court held that in­terest on Govt. Securities and dividends of shares of Industrial Finance Corporation was income from banking business and hence en­titled to deduction u/s 80P(2)(a)(i) of the Act. In the case of Mehsana Distt. Central Co-op. Bank Ltd. v. ITO (supra), the Hon'ble Apex Court held that interest earned from funds utilized for statutory reserves and income from hiring safe deposits was the income from banking business and hence entitled to de­duction u/S. 80P(2)(a)(i). Thus, the sum and substance of the aforesaid discussion and le­gal position is that the intereest earned by the Bank from investment in SLR and other in­vestments forms part of banking business and is entitled to deduction u/S. 80P(2)(a)(i) of the Act. As per Banking Regulation Act, the banks are required to keep certain percent­age of their total deposits in the statutory li­quidity ratio (SLR) and the total deposits ac­cepted from the public vary from year to year. The fact that in a particular year, the amount of investment made in the Govt. securities or deposits exceeds SLR would not mean that such investments have not been made in the Banking business.Therefore, interest earned on such deposits/investments would form part of banking business entitled to deduction u/S. 80P(2)(a)(i) of the Act. In the light of these facts and circumstances of the case and the legal position discussed above, we are of the considered opinion that the Ld. CIT (A) was justified in allowing deduction u/S. 80P(2)(a)(i) of the Act. In the light of these facts and circumstances of the case and the legal position discussed above, we are of the considered opinion that the Ld. CIT (A) was justified in allowing deduction u/S. 80P(2)(a)(i) of the Act. We confirm his order and reject the grounds of appeal of the Rev­enue." Heard Sri R.K.Upadhyay, learned Stand­ing Counsel. 7. We are of the opinion that the issue in­volved in the present case is no more rest in­tegral and is covered by the decision of the Apex Court in the case of Commissioner of Income-Tax v. Karnataka State Co-Operative Apex Bank reported in 251 ITR 194 r( AIR 2001 SC 3332 ) Mehsana District Central Co­operative Bank Ltd. v. Income Tax Officer, reported in 2001 (251) ITR 522 and a recent decision of the Apex Court in the case of Commissioner of Income-tax v. Nawan-shahar Central Co-Operative Bank Ltd. re­ported in 2007 (289) ITR 6 (SC) wherein in it has been held that where a co-operative Bank carrying on business of banking is statu-torily required to place a part of its funds in approved securities, the income is attribut­able thereto is the business of banking and is deductable under section 80P(2)(a)(i) of the Act. In the present case, it is not the case of revenue that the assessee had carried on any other business other than banking business. The deposit exceeding Statutory Liquidity Ratio (SLR) was also in relation to banking activity. Hence, the income accrued out of such deposit also attribute to the banking busi­ness and deductable under Section SOP (2)(a)(i) of the Act. The issue involved in the present appeal is also covered by the deci­sion of the Apex Court in the case of M/s. Gorakhpur Kshetriya Gramin Bank, Gorakh-pur v. Commissioner of Income Tax, Allahabad reported in 2007 U.P.T.C., 1486. 8. In view of the decisions of the Apex Court, we do not find any merit in the present appeal. The appeal is, accordingly, dismissed. Appeal dismissed.