Section 80P deduction for interest from co-operative bank deposits allowed to co-operative society; disallowance deleted.

Section 80P(2)(d) permits a co-operative society to claim deduction for interest or dividend income derived from investments with another co-operative society, and the Tribunal treated a co-operative bank as falling within that expression for this purpose. It held that section 80P(4) restricts deductions for co-operative banks themselves, but does not deny deduction to a co-operative society receiving interest from such deposits. The reliance on Totgars was found misplaced because that decision concerned section 80P(2)(a)(i) and surplus funds, not deduction under section 80P(2)(d). The interest income was therefore deductible and the disallowance was deleted.

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Issues: Whether a co-operative housing society is entitled to deduction under section 80P(2)(d) on interest income earned from deposits/investments with co-operative banks or other co-operative societies, notwithstanding section 80P(4).

Analysis: The Tribunal held that section 80P(2)(d) allows deduction of interest or dividend derived by a co-operative society from investments with any other co-operative society. It followed coordinate bench decisions and the view that a co-operative bank falls within the expression co-operative society for this purpose. The reliance on Totgars was held to be misplaced because that decision dealt with section 80P(2)(a)(i) and surplus funds, not the entitlement under section 80P(2)(d). Section 80P(4) was held to bar deductions for co-operative banks themselves, but not to deny deduction to a co-operative society earning interest from such banks.

Conclusion: The assessee was entitled to deduction under section 80P(2)(d) on the interest income, and the disallowance was deleted.

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