Co-operative society interest from co-operative banks qualifies for deduction under Section 80P(2)(d) of the Income-tax Act.

Interest earned by a co-operative housing society from fixed deposits and recurring deposits placed with co-operative banks qualifies for deduction under Section 80P(2)(d) of the Income-tax Act, 1961. The Tribunal treated a co-operative bank as a co-operative society for this purpose and held that Section 80P(4) does not defeat the claim where the assessee is itself a co-operative society earning interest from such investments. The result is that interest income received from co-operative banks falls within the deduction available under Section 80P(2)(d).

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Issues: Whether interest earned by a co-operative housing society from fixed deposits and recurring deposits placed with co-operative banks is eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961.

Analysis: The provision allows deduction of income by way of interest or dividends derived by a co-operative society from its investments with any other co-operative society. The Tribunal noted that a co-operative bank is treated as a co-operative society for this purpose, and that Section 80P(4) does not defeat the claim where the assessee itself is a co-operative society earning interest from its investments with co-operative banks. Relying on judicial precedent, the Tribunal held that the interest income received from co-operative banks falls within the scope of Section 80P(2)(d).

Conclusion: The assessee was entitled to deduction under Section 80P(2)(d) on the interest earned from co-operative banks.

Ratio Decidendi: Interest earned by a co-operative society from investments with a co-operative bank qualifies for deduction under Section 80P(2)(d), because for that purpose a co-operative bank is treated as a co-operative society.

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