Co-operative society interest deduction upheld for deposits with co-operative bank under Section 80P(2)(d).

Interest earned by a co-operative society from surplus funds invested with a co-operative bank was treated as deductible under Section 80P(2)(d) of the Income-tax Act because the provision covers income derived from investments with another co-operative society, and the deposits with a co-operative bank were regarded as qualifying investments for that purpose. The reliance on Totgars Co-operative Sales Society Ltd. did not defeat the claim, as that decision was considered relevant to Section 80P(2)(a)(i) and not determinative of a deduction claim under Section 80P(2)(d). The disallowance was set aside and the deduction was allowed.

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Issues: Whether interest income earned by a co-operative society from investments made with a co-operative bank is deductible under Section 80P(2)(d) of the Income-tax Act, 1961, and whether the decision in Totgars Co-operative Sales Society Ltd. bars such deduction.

Analysis: The interest in question arose from surplus funds invested by co-operative societies in co-operative banks. Section 80P(2)(d) grants deduction for interest or dividend derived by a co-operative society from investments with any other co-operative society. The provision was applied as covering such investments, and the Court treated co-operative bank deposits as qualifying investments for this purpose. The reliance on Totgars Co-operative Sales Society Ltd. was held not to defeat the claim because that decision was considered in the context of Section 80P(2)(a)(i) and not as a ruling on Section 80P(2)(d).

Conclusion: The deduction under Section 80P(2)(d) was held admissible on interest earned from investment with a co-operative bank, and the assessees succeeded.

Final Conclusion: The disallowance of deduction was set aside and the appeals were allowed.

Ratio Decidendi: Interest earned by a co-operative society from investments with a co-operative bank is deductible under Section 80P(2)(d), and precedent dealing with Section 80P(2)(a)(i) does not control that claim.

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