Section 80P(2)(d) deduction upheld for interest from co-operative bank investments, following the view that it is a co-operative society.

A co-operative society was entitled to deduction under section 80P(2)(d) on interest income from investments made with another co-operative society, including a co-operative bank, because the provision was read as covering interest or dividend derived from such investments. The contrary reliance on Totgars was rejected as distinguishable since it concerned section 80P(2)(a)(i) and surplus funds, not deduction under section 80P(2)(d). The tribunal followed earlier coordinate bench decisions and held that a co-operative bank falls within the expression "co-operative society" for this purpose.

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Issues: Whether a co-operative society is entitled to deduction under section 80P(2)(d) of the Income-tax Act, 1961 on interest income earned from investments made with another co-operative society, including a co-operative bank.

Analysis: The issue was held to be covered by earlier coordinate bench decisions and supported by the view that a co-operative bank falls within the expression "co-operative society" for the purpose of section 80P(2)(d). The decision relied upon by the lower authorities on Totgars was found distinguishable because it dealt with section 80P(2)(a)(i) and the taxability of surplus funds, not the specific deduction under section 80P(2)(d). The statutory language of section 80P(2)(d) was read as allowing deduction of interest or dividend income derived by a co-operative society from investments with another co-operative society.

Conclusion: The assessee was entitled to deduction under section 80P(2)(d) on the interest income earned from investments with co-operative banks or other co-operative societies.

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