Co-operative society interest from co-operative bank deposits qualifies for deduction under section 80P(2)(d).

Interest earned by a co-operative society from fixed deposits and other investments placed with co-operative banks is deductible under section 80P(2)(d) of the Income-tax Act, 1961. The Tribunal applied the Supreme Court's position that a co-operative bank is a co-operative society for this purpose, and that section 80P(4) does not bar deduction where the income is interest from such investments. Following that legal position and coordinate bench decisions, the interest income was held eligible for deduction and the disallowance was deleted.

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Issues: Whether interest earned by a co-operative society from deposits placed with co-operative banks is deductible under section 80P(2)(d) of the Income-tax Act, 1961, and whether section 80P(4) bars such deduction.

Analysis: The assessee, a co-operative society, earned interest from fixed deposits and other investments with co-operative banks. The dispute was confined to the allowability of deduction under section 80P(2)(d). The Tribunal noted that the controversy stands covered by the Supreme Court's ruling that a co-operative bank is a co-operative society for the purposes of section 80P(2)(d), and that section 80P(4) does not deny the deduction where the income is interest from investments with a co-operative bank. Following that legal position and the consistent view taken in coordinate bench decisions, the Tribunal held that the interest income was eligible for deduction.

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

Ratio Decidendi: Interest earned by a co-operative society from investments with a co-operative bank qualifies for deduction under section 80P(2)(d), and section 80P(4) does not bar such deduction merely because the recipient institution is a co-operative bank.

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