Deductibility of interest under Section 80P for cooperative societies affirmed; interest from cooperative banks qualifies for deduction.

Whether interest received by a cooperative society from cooperative banks qualifies for deduction under section 80P(2)(d) was examined by reference to prior tribunal rulings and Supreme Court interpretation of the phrase "any income by way of interest." The analysis treated cooperative banks as falling within the cooperative society concept for entitlement to deduction and followed coordinate-bench decisions that allowed deduction for interest and dividend. The operative conclusion in the text is that the assessee's interest from cooperative banks is deductible under section 80P(2)(d) and the revenue's grounds were dismissed.

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Issues: Whether interest received by a cooperative society from cooperative banks is eligible for deduction under section 80P(2)(d) of the Income-tax Act, 1961.

Analysis: Relevant prior tribunal decisions were examined which treated cooperative banks as cooperative societies for the purpose of entitlement to deduction for "any income by way of interest". The effect of the statutory amendment (sub section 4 of section 80P) was considered in light of those decisions and the Supreme Court authority addressing the expression "any income by way of interest". The coordinate bench rulings finding cooperative banks to be cooperative societies and allowing deduction for interest and dividend were followed.

Conclusion: Deduction under section 80P(2)(d) of the Income-tax Act, 1961 is available for interest received by the assessee from cooperative banks; the revenue's grounds are dismissed.

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