Deduction for interest from co-operative bank deposits upheld for co-operative society under section 80P(2)(d).

Interest income earned by a co-operative society from deposits with a co-operative bank qualifies for deduction under section 80P(2)(d) because that provision allows deduction for interest or dividend derived from investments with any other co-operative society. No further restriction is imposed by the nature or source of the investment, and section 80P(4) only excludes a co-operative bank from claiming deduction under section 80P; it does not curtail the entitlement of a co-operative society under section 80P(2)(d). Applying the jurisdictional precedent, the ITAT held that interest from the co-operative bank satisfied the statutory condition for deduction and deleted the disallowance.

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Issues: Whether interest income earned by a co-operative society from deposits placed with a co-operative bank is eligible for deduction under section 80P(2)(d) of the Income-tax Act, 1961.

Analysis: The deduction under section 80P(2)(d) applies where the assessee is a co-operative society and the income is by way of interest or dividend derived from investments with any other co-operative society. The provision does not impose any further restriction based on the nature or source of the investment. The exclusion in section 80P(4) operates only in relation to a co-operative bank claiming deduction under section 80P and does not take away the entitlement of a co-operative society under section 80P(2)(d). Applying the jurisdictional precedent, interest received from a co-operative bank, being a co-operative society, satisfies the statutory condition for deduction.

Conclusion: The interest income earned from the co-operative bank was held eligible for deduction under section 80P(2)(d), and the disallowance was deleted.

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