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

Interest earned by a co-operative housing society from deposits placed with co-operative banks qualifies for deduction under section 80P(2)(d) of the Income-tax Act, 1961, because a co-operative bank is treated as a co-operative society for that purpose. The Tribunal followed its coordinate bench view and read the statutory language, together with the definition of co-operative society in section 2(19), as covering interest derived from investments with another co-operative society. The disallowances made by the lower authorities were therefore held unjustified, and the deduction was allowed in favour of the assessee.

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Issues: Whether interest income earned by a co-operative housing society from investments with co-operative banks is eligible for deduction under section 80P(2)(d) of the Income-tax Act, 1961, and whether the disallowance sustained by the lower authorities was justified.

Analysis: The Tribunal followed its coordinate bench decision holding that a co-operative bank falls within the expression co-operative society for the purpose of section 80P(2)(d). It noted that the statutory language grants deduction in respect of interest derived by a co-operative society from its investment with any other co-operative society, and that the definition of co-operative society under section 2(19) supports this reading. The Tribunal accepted that interest earned on deposits with co-operative banks is covered by the provision and that the lower authorities were not justified in denying the deduction.

Conclusion: The issue was decided in favour of the assessee, and the deduction under section 80P(2)(d) was held allowable on interest received from co-operative banks.

Final Conclusion: The assessee succeeded on the common issue in both assessment years, and the disallowances made by the revenue authorities were reversed.

Ratio Decidendi: Interest earned by a co-operative society from deposits placed with a co-operative bank qualifies for deduction under section 80P(2)(d) of the Income-tax Act, 1961 because the bank is treated as a co-operative society for that purpose.

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