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<h1>Co-operative society interest on co-operative bank deposits qualifies for deduction under Section 80P(2)(d), with favourable interpretation applied.</h1> Interest income earned by a co-operative society from investments with co-operative banks was held eligible for deduction under Section 80P(2)(d) of the ... Deduction u/s 80P(2)(d) - Interest from investments with co-operative banks HELD THAT: - The Tribunal held that the issue stood covered by several coordinate Bench decisions of the Mumbai Tribunal like BLUE ROSE INDUSTRIAL PREMISES CO-OP SOCIETY LTD [2024 (9) TMI 577 - ITAT MUMBAI] which had taken the view that interest earned by a co-operative society from investments with another co-operative bank is allowable as deduction u/s 80P(2)(d). Respectfully following that view, the Tribunal accepted the assessee's claim and held that such interest income was deductible. [Paras 5, 6] The disallowance of the claim under section 80P(2)(d) was reversed and the deduction was allowed. Final Conclusion: The appeal was allowed. The Tribunal held that the assessee was entitled to deduction u/s 80P(2)(d) in respect of interest earned from investments with co-operative banks. Issues: Whether interest income earned by a co-operative 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 adjustment made in processing the return could validly deny such deduction.Analysis: The Tribunal noted that coordinate benches of the Mumbai Tribunal had consistently allowed deduction under Section 80P(2)(d) in respect of interest income from co-operative banks. It adopted the view that where divergent judicial views exist on a taxing provision, the interpretation favouring the assessee should be followed. Relying on that approach, the Tribunal held that interest earned from investments with co-operative banks qualifies for deduction under Section 80P(2)(d).Conclusion: The disallowance of deduction under Section 80P(2)(d) was held to be unsustainable and the deduction was allowed in favour of the assessee.
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