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

A co-operative society's interest income from deposits or investments with a co-operative bank qualifies for deduction under section 80P(2)(d) of the Income-tax Act. The Tribunal followed co-ordinate bench authority treating a co-operative bank as a co-operative society for this purpose, and held that section 80P(4) withdraws the deduction only from co-operative banks themselves, not from a co-operative society earning interest from such investments. Where non-jurisdictional High Court views conflicted, the Tribunal applied the interpretation favourable to the assessee and allowed the deduction.

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Issues: Whether a co-operative society is entitled to deduction under section 80P(2)(d) of the Income-tax Act, 1961 on interest income earned from deposits/investments made with a co-operative bank.

Analysis: The Tribunal followed earlier co-ordinate bench decisions holding that a co-operative bank continues to be a co-operative society for the purposes of section 80P(2)(d), and that the interest earned by a co-operative society from investments with such a bank qualifies for deduction. It relied on the view that the restriction in section 80P(4) withdraws deduction from co-operative banks themselves, but does not take away the entitlement of an assessee co-operative society receiving interest from investments made with another co-operative society. The Tribunal also preferred the view favourable to the assessee where there were conflicting non-jurisdictional High Court decisions.

Conclusion: The assessee was entitled to deduction under section 80P(2)(d) on the interest income from co-operative bank deposits, and the denial of deduction was set aside.

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