Deduction for interest from fixed deposits with co-operative banks upheld under section 80P(2)(d) for co-operative societies.

Interest earned by a co-operative society from fixed deposits with co-operative banks was treated as deductible under section 80P(2)(d) of the Income-tax Act, on the view that a co-operative bank falls within the expression "co-operative society" for that provision. The Tribunal followed judicial precedents supporting that interpretation and distinguished contrary authority. On that basis, the interest income from such deposits qualified for deduction, and the disallowance of deduction under section 80P(2)(d) was set aside.

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

Analysis: The Tribunal followed the view that, for the purposes of section 80P(2)(d), a co-operative bank continues to fall within the expression "co-operative society" and that interest derived by a co-operative society from investments with such a bank qualifies for deduction. Relying on the line of judicial precedents favouring the assessee and distinguishing contrary authority, the Tribunal held that the assessee's interest income from deposits with co-operative banks was deductible under the said provision.

Conclusion: The issue was decided in favour of the assessee and the disallowance of deduction under section 80P(2)(d) was set aside.

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