Co-operative bank deposit interest qualifies for co-operative society deduction despite the exclusion applicable to banks themselves.

Interest or dividend income derived by a co-operative society from investments with another co-operative society qualifies for deduction under section 80P(2)(d). The exclusion of co-operative banks from claiming deduction under section 80P(4) does not change their character as co-operative societies for a depositor co-operative society's claim under section 80P(2)(d). Where conflicting non-jurisdictional High Court views exist, the favourable interpretation supports deduction of interest earned by a co-operative credit society on investments or fixed deposits with co-operative banks.

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Issues: Whether a co-operative credit society is entitled to deduction under section 80P(2)(d) of interest income earned on investments or fixed deposits with co-operative banks.

Analysis: Section 80P(2)(d) allows deduction of interest or dividend income derived by a co-operative society from investments with another co-operative society. Although section 80P(4) excludes co-operative banks from claiming deduction under section 80P, it does not alter the character of a co-operative bank as a co-operative society for the purpose of the depositor society's claim under section 80P(2)(d). The applicable favourable view was preferred where non-jurisdictional High Court decisions were conflicting.

Conclusion: Interest income earned by the assessee co-operative credit society from investments or fixed deposits with co-operative banks is deductible under section 80P(2)(d), in favour of the assessee.

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