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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether interest earned by a co-operative housing society from deposits with co-operative banks is deductible under section 80P(2)(d) of the Income-tax Act, 1961.
Analysis: The claim turned on whether a co-operative bank falls within the expression "co-operative society" for the purpose of section 80P(2)(d). The statutory framework allows deduction of income by way of interest or dividend derived from investment with any other co-operative society. The Tribunal noted that the definition of co-operative society in section 2(19) is broad, and that a co-operative bank, under the relevant State co-operative law, is itself a co-operative society carrying on banking business. On a plain reading of the provision, interest earned from deposits placed with co-operative banks is therefore treated as income from investment with another co-operative society. Section 80P(4) was not viewed as defeating the assessee's claim on these facts.
Conclusion: The interest income from deposits with co-operative banks was held eligible for deduction under section 80P(2)(d), and the disallowance was unsustainable.
Final Conclusion: The assessee succeeded on the sole issue and the addition made on account of interest income from co-operative banks was deleted.
Ratio Decidendi: A co-operative bank, being a co-operative society, qualifies as "any other co-operative society" for the purpose of section 80P(2)(d), and interest earned by a co-operative society from deposits with such bank is deductible.
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