Section 80P(2)(d) deduction and limited summary processing: interest from co-operative banks remains eligible, and disallowance under section 143(1) is constrained.

Section 143(1) permits only limited summary-processing adjustments, and a deduction under section 80P(2)(d) cannot be disallowed unless the claim is an incorrect claim apparent from the return or otherwise falls within the statutory grounds; a mere characterization of interest under another income head does not justify such adjustment. The document also states that interest earned by a co-operative society from co-operative banks remains eligible for deduction under section 80P(2)(d) because co-operative banks retain the character of co-operative societies for this purpose, and section 80P(4) does not apply where the assessee is not a co-operative bank.

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Issues: (i) Whether disallowance of deduction under section 80P(2)(d) could be made as an adjustment while processing the return under section 143(1). (ii) Whether interest earned by a co-operative society from co-operative banks qualifies for deduction under section 80P(2)(d).

Issue (i): Whether disallowance of deduction under section 80P(2)(d) could be made as an adjustment while processing the return under section 143(1).

Analysis: Section 143(1)(a) permits only limited adjustments, including arithmetical errors, apparent incorrect claims, specified loss disallowance, and certain other enumerated items. Disallowance of a Chapter VI-A deduction is permissible under section 143(1)(a)(v) only when the return is filed beyond the due date. The claim for deduction under section 80P(2)(d) was not shown to be an incorrect claim apparent from the return, because the deduction was not subject to any monetary cap, percentage limit, or other condition falling within the statutory meaning of an incorrect claim. The mere presentation of part of the interest under the head income from other sources did not change the character of the receipt for the purpose of deciding the deduction claim at the summary-processing stage.

Conclusion: The adjustment disallowing the deduction under section 80P(2)(d) was not permissible under section 143(1), and the intimation was unsustainable.

Issue (ii): Whether interest earned by a co-operative society from co-operative banks qualifies for deduction under section 80P(2)(d).

Analysis: Section 2(19) defines a co-operative society, and the relevant state co-operative law treated co-operative banks as co-operative societies carrying on banking business. Section 80P(2)(d) grants deduction for income by way of interest or dividends derived by a co-operative society from its investments with any other co-operative society. Since the recipient entities were co-operative banks that retained the character of co-operative societies, the interest earned from deposits with them fell within the deduction provision. Section 80P(4) did not apply because the assessee was not a co-operative bank.

Conclusion: The interest income from the co-operative banks was eligible for deduction under section 80P(2)(d), and the assessee succeeded on merits.

Final Conclusion: The summary disallowance was held to be beyond the scope of section 143(1), and the assessee's interest income from co-operative banks was held deductible under section 80P(2)(d).

Ratio Decidendi: A deduction under section 80P(2)(d) cannot be disallowed in summary processing under section 143(1) unless the adjustment falls squarely within the limited statutory grounds, and interest earned by a co-operative society from co-operative banks that retain the character of co-operative societies is deductible under that provision.

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