Section 80P deduction for interest from co-operative banks upheld for co-operative societies under settled legal position.

Interest earned by a co-operative society from deposits or investments with co-operative banks qualifies for deduction under section 80P(2)(d), because a co-operative bank is treated as a co-operative society for that purpose. Section 80P(4) excludes only co-operative banks as assessees from claiming deduction under section 80P; it does not withdraw a co-operative society's entitlement to deduct interest income received from such banks. The assessee's claim was therefore allowed in its favour.

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Issues: Whether the assessee, a co-operative society, was entitled to deduction under section 80P(2)(d) in respect of interest income earned from investments made with co-operative banks.

Analysis: The jurisdictional High Court decisions relied upon held that interest earned by a co-operative society from deposits or investments with a co-operative bank is eligible for deduction under section 80P(2)(d), since a co-operative bank remains a co-operative society for this purpose. It was further held that section 80P(4) excludes only co-operative banks as assessees from claiming deduction under section 80P, and does not take away the entitlement of a co-operative society to claim deduction on interest income received from such banks. In view of this settled position, the assessee's claim was covered in its favour.

Conclusion: The assessee was entitled to deduction under section 80P(2)(d) on the interest income earned from co-operative banks.

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