Deduction for interest from co-operative bank deposits upheld under section 80P(2)(d) for a co-operative society.

Interest income earned by a co-operative society from deposits with a co-operative bank was held eligible for deduction under section 80P(2)(d) of the Income-tax Act. The reasoning accepted the later line of authority that treats such interest as falling within the deduction provision and held that the TDS-related amendment in section 194A(3)(v) does not bar relief under section 80P(2)(d). On that basis, the society was entitled to the deduction on the deposit interest.

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Issues: Whether the assessee was entitled to deduction under section 80P(2)(d) of the Income-tax Act, 1961 on interest income earned from deposits placed with a co-operative bank.

Analysis: The dispute turned on whether interest received by a co-operative society from deposits with a co-operative bank falls within the expression qualifying for deduction under section 80P(2)(d). The reasoning accepted the view that a co-operative bank is distinct from the class of receipts targeted by the Revenue's objection and followed the later line of authority which held that interest income derived by a co-operative society from investment with a co-operative bank is eligible for deduction. The earlier reliance on the TDS-related amendment in section 194A(3)(v) was not accepted as disabling the deduction under section 80P(2)(d).

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

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