Section 80P(2)(d) deduction allowed on interest from co-operative bank deposits; disallowance deleted.

Interest earned by a co-operative housing society from deposits with co-operative banks was treated as eligible for deduction under section 80P(2)(d) because the provision covers income derived from investments with another co-operative society. Section 80P(4) was read as withdrawing the deduction only from co-operative banks themselves, not from co-operative societies receiving interest from them. The revenue's relied-on precedent was found inapplicable as it concerned section 80P(2)(a)(i), not section 80P(2)(d), and the disallowance was deleted.

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Issues: Whether interest income earned by a co-operative housing society from deposits placed with co-operative banks is eligible for deduction under section 80P(2)(d) of the Income-tax Act, 1961.

Analysis: The deduction under section 80P(2)(d) applies to interest or dividend income derived by a co-operative society from investments with another co-operative society. A co-operative bank continues to be a co-operative society for this purpose, and the exclusion in section 80P(4) withdraws the deduction only from co-operative banks themselves, not from co-operative societies receiving income from them. The precedent relied upon by the revenue was held inapplicable because it dealt with section 80P(2)(a)(i) and not section 80P(2)(d). The view that a co-operative bank is a species within the broader genus of co-operative societies was followed, along with the line of decisions supporting deduction on interest earned from co-operative banks.

Conclusion: The assessee was entitled to deduction under section 80P(2)(d) on interest earned from deposits with co-operative banks, and the disallowance was deleted.

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