Co-operative society deduction on interest from co-operative banks remains available under section 80P(2)(d) despite the section 80P(4) bar.

Interest and dividend earned by a co-operative credit society from investments with co-operative banks is stated to fall within section 80P(2)(d), because a co-operative bank is treated as a co-operative society for that purpose. The note further states that section 80P(4) does not bar the deduction where the recipient is not itself a co-operative bank. On that basis, the disallowance of deduction under section 80P(2)(d) is described as unjustified and the society is treated as entitled to the deduction.

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Issues: Whether the assessee, a co-operative credit society, was entitled to deduction under section 80P(2)(d) on interest and dividend earned from co-operative banks, and whether section 80P(4) barred such deduction.

Analysis: The issue was treated as settled by the Supreme Court and by co-ordinate bench decisions holding that income earned by a co-operative society from investments with a co-operative bank falls within section 80P(2)(d). A co-operative bank is regarded as a co-operative society for this purpose, and the bar in section 80P(4) does not disentitle the assessee from deduction on such interest and dividend income.

Conclusion: The disallowance under section 80P(2)(d) was held to be unjustified, and the assessee was held entitled to the deduction.

Ratio Decidendi: Interest and dividend earned by a co-operative society from a co-operative bank are deductible under section 80P(2)(d), and section 80P(4) does not exclude such deduction where the recipient is not a co-operative bank.

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