Co-operative society interest deduction under section 80P(2)(d) remains available on deposits with co-operative banks.

Interest earned by a co-operative society from deposits or investments with a co-operative bank is deductible under section 80P(2)(d) where the recipient is itself a co-operative society and the income is derived from qualifying investments. Section 80P(4) restricts deduction for co-operative banks, but it does not, by itself, bar a co-operative society from claiming deduction on such interest income. The discussion also notes that denial of the deduction could not be sustained in rectification proceedings under section 154 where the claim was otherwise covered by the applicable judicial view.

---

---

Issues: Whether interest income earned by a co-operative housing society from deposits and investments with co-operative banks is deductible under section 80P(2)(d) of the Income-tax Act, 1961, and whether denial of such deduction could be sustained in rectification proceedings under section 154.

Analysis: The deduction under section 80P(2)(d) applies to income by way of interest or dividends derived by a co-operative society from its investments with any other co-operative society. The decisive requirement is the character of the recipient as a co-operative society and the source of the interest income. Section 80P(4) excludes co-operative banks from claiming deduction under section 80P, but it does not negate the entitlement of a co-operative society receiving interest from such deposits where the society otherwise satisfies section 80P(2)(d). The issue was treated as having been settled in favour of the assessee by the relevant judicial view adopted by the Tribunal.

Conclusion: The assessee was entitled to deduction under section 80P(2)(d), and the disallowance was deleted. The appeal succeeded.

Ratio Decidendi: Interest earned by a co-operative society from investments placed with a co-operative bank is deductible under section 80P(2)(d) where the recipient is itself a co-operative society, and section 80P(4) does not bar that claim.

---