Deduction under Section 80P(2)(d) for cooperative societies covers interest from deposits with cooperative banks, allowing the claim.

Interest income earned by a cooperative society from deposits or investments with cooperative banks qualifies for deduction under Section 80P(2)(d) because cooperative banks are treated as cooperative societies for the provision's purpose; the established line of precedent treating such inter-society investment income as deductible was applied and followed. Consequently, prior assessment and appellate disallowances were set aside and the claimed deduction in respect of the interest income was allowed, the operative legal effect being full deductibility of such investment interest for cooperative societies.

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Issues: Whether interest income earned by a cooperative society from its deposits/investments with cooperative banks is eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961.

Analysis: The Tribunal examined prior decisions of coordinate Benches and recent pronouncements of the same Bench holding that interest/dividend income derived by a cooperative society from investments with cooperative banks is covered by the deduction under Section 80P(2)(d). The Tribunal applied the consistent line of authority establishing that cooperative banks are essentially cooperative societies for the purpose of Section 80P(2)(d), and that interest income from deposits/investments with such banks falls within the scope of the deduction. The Tribunal therefore followed the catena of decisions and the cited precedents in allowing the claim.

Conclusion: Deduction under Section 80P(2)(d) of the Income-tax Act, 1961 is allowable in respect of the interest income earned by the assessee from deposits/investments with cooperative banks; the assessment and appellate findings disallowing the deduction are set aside and the deduction of Rs. 10,89,512/- is to be allowed.

Ratio Decidendi: Interest or dividend income received by a cooperative society from its investments with another cooperative society (including cooperative banks treated as cooperative societies) is deductible in full under Section 80P(2)(d) of the Income-tax Act, 1961.

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