Deduction under section 80P(2)(d) for interest from investments in other cooperative societies is available to cooperative societies.

Whether a cooperative society may claim deduction for interest income from investments with other cooperative societies is decided by applying the statutory definition of "cooperative society" to include societies registered under state cooperative laws, including cooperative banks; on that basis the Tribunal followed precedent and allowed deduction under section 80P(2)(d) for interest/dividend received from such investments, dismissing the Revenue's appeal.

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Issues: Whether a cooperative society is entitled to deduction under section 80P(2)(d) of the Income-tax Act, 1961 in respect of interest income earned on investments held with cooperative societies/banks.

Analysis: The assessee is a cooperative society registered under the Maharashtra Cooperative Societies Act, 1960 and earned interest on investments with cooperative societies/banks. Section 80P(2)(d) of the Income-tax Act, 1961 allows deduction for income by way of interest or dividend derived by a co-operative society from its investment with any other co-operative society. Section 2(19) of the Income-tax Act, 1961 defines cooperative society to include a society registered under any law for the time being in force in any state for the registration of co-operative societies, thereby encompassing cooperative banks and other state-registered cooperative societies. The Tribunal applied settled tribunal and High Court precedent holding that interest/dividend income from investments with cooperative societies, whether cooperative banks or other cooperative societies, falls within the scope of section 80P(2)(d) and followed those authorities in allowing the deduction.

Conclusion: Deduction under section 80P(2)(d) of the Income-tax Act, 1961 is available to the assessee in respect of interest income on investments with cooperative societies/banks; the Revenue's grounds of appeal are dismissed.

Ratio Decidendi: A registered cooperative society is entitled to deduction for interest or dividend income from investments with any other cooperative society under section 80P(2)(d) of the Income-tax Act, 1961, because the statutory definition of cooperative society encompasses societies registered under state cooperative enactments including cooperative banks.

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