Section 80P(2)(d) deduction applies to interest earned by a co-operative society from investments with co-operative banks.

Interest earned by a co-operative housing society from deposits or investments with co-operative banks was treated as deductible under section 80P(2)(d), because the term "co-operative society" in section 2(19) is of wide import and a co-operative bank is not excluded from that character merely by section 80P(4). That provision only limits the bank's own eligibility for deduction and does not prevent a co-operative society from claiming deduction on interest derived from such investments. The contrary reliance on provisions dealing with surplus-fund income under section 80P(2)(a)(i) was held inapposite, and prior acceptance of the same claim in the assessee's own case supported the position.

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

Analysis: Section 80P(2)(d) allows deduction in respect of interest or dividend derived by a co-operative society from its investments with any other co-operative society. The expression "co-operative society" in section 2(19) is of wide import, and a co-operative bank is not taken out of that character merely because section 80P(4) denies the benefit of section 80P to the co-operative bank itself. That provision restricts the bank's own eligibility; it does not prevent a co-operative society from claiming deduction on interest earned from deposits with such bank. The decision relied on by the Revenue on surplus-fund income under section 80P(2)(a)(i) was treated as inapplicable because the present claim was under a different limb, section 80P(2)(d). The prior allowance of the same claim in the assessee's own case also supported the claim on consistency.

Conclusion: The interest income from investments with co-operative banks is deductible under section 80P(2)(d), and the disallowance was not sustainable.

Ratio Decidendi: For section 80P(2)(d), a co-operative bank is to be treated as a co-operative society, so interest earned by a co-operative society from investments with a co-operative bank qualifies for deduction, and section 80P(4) does not defeat that claim.

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