Co-operative society interest deduction under Section 80P(2)(d) upheld in principle, subject to limited factual verification.

Interest earned by a co-operative housing society from investments with a co-operative bank was treated as eligible for deduction under Section 80P(2)(d) because a co-operative bank was regarded as falling within the ambit of a co-operative society for this purpose, and Section 80P(4) did not defeat the claim. The only remaining exercise was limited factual verification of the interest quantum and the genuineness of the underlying transactions. The assessee's claim was accepted in principle, and the matter was sent back to the Assessing Officer for that restricted verification, with the appeal allowed for statistical purposes.

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Issues: Whether interest earned by a co-operative housing society from investments made with a co-operative bank is deductible under Section 80P(2)(d) of the Income-tax Act, 1961, and whether the matter required limited factual verification before the Assessing Officer.

Analysis: Section 80P(2)(d) allows deduction in respect of interest derived by a co-operative society from investments with another co-operative society. The Tribunal held that a co-operative bank falls within the ambit of a co-operative society for this purpose and relied on the Supreme Court's settled position that Section 80P(4) does not defeat the claim where the interest is earned from a co-operative bank. On the facts, the only surviving exercise was to verify the quantum of interest income of Rs. 15,24,410 and the genuineness of the underlying transactions.

Conclusion: The assessee's claim under Section 80P(2)(d) was accepted in principle, but the matter was restored to the Assessing Officer for limited verification, and the appeal was allowed for statistical purposes.

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