Co-operative society interest income from co-operative bank deposits qualifies for deduction under section 80P(2)(d)

Interest earned by a co-operative credit society from deposits with a co-operative bank is treated as income from investments with another co-operative society and is deductible under section 80P(2)(d) of the Income-tax Act, 1961. The discussion notes that Totgar's Co-operative Sale Society Ltd. was misplaced because it addressed section 80P(2)(a)(i), not the scope of section 80P(2)(d). Consistent jurisdictional and coordinate bench decisions were followed to confirm the deduction. The alternative claim under section 80P(2)(a)(i) was not examined because the section 80P(2)(d) claim succeeded.

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

Analysis: The deposits were made with co-operative banks which are co-operative societies. Section 80P(2)(d) allows deduction in respect of income by way of interest or dividend derived by a co-operative society from investments with another co-operative society. The reliance on Totgar's Co-operative Sale Society Ltd. was held to be misplaced because that decision concerned deduction under section 80P(2)(a)(i) and did not decide the scope of section 80P(2)(d) for investments with co-operative societies. The issue was treated as settled by consistent jurisdictional and coordinate bench decisions holding that such interest income qualifies for deduction under section 80P(2)(d).

Conclusion: The interest income was held deductible under section 80P(2)(d) of the Income-tax Act, 1961, and the disallowance was directed to be deleted. The alternative claim under section 80P(2)(a)(i) was rendered academic and not adjudicated.

Ratio Decidendi: Interest earned by a co-operative society from investments with another co-operative society, including a co-operative bank, is deductible under section 80P(2)(d) of the Income-tax Act, 1961.

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