Deduction for interest from co-operative bank deposits under section 80P(2)(d) remains available where precedent treats the bank as a co-operative society.

Interest earned by a co-operative society from deposits or investments with a co-operative bank was treated as eligible for deduction under section 80P(2)(d). The jurisdictional High Court principle applied was that a co-operative bank is itself a co-operative society for this purpose, and the exclusion in section 80P(4) does not deny deduction under section 80P(2)(d) absent a corresponding amendment to that clause. Existing precedent was considered decisive, leaving no scope to disallow the deduction on such interest income.

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

Analysis: The issue was treated as settled by the jurisdictional High Court, which held that a co-operative bank is itself a co-operative society for the purpose of section 80P(2)(d). The exclusion contained in section 80P(4) was held not to deny deduction under section 80P(2)(d) in the absence of any corresponding amendment to that clause. The decision also reiterated that the existence of judicial precedent on the point leaves no scope to deny the deduction on interest earned from investment with a co-operative bank.

Conclusion: Deduction under section 80P(2)(d) was held allowable to the assessee on interest income earned from investments with co-operative banks.

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