Co-operative society interest deduction under section 80P(2)(d) extended to deposits with co-operative banks and societies.

A co-operative housing society was treated as a co-operative society under the Income-tax Act, and interest income derived from deposits or investments with co-operative banks or other co-operative societies was held eligible for deduction under section 80P(2)(d). The provision was applied broadly to cover such interest as income from investments with another co-operative society, including co-operative banks, and prior decisions were followed on that basis. The disallowance of the claimed amount was therefore set aside in favour of the assessee.

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Issues: Whether the assessee, a co-operative housing society, was entitled to deduction under section 80P(2)(d) of the Income-tax Act, 1961 on interest earned from deposits or investments with co-operative banks or co-operative societies.

Analysis: The assessee was a co-operative society within the meaning of section 2(19) of the Income-tax Act, 1961. Section 80P(2)(d) grants deduction in respect of income by way of interest or dividend derived by a co-operative society from its investments with any other co-operative society. The provision was read to cover interest income earned from investments with co-operative societies, including co-operative banks. The issue was treated as settled by prior decisions, and the Tribunal followed the view that such interest income remains eligible for deduction.

Conclusion: The assessee was held entitled to deduction under section 80P(2)(d) of the Income-tax Act, 1961 in respect of the disallowed amount, and the disallowance was set aside in favour of the assessee.

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