Section 80P(2)(d) deduction for interest from co-operative bank deposits upheld for co-operative society investors.

Interest income earned by a co-operative housing society from deposits with co-operative banks was treated as deductible under Section 80P(2)(d) because the provision applies to income from investments with another co-operative society, and a co-operative bank remains a co-operative society for that limited purpose. Section 80P(4) was read as excluding only the co-operative bank's own claim to deduction, not the investing society's claim under Section 80P(2)(d). The disallowance was therefore unsustainable, subject to factual verification by the jurisdictional Assessing Officer.

---

---

Issues: Whether interest income earned by a co-operative housing society from deposits kept with co-operative banks is eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961, despite the exclusion in Section 80P(4).

Analysis: The deduction under Section 80P(2)(d) applies where a co-operative society earns interest or dividend income from investments with another co-operative society. A co-operative bank continues to be a co-operative society for this limited purpose, and Section 80P(4) excludes only the co-operative bank's own claim to deduction under Section 80P, not the claim of an investing co-operative society under Section 80P(2)(d). The issue was treated as covered by binding and coordinate-bench precedent, and the disallowance was therefore unsustainable.

Conclusion: The interest income was held deductible under Section 80P(2)(d), and the disallowance was deleted, subject to factual verification by the jurisdictional Assessing Officer.

---