Deduction under section 80P(2)(d) for interest from co-operative banks upheld for co-operative society; section 80P(4) not a bar.

Interest earned by a co-operative society from deposits and investments with co-operative banks was treated as eligible for deduction under section 80P(2)(d) of the Income-tax Act. The ITAT followed its consistent view and preferred the line of authority supporting the assessee where non-jurisdictional precedents conflicted, holding that section 80P(4) bars deduction only for co-operative banks claiming the benefit and does not deny deduction to a co-operative society receiving such interest. The disallowance was deleted, subject to limited verification by the Assessing Officer of the factual position of the interest income.

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Issues: Whether interest income earned by a co-operative society from deposits and investments made with co-operative banks is eligible for deduction under section 80P(2)(d) of the Income-tax Act, 1961, and whether section 80P(4) bars such deduction.

Analysis: The interest income from investments with co-operative banks was treated as qualifying for deduction under section 80P(2)(d). The Tribunal followed its earlier consistent view that a co-operative society earning such interest is entitled to the deduction, and preferred the line of authority supporting the assessee where there was a conflict in non-jurisdictional precedents. It also held that section 80P(4) restricts deductions only in the case of co-operative banks claiming the benefit and does not deny deduction to a co-operative society receiving interest from such banks. The factual position of the interest earned was directed to be verified by the Assessing Officer for limited purposes.

Conclusion: The assessee was held entitled to deduction under section 80P(2)(d) on interest income from co-operative banks and the disallowance was deleted, subject to verification of the factual aspect by the Assessing Officer.

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