Co-operative bank interest qualifies for Section 80P(2)(d) deduction despite the exclusion applicable to co-operative banks themselves.

Interest earned by a co-operative credit society from investments or deposits with a co-operative bank qualifies for deduction under Section 80P(2)(d). Section 80P(4) excludes co-operative banks from claiming deduction under Section 80P but does not prevent another co-operative society from claiming deduction on interest received from investments with a co-operative bank that remains a co-operative society. Where non-jurisdictional High Court decisions conflict, the interpretation favourable to the assessee applies. The stated position supports deduction of such interest income and deletion of the related disallowance.

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Issues: Whether interest earned by a co-operative credit society on investments or deposits with co-operative banks qualifies for deduction under Section 80P(2)(d) of the Income-tax Act, 1961.

Analysis: A co-operative bank continues to be a co-operative society for purposes of the deduction, notwithstanding that Section 80P(4) excludes co-operative banks themselves from claiming deduction under Section 80P. The exclusion does not deny a co-operative society deduction on interest derived from investments with a co-operative bank. The alternative claim under Section 80P(2)(d) was admissible, and consistent relief had been granted to the assessee in earlier assessment years. Where non-jurisdictional High Court decisions conflict, the interpretation favourable to the assessee was applied.

Conclusion: Interest income from investments with co-operative banks is deductible under Section 80P(2)(d) of the Income-tax Act, 1961; the disallowance was deleted for both assessment years.

Ratio Decidendi: Section 80P(4) does not bar a co-operative society from claiming Section 80P(2)(d) deduction on interest income derived from investments with a co-operative bank that is a co-operative society.

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