Co-operative Society Deduction U/s 80P

Assessee is co operative society. In the year 2010-11 society has purchased KVP (kisan vikas patra) from Co-operative Bank out of its surplus balance, now at the time of maturity interest earned on KVP is mentioned in the Income from other sources head and claimed deduction u/s 80P. But CPC didn't allow the deduction u/s 80P to the income offered in IFOS.

Is the interest income from kvp obtained from Co-operative Bank is taxable or allow as deduction u/s 80P?

Please help to resolve the query with any supporting judgement if any.

Thank you