Deduction under Section 80P(2)(d) for interest and dividend from cooperative bank deposits allowed following precedent.

Deduction under Section 80P(2)(d) was applied to interest and dividend received from deposits with a cooperative bank (PDCC Bank); the article explains that, following coordinate-bench decisions and the tribunal's earlier decision in the assessee's own case, cooperative banks are treated as cooperative societies and income from deposits with them falls within the statutory deduction, and therefore the deduction was held allowable in favour of the assessee.

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Issues: (i) Whether interest and dividend income received by the assessee from deposits with cooperative banks (PDCC Bank) is eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961.

Analysis: The issue was examined in detail with reference to Section 80P(2)(d) of the Income-tax Act, 1961 which provides deduction for income by way of interest or dividend derived by a cooperative society from its investment with any other cooperative society. The Tribunal followed a series of coordinate-bench decisions and the Tribunal's earlier decision in the assessee's own case for A.Y. 2018-19, which consistently held that cooperative banks, though carrying on banking activity, are essentially cooperative societies and income from deposits with such cooperative banks falls within Section 80P(2)(d). The analysis applied the statutory provision to the facts that the assessee earned interest and dividend from PDCC Bank and relied on the principle of following coordinate bench precedents where the same question was not res integra.

Conclusion: Deduction under Section 80P(2)(d) of the Income-tax Act, 1961 in respect of interest and dividend income received from PDCC Bank is allowable in favour of the assessee for the assessed amount of Rs. 10,65,460/-.

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