Co-operative society status under Section 80P preserved where statutory conditions for treating it as a co-operative bank were not met.

A credit society that provides facilities only to its members is not treated as a co-operative bank unless it satisfies the statutory attributes of a primary co-operative bank under the Banking Regulation Act, including banking as its principal business, the prescribed share capital and reserves, and bye-laws excluding admission of another co-operative society as a member. On the recorded facts, the assessee was registered only as a co-operative society, not as a bank, and the authorities found no lending or credit activity to non-members. The Court found no perversity or misreading in those concurrent findings and held that no substantial question of law arose; the deduction under Section 80P(2)(a)(i) was therefore available.

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Issues: Whether a credit society providing facilities only to its members is to be treated as a co-operative bank so as to deny deduction under Section 80P(2)(a)(i) of the Income-tax Act, and whether any substantial question of law arose from the concurrent factual findings.

Analysis: A co-operative bank, for the purpose of Section 80P, must satisfy the statutory attributes of a primary co-operative bank under the Banking Regulation Act, namely that its principal business is banking, its paid-up share capital and reserves meet the prescribed minimum, and its bye-laws do not permit admission of another co-operative society as a member. The concurrent findings recorded that the assessee was registered as a co-operative society, not as a bank, and that the relevant statutory conditions for treating it as a co-operative bank were not satisfied. The Court also noted that the material on record did not show any lending or credit activity to non-members, and that there was no perversity or misreading in the findings of the authorities below.

Conclusion: The assessee remained a co-operative society entitled to deduction under Section 80P(2)(a)(i), and no substantial question of law arose for consideration.

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