Regional rural bank deduction under section 80P(2)(a)(i) sustained where it was treated as a co-operative society.

A regional rural bank was considered entitled to deduction under section 80P(2)(a)(i) because it was treated as a co-operative society under the Regional Rural Banks Act, 1976. On that basis, section 80P(4) did not operate to deny the deduction on the facts accepted by the Tribunal. The Tribunal also followed its earlier decision in the assessee's own case and declined to accept the contrary reliance on Circular No. 6/2010 by the lower authorities. The disallowance was therefore set aside in the assessee's favour.

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Issues: Whether the assessee, a regional rural bank, was entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961, notwithstanding section 80P(4) and the departmental circular relied upon by the lower authorities.

Analysis: The Tribunal followed its earlier decision in the assessee's own case and accepted the view that, having regard to the Regional Rural Banks Act, 1976, the assessee was to be treated as a co-operative society. On that footing, the benefit of section 80P(2)(a)(i) remained available. The contrary reliance on section 80P(4) and Circular No. 6/2010 did not displace the binding effect of the coordinate bench decision on the same issue in the assessee's case.

Conclusion: The assessee was held eligible for deduction under section 80P(2)(a)(i) and the disallowance was set aside in the assessee's favour.

Ratio Decidendi: A regional rural bank treated as a co-operative society under the Regional Rural Banks Act, 1976 is entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961, and section 80P(4) does not apply to deny that benefit on the facts accepted by the Tribunal.

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