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Issues: Whether a co-operative credit society engaged in providing credit facilities to its members, and not holding a banking licence, was entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961, or whether section 80P(4) applied to deny the claim by treating it as a co-operative bank.
Analysis: The deduction under section 80P(2)(a)(i) is available to a co-operative society carrying on the business of banking or providing credit facilities to its members. The exclusion in section 80P(4) applies only to a co-operative bank other than the specified agricultural credit institutions. Applying the statutory definitions in the Banking Regulation Act, 1949, and following the jurisdictional High Court decisions relied on by the first appellate authority, the Tribunal noted that the assessee was registered as a co-operative society, was engaged in providing credit facilities only to its members, and was not shown to be a co-operative bank or to possess an RBI banking licence.
Conclusion: The assessee was not hit by section 80P(4) and remained eligible for deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961.
Ratio Decidendi: A co-operative society that only provides credit facilities to its members and is not a co-operative bank carrying on banking business is not excluded by section 80P(4) from claiming deduction under section 80P(2)(a)(i).
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