Section 80P deduction for credit co-operative societies is not denied merely for insignificant non-member income, absent co-operative bank status.

A credit co-operative society remains eligible for deduction under section 80P(2)(a)(i) where it is not shown to be a co-operative bank within the statutory exclusion under section 80P(4). The analysis states that an insignificant receipt from non-members does not by itself defeat eligibility or convert the society into a co-operative bank. On the facts, the entity was treated as a credit co-operative society, so the Revenue's objection failed and the deduction was allowed to remain available.

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Issues: Whether the assessee, being a credit co-operative society, was entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 despite the Revenue's plea that it functioned as a co-operative bank and in view of section 80P(4) and section 2(24)(viia) of the Income-tax Act, 1961.

Analysis: The assessee's claim for deduction under section 80P(2)(a)(i) was examined in the context of the statutory exclusion applicable to co-operative banks. Reliance was placed on the principle that a co-operative society does not cease to be eligible merely because an insignificant part of its receipts comes from non-members, if it cannot be regarded as a co-operative bank on that ground. On the facts, the assessee was treated as a credit co-operative society and not as a co-operative bank.

Conclusion: The Revenue's challenge to the allowance of deduction under section 80P(2)(a)(i) failed, and the assessee remained entitled to the deduction.

Ratio Decidendi: A credit co-operative society cannot be denied deduction under section 80P(2)(a)(i) merely because of an insignificant proportion of income from non-members, unless it is shown to be a co-operative bank within the statutory exclusion.

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