Section 80P(4) applies only to co-operative banks, not to a credit co-operative society serving its members.

Section 80P(4) excludes only a co-operative bank, as understood under Part V of the Banking Regulation Act, and does not extend to a co-operative society merely because it provides credit facilities to its members. The insertion of section 2(24)(viia) does not convert such a society into a co-operative bank, so the assessee remained outside the exclusion and deduction under section 80P(2)(a)(i) was allowable.

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Issues: Whether a credit co-operative society carrying on banking-like activities with its members is hit by section 80P(4) of the Income-tax Act, 1961 and thereby denied deduction under section 80P(2)(a)(i).

Analysis: The exclusion in section 80P(4) applies only to a co-operative bank, as understood with reference to Part V of the Banking Regulation Act, 1949, and not to every co-operative society that provides credit facilities to its members. The insertion of section 2(24)(viia) does not convert a credit co-operative society into a co-operative bank. The distinction between a co-operative bank and a co-operative society remains material, and the assessee, being a co-operative society and not a co-operative bank, falls outside the exclusion. The CBDT clarification and the prior tribunal and High Court view support this construction.

Conclusion: Section 80P(4) does not apply to the assessee, and deduction under section 80P(2)(a)(i) is allowable in favour of the assessee.

Ratio Decidendi: The exclusion in section 80P(4) operates only against co-operative banks and does not extend to a co-operative society merely because it provides credit facilities to its members.

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