Section 80P exclusion for regional rural banks limits deduction claims despite reliance on deeming fiction and withdrawn guidance.

A regional rural bank is not entitled to deduction under section 80P after insertion of section 80P(4) unless it falls within the specific statutory exceptions for primary agricultural credit societies or primary co-operative agricultural and rural development banks. The deeming fiction in section 22 of the Regional Rural Banks Act, 1976 is confined to its limited purpose and cannot override the express exclusion in section 80P(4). The amended provision, together with the CBDT clarification, indicates that the deduction is unavailable to regional rural banks from assessment year 2007-08 onwards, and reliance on a withdrawn circular does not change that position.

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Issues: Whether a regional rural bank is entitled to deduction under section 80P of the Income-tax Act, 1961 after insertion of section 80P(4).

Analysis: The assessee was a regional rural bank carrying on banking activities and was not a primary agricultural credit society or a primary co-operative agricultural and rural development bank. The deeming provision in section 22 of the Regional Rural Banks Act, 1976 could not be extended beyond its limited purpose so as to override the specific exclusion in section 80P(4). The statutory amendment and the CBDT circular clarified that, from assessment year 2007-08 onwards, deduction under section 80P was not available to regional rural banks. The assessee's reliance on the deeming fiction and the withdrawn circular did not alter the operation of the amended provision.

Conclusion: The assessee was not entitled to deduction under section 80P, and the disallowance was correctly sustained.

Final Conclusion: The appeals failed on the sole substantive issue, and the denial of deduction under section 80P stood confirmed.

Ratio Decidendi: A regional rural bank is excluded from deduction under section 80P(4) unless it falls within the specific statutory exceptions, and a limited deeming fiction cannot be extended to defeat that exclusion.

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