Co-operative credit society not treated as co-operative bank for section 80P deduction under strict statutory interpretation.

A co-operative credit society remains distinct from a co-operative bank for section 80P(4) of the Income-tax Act, 1961, because the term "co-operative bank" is adopted by reference to the Banking Regulation Act, 1949 and must be strictly construed. Mere banking-like activities do not convert a credit society into a co-operative bank unless the statutory definition is satisfied. The withdrawal of deduction therefore applies only to entities falling within the defined category of co-operative bank, and a credit society is entitled to deduction under section 80P(2)(a)(i).

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Issues: Whether a co-operative credit society is a co-operative bank for the purpose of section 80P(4) of the Income-tax Act, 1961, and thereby disentitled to deduction under section 80P(2)(a)(i).

Analysis: The statutory scheme after insertion of section 80P(4) withdraws the deduction only from a co-operative bank, other than the specified agricultural development institutions. The expression "co-operative bank" is adopted by reference to the Banking Regulation Act, 1949. Under that Act, a co-operative bank is separately defined, and a co-operative credit society is separately defined as a distinct category whose primary object is to provide financial accommodation to its members. On a strict construction of the taxing provision, nothing can be added by intendment, and the mere fact that a credit society may carry on activities resembling banking does not make it a primary co-operative bank unless the statutory conditions for that classification are satisfied.

Conclusion: A co-operative credit society is not a co-operative bank within the meaning of section 80P(4) of the Income-tax Act, 1961, and is entitled to deduction under section 80P(2)(a)(i).

Ratio Decidendi: For the purpose of section 80P(4), a co-operative credit society remains distinct from a co-operative bank, and the withdrawal of deduction applies only to entities falling within the statutory definition of co-operative bank under the Banking Regulation Act, 1949.

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