Cooperative credit society deduction under section 80P(2)(a)(i) remains available where section 80P(4) targets only cooperative banks.

Section 80P(4) withdraws deduction only from a cooperative bank, not from a cooperative credit society carrying on credit activities with its members. The distinction between a cooperative bank and a cooperative credit society was treated as material, and the CBDT circular was relied upon to support that section 80P(4) does not govern societies of the assessee's type. On that construction, the assessee remained entitled to deduction under section 80P(2)(a)(i), and the disallowance was not sustainable.

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Issues: Whether a cooperative credit society, and not a cooperative bank, is entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act despite section 80P(4).

Analysis: Section 80P(4) withdraws the benefit of section 80P only in relation to a cooperative bank, other than the specified exceptions. The provision does not define or exclude a cooperative society merely because it carries on credit activities with its members. The distinction between a cooperative bank and a cooperative credit society was treated as material, and the explanatory circular of the Central Board of Direct Taxes was relied upon to support the view that section 80P(4) does not govern credit cooperative societies. On that construction, the legislative insertion of section 80P(4) was held to target cooperative banks and not cooperative societies of the assessee's type.

Conclusion: The assessee was entitled to deduction under section 80P(2)(a)(i), and the disallowance based on section 80P(4) was not sustainable.

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