Co-operative society deduction under Section 80P upheld where activities did not make the assessee a co-operative bank.

Section 80P(4) withdraws deduction only from a co-operative bank, while a co-operative society providing credit facilities to its members remains eligible under section 80P(2)(a)(i). On the facts, there was no material to show that the assessee was a co-operative bank within the Banking Regulation Act, 1949, and its nominal member structure did not convert it into one. The assessee was found to function as a credit co-operative society, not a co-operative bank, and was therefore entitled to the deduction.

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Issues: Whether the assessee was a co-operative bank hit by section 80P(4) of the Income-tax Act, 1961, or a co-operative credit society entitled to deduction under section 80P(2)(a)(i).

Analysis: The dispute turned on the character of the assessee's activities and the scope of section 80P(4). That provision withdraws the deduction only from a co-operative bank, while the benefit under section 80P(2)(a)(i) remains available to a co-operative society providing credit facilities to its members. On the facts, no material was shown to establish that the assessee was a co-operative bank within the meaning of the Banking Regulation Act, 1949, or that its nominal member structure converted it into such a bank. The record supported the finding that the assessee functioned as a credit co-operative society and not as a co-operative bank.

Conclusion: The assessee was not hit by section 80P(4) and was entitled to deduction under section 80P(2)(a)(i).

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