Section 80P exclusion applies only to co-operative banks, preserving deduction for member-based credit co-operative societies.

Section 80P(4) was confined to co-operative banks and did not extend to a credit co-operative society merely because it provided credit facilities to its members. The assessee was not shown to be a co-operative bank within the Banking Regulation Act, 1949, and the CBDT circular was read consistently with that limited exclusion. On that basis, the society continued to qualify for deduction under section 80P(2)(a)(i), reflecting the view that the legislative intent was to withdraw the benefit from co-operative banks, not from all member-based credit societies.

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Issues: Whether section 80P(4) of the Income-tax Act, 1961 excludes a credit co-operative society from claiming deduction under section 80P(2)(a)(i) on income from providing credit facilities to its members.

Analysis: Section 80P(4) withdraws the benefit of section 80P only in relation to a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. The assessee was a co-operative society engaged in credit activity with its members and was not shown to be a co-operative bank within the meaning of the Banking Regulation Act, 1949. The circular issued by the Central Board of Direct Taxes clarified that the exclusion does not extend to credit co-operative societies that are not co-operative banks. The Tribunal also followed its earlier view that the legislative intent was to exclude co-operative banks and not all societies providing credit facilities to members.

Conclusion: Section 80P(4) did not apply to the assessee. The assessee remained eligible for deduction under section 80P(2)(a)(i), and the revenue's challenge failed.

Final Conclusion: The appeal was dismissed because the assessee, being a credit co-operative society and not a co-operative bank, was not hit by the statutory exclusion in section 80P(4).

Ratio Decidendi: The exclusion in section 80P(4) applies only to co-operative banks and does not deny deduction under section 80P(2)(a)(i) to a co-operative society merely because it provides credit facilities to its members.

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