Co-operative bank classification under tax law turns on statutory conditions; failure to meet them preserves deduction eligibility.

A co-operative society carrying on banking or credit activity is excluded from section 80P(2)(a)(i) only if it qualifies as a co-operative bank under section 80P(4), which requires satisfaction of the statutory conditions of a primary co-operative bank under the Banking Regulation Act, 1949. On the stated facts, although deposits were accepted from members and non-members, the bye-laws allowed admission of other co-operative societies as members, so the third statutory condition was not cumulatively satisfied. The entity therefore could not be treated as a co-operative bank and remained entitled to deduction under section 80P(2)(a)(i).

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Issues: Whether the assessee was a co-operative bank so as to be excluded by section 80P(4) of the Income-tax Act, 1961, or whether it remained a co-operative society entitled to deduction under section 80P(2)(a)(i).

Analysis: The relevant scheme distinguishes between a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members, and a co-operative bank to which section 80P(4) applies. A co-operative bank, for this purpose, must satisfy the statutory requirements of a primary co-operative bank under the Banking Regulation Act, 1949. On the facts, the assessee accepted deposits from members as well as non-members, but its bye-laws permitted admission of other co-operative societies as members, so the third condition for a primary co-operative bank was not met. Since all three statutory conditions were not cumulatively satisfied, the assessee could not be treated as a co-operative bank.

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

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