Credit co-operative society exemption under section 80P survives where member-only lending does not make it a co-operative bank.

A credit co-operative society that provides credit facilities only to its members is not hit by section 80P(4) because that exclusion applies to co-operative banks, not to a society lacking the attributes of a co-operative bank. The Tribunal, relying on the CBDT clarification and binding High Court authority, treated the assessee as a co-operative society registered under the co-operative law and therefore within section 80P(2)(a)(i). The deduction under section 80P(2)(a)(i) is allowable where the entity is engaged in member-based credit activity and does not function as a co-operative bank.

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Issues: Whether a credit co-operative society providing credit facilities only to its members is hit by section 80P(4) of the Income-tax Act, 1961 and thereby denied deduction under section 80P(2)(a)(i).

Analysis: The assessee was registered as a co-operative society and not as a co-operative bank. Section 80P(4) withdraws the deduction only in relation to a co-operative bank other than the specified agricultural credit institutions. The Tribunal noted that the statutory exclusion is aimed at co-operative banks, while a society engaged in providing credit facilities to its members continues to fall within section 80P(2)(a)(i). The reasoning was consistent with the cited CBDT clarification and the binding High Court decisions relied upon, which recognized that a credit co-operative society without the attributes of a co-operative bank is outside the mischief of section 80P(4).

Conclusion: Section 80P(4) does not apply to the assessee and the deduction under section 80P(2)(a)(i) is allowable.

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