Section 80P deduction for member-based co-operative credit societies survives where the entity is not a co-operative bank.

A co-operative credit society that accepted deposits from members and provided credit facilities only to members was treated as eligible for deduction under section 80P(2)(a)(i). The exclusion in section 80P(4) was applied as confined to co-operative banks, with the statutory meaning of "co-operative bank" under the Banking Regulation Act used to distinguish such banks from co-operative societies. As the entity was not shown to fall within the excluded category and did not operate as an exclusively banking co-operative bank, the deduction remained available.

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Issues: Whether a co-operative credit society engaged in accepting deposits from its members and providing credit facilities to them is entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 notwithstanding the exclusion in section 80P(4) and the definition of income in section 2(24)(viia).

Analysis: The assessee was found to be a co-operative society carrying on the business of accepting deposits and extending credit facilities only to its members. The exclusion in section 80P(4) applies to co-operative banks, and the statutory meaning of co-operative bank under the Banking Regulation Act, 1949 was applied to distinguish a co-operative bank from a co-operative society. Relying on the binding High Court authorities cited before it, the Tribunal accepted that where the entity is not shown to be an exclusively banking co-operative bank and does not fall within the excluded category, the benefit of section 80P(2)(a)(i) remains available.

Conclusion: The assessee was held entitled to deduction under section 80P(2)(a)(i), and the Revenue's challenge to that allowance failed.

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