Section 80P deduction for co-operative credit society upheld where banking activity amendment was held prospective.

A co-operative credit society's entitlement to deduction under section 80P turned on whether it should be treated as a co-operative bank or primary credit society. The Tribunal applied the binding jurisdictional High Court ruling that, for the relevant period, the connected enactments made no substantive distinction between a co-operative society engaged in banking activity and a co-operative bank, and that the Revenue's relied-upon amendment operated prospectively. On that basis, the society could not be denied the deduction for the assessment years in question, and the disallowance under section 80P was set aside.

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Issues: Whether the assessee, a co-operative credit society, was entitled to deduction under section 80P of the Income-tax Act, 1961, or whether it was to be treated as a co-operative bank or primary credit society so as to deny the benefit.

Analysis: The appeals turned on the character of the assessee for the relevant assessment years. The earlier appellate order had denied the deduction by treating the assessee as falling within the category of a primary credit society and therefore outside the benefit of section 80P. The Tribunal followed the binding jurisdictional High Court decision, which had held that, for the relevant period, no distinction of substance was made by the connected enactments between a co-operative society carrying on banking activity and a co-operative bank, and that the amendment relied upon by the Revenue operated prospectively. On that footing, the assessee could not be denied the claim for the assessment years in question.

Conclusion: The disallowance of deduction under section 80P was set aside and the assessee was held entitled to relief for the assessment years under appeal.

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