Section 80P deduction remains available for member-credit co-operative societies not treated as co-operative banks.

A co-operative society providing credit facilities only to its members was held to remain eligible for deduction under section 80P(2)(a)(i) because it was not shown to be a co-operative bank or primary co-operative bank under the Banking Regulation Act, 1949. The Tribunal relied on the absence of an RBI banking licence and on jurisdictional High Court rulings that section 80P(4) excludes only entities carrying on banking business as co-operative banks. The society therefore fell outside the exclusion and the deduction remained available.

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

Analysis: The dispute turned on whether the assessee could be treated as a co-operative bank or primary co-operative bank under the Banking Regulation Act, 1949 so as to fall outside the exemption in section 80P. The Tribunal noted that the assessee was registered as a co-operative society, was engaged in providing credit facilities only to its members, and did not possess a banking licence from the Reserve Bank of India. It followed the jurisdictional High Court decisions holding that a society carrying on such activities, without being an RBI-licensed co-operative bank exclusively engaged in banking business, is not excluded by section 80P(4). The Tribunal also followed its decision in the assessee's own case on the same point.

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

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