Section 80P(2) deduction turns on actual business activity, not a cooperative society's name or objects.

Deduction under Section 80P(2) depends on the actual business carried on by a cooperative society, not on its name or the wording of its bye-laws. A society is not treated as a cooperative bank merely because its title earlier included "Bank" or its objects permitted banking-like activity. Where the record contains no specific transaction showing dealings with non-members, an adverse finding on that basis lacks evidentiary support and is perverse. The HC therefore set aside the denial of deduction and accepted the assessee's entitlement to relief under Section 80P(2).

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Issues: Whether the assessee was carrying on banking business by dealing with non-members so as to deny deduction under Section 80P(2) of the Income Tax Act, 1961, and whether the Tribunal's contrary finding was perverse.

Analysis: The entitlement to deduction under Section 80P(2) depends on the actual nature of the business carried on, not merely on the society's name or the objects stated in its bye-laws. A cooperative society cannot be treated as a cooperative bank merely because its name earlier contained the word "Bank" or because its objects clause permitted banking-like activity. The record contained no specific transaction showing dealings with non-members. The adverse finding was therefore based only on assumptions drawn from nomenclature and objects, without evidentiary support.

Conclusion: The finding that the assessee dealt with non-members was held to be perverse, and the denial of deduction was set aside in favour of the assessee.

Final Conclusion: The appeals were allowed and the assessee was held entitled to succeed on the claim for deduction under Section 80P(2).

Ratio Decidendi: Deduction for a cooperative society cannot be denied on the basis of its name or objects alone; there must be evidence of the actual business activity alleged to disqualify it.

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