Co-operative credit society deduction under section 80P upheld where it is not a co-operative bank.

A co-operative credit society providing credit facilities to its members was treated as distinct from a co-operative bank for purposes of section 80P of the Income-tax Act. Reading section 80P(4) with the Banking Regulation Act, 1949, the Tribunal applied strict construction of the taxing provision and held that the co-operative bank exclusion cannot be extended to a co-operative credit society unless it falls within the statutory meaning of a primary co-operative bank. Deduction under section 80P(2)(a)(i) was therefore available, and the Revenue's challenge failed.

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Issues: Whether a co-operative credit society engaged in providing credit facilities to its members is entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961, and whether it falls within the exclusion for co-operative banks under section 80P(4) of the Act.

Analysis: The Tribunal followed its earlier coordinate bench decision holding that a co-operative credit society is distinct from a co-operative bank. The definition of co-operative bank in section 80P(4) was read with the Banking Regulation Act, 1949, and the Court noted that a co-operative credit society is separately defined under that Act. Applying strict construction to taxing provisions, it held that the legislative exclusion for co-operative banks cannot be extended to a co-operative credit society unless it is shown to be a primary co-operative bank within the statutory meaning.

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

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