Co-operative credit society deduction under section 80P upheld where only members were served and no banking licence existed.

A co-operative credit society that provides credit facilities only to its members is entitled to deduction under section 80P(2)(a)(i), because section 80P(4) withdraws that benefit only from co-operative banks. The Tribunal found no material that the assessee served the general public, held a banking licence, or otherwise had the characteristics of a co-operative bank. On that limited factual basis and the binding precedent applied, the society fell outside the statutory exclusion and the deduction remained available.

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Issues: Whether a co-operative credit society engaged in providing credit facilities only to its members is entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961, and whether section 80P(4) excludes such deduction on the footing that the assessee is a co-operative bank.

Analysis: The assessee was found to be a society confined to its own members, without material to show that it provided banking facilities to the general public or that it possessed the characteristics of a co-operative bank. The authorities relied on the distinction between a co-operative credit society and a co-operative bank, and on the settled position that section 80P(4) withdraws the deduction only from co-operative banks, not from societies merely providing credit facilities to members. Following the binding precedent applied by the Tribunal, the absence of a banking licence and the limited nature of the assessee's activities supported the conclusion that the assessee did not fall within the exclusion.

Conclusion: The assessee was held to be a co-operative credit society and not a co-operative bank, and deduction under section 80P(2)(a)(i) was allowable.

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