Section 80P deduction for co-operative credit societies extends to interest from deposits with co-operative banks under the Tribunal's approach.

A co-operative credit society remains distinct from a co-operative bank for section 80P purposes, and section 80P(4) excludes co-operative banks without withdrawing deduction from eligible credit societies. The Tribunal applied a strict construction of taxing provisions, relied on the distinction under the Banking Regulation Act and the wider concept of membership under the Maharashtra Co-operative Societies Act, 1960, and accepted earlier rulings that nominal or associate members do not fall outside membership for this purpose. It also treated the society's interest income from deposits with co-operative banks as deductible under section 80P(2)(d), and considered contrary authority inapplicable on the facts.

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Issues: Whether the assessees, being co-operative credit societies, were entitled to deduction under section 80P notwithstanding the Revenue's stand that they functioned like co-operative banks and that interest from deposits made with co-operative banks was ineligible.

Analysis: The denial of deduction was examined in the context of section 80P(4), which excludes co-operative banks but not co-operative credit societies. The Tribunal followed the view that a co-operative credit society is distinct from a co-operative bank and that taxing provisions must be construed strictly. It relied on the distinction drawn in the Banking Regulation Act, the breadth of the term "member" under the Maharashtra Co-operative Societies Act, 1960, and earlier decisions holding that nominal or associate members are not outside the concept of membership for this purpose. The Tribunal also accepted that the assessee's facts were covered by earlier decisions supporting eligibility under section 80P(2)(a)(i) and section 80P(2)(d), and held that the ratio of the cited contrary decision did not govern the present case.

Conclusion: The assessees were held entitled to deduction under section 80P of the Income-tax Act, 1961, including in respect of interest on investments with co-operative banks, and the disallowance was deleted.

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