Co-operative credit society deduction under section 80P upheld where section 80P(4) did not apply.

A co-operative credit society was treated as distinct from a co-operative bank, so the bar in section 80P(4) did not apply to deny deduction under section 80P of the Income-tax Act, 1961. The Tribunal followed its earlier decision and the settled rule of consistency, noting that the Maharashtra Co-operative Societies Act recognises nominal and similar classes of members within the concept of membership. It also held that the society's investments and interest income did not change its character into a co-operative bank. Deduction under section 80P was therefore allowed.

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Issues: Whether the assessee co-operative society was entitled to deduction under section 80P of the Income-tax Act, 1961, and whether the bar under section 80P(4) applied so as to deny the claim.

Analysis: The issue was held to be covered by the Tribunal's earlier decision in a similar case, where a co-operative credit society was treated as distinct from a co-operative bank. The reasoning followed the principle that section 80P(4) excludes co-operative banks, not all co-operative credit societies, and that the definition of members under the Maharashtra Co-operative Societies Act includes nominal and similar classes of members. The Tribunal also accepted that the assessee's investments and interest income did not alter its character into a co-operative bank, and relied on the settled view and the rule of consistency.

Conclusion: The assessee was held entitled to deduction under section 80P of the Income-tax Act, 1961, and the denial of deduction was set aside.

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