Liberal construction of Section 80P preserves deduction for a credit co-operative bank absent an express statutory restriction.

Section 80P is a beneficial deduction provision and must be construed liberally, so its scope cannot be narrowed by implication beyond the statute's express terms. The Supreme Court in Mavilayi Service Co-operative Bank Ltd. was applied to hold that Section 80P(4) excludes only co-operative banks engaged in banking business as contemplated by that provision, and that no additional restriction can be read into Section 80P(2)(a)(i). On that basis, a credit co-operative bank was treated as entitled to claim deduction under Section 80P.

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Issues: Whether the assessee, a credit co-operative bank, was entitled to deduction under Section 80P of the Income-tax Act, 1961 in view of the Supreme Court's ruling in Mavilayi Service Co-operative Bank Ltd.

Analysis: The Court noted that the Supreme Court had set aside the Full Bench view that had been relied upon to deny the deduction and had reiterated that Section 80P is a benevolent provision to be read liberally. It further observed that Section 80P(4) excludes only co-operative banks engaged in banking business as contemplated by the provision, and that the benefit cannot be denied by reading into Section 80P(2)(a)(i) a restriction not found there. Applying that ruling, the assessee was held entitled to the deduction as claimed.

Conclusion: The assessee was entitled to deduction under Section 80P.

Ratio Decidendi: A beneficial deduction provision must be construed liberally, and in the absence of an express statutory restriction, the revenue cannot narrow the scope of Section 80P by implication.

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