Cooperative credit society deduction under section 80P upheld where banking status requirements were not satisfied.

A cooperative credit society's entitlement to deduction under section 80P(2)(a)(i) depended on whether it was a cooperative bank excluded by section 80P(4). The appellate authority found that the society did not meet the cumulative requirements of a primary cooperative bank under section 5(ccv) of the Banking Regulation Act, 1949, because its principal business was not established as banking and its bye-laws lacked the mandatory bar on admitting another cooperative society as a member. The Tribunal noted that binding High Court authority had been followed and no contrary decision was shown. Deduction remained available only to the extent income was attributable to providing credit facilities to members, and section 80P(4) did not deny the claim.

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Issues: Whether the assessee, a cooperative credit society, was entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961, or whether it was excluded by section 80P(4) on the footing that it was a cooperative bank.

Analysis: The claim for deduction was disallowed by the Assessing Officer on the view that the assessee was a cooperative bank. The appellate authority found that the assessee did not satisfy the cumulative requirements of a primary cooperative bank under section 5(ccv) of the Banking Regulation Act, 1949. Its principal business was not established to be banking, and the bye-laws did not contain the mandatory prohibition against admission of another cooperative society as a member. The Tribunal noted that the appellate authority had followed binding High Court authority and that no contrary decision was shown. It also accepted that deduction under section 80P is available only to the extent income is attributable to providing credit facilities to members.

Conclusion: The assessee was entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961, and section 80P(4) did not apply to deny the claim.

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