Credit co-operative society status upheld, with section 80P(4) inapplicable and deduction quantum remitted for fresh examination.

An assessee engaged only in providing credit facilities to its members was treated as a credit co-operative society, not a co-operative bank, because it did not carry on banking business with the public and was not shown to be a licensed co-operative bank. Section 80P(4) was therefore held inapplicable, leaving eligibility for deduction under section 80P(2)(a)(i) open on merits. The quantum of deduction was not finally determined, because the Assessing Officer had not examined the other components of income and deduction, and the matter was remitted for fresh quantification after giving the assessee an opportunity to furnish details.

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Issues: Whether the assessee was a co-operative bank hit by section 80P(4) of the Income-tax Act, 1961, or a credit co-operative society entitled to deduction under section 80P(2)(a)(i), and whether the quantum of deduction required fresh examination by the Assessing Officer.

Analysis: The assessee's objects and activities were confined to providing credit facilities to its members. The distinction between a co-operative bank and a credit co-operative society was applied by reference to the nature of banking business and the regulatory framework under the Banking Regulation Act, 1949. Since the assessee did not carry on banking business with the public and was not shown to be a licensed co-operative bank, section 80P(4) was held inapplicable. As the Assessing Officer had not examined the other components of income and deduction on merits, the matter was directed to be reconsidered for quantification after giving the assessee an opportunity to furnish details.

Conclusion: The assessee was held to be a credit co-operative society eligible for consideration under section 80P(2)(a)(i), not a co-operative bank under section 80P(4), and the issue of quantum of deduction was remitted for fresh assessment.

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