Section 80P deduction denied to a co-operative bank outside the taluk-based exception for rural development banks.

Section 80P deduction is unavailable to a co-operative bank unless it falls within the statutory exceptions in section 80P(4); a society whose area of operation is not confined to a taluk does not satisfy the definition of a primary co-operative agricultural and rural development bank. On the assessee's bye-laws, its area of operation extended beyond a taluk, so it could not claim the exception and the denial of deduction was upheld in favour of the Revenue.

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Issues: Whether the assessee, a co-operative bank, was entitled to deduction under section 80P of the Income-tax Act, 1961, and whether it fell within the exception for a primary co-operative agricultural and rural development bank.

Analysis: Section 80P grants deduction to co-operative societies, but section 80P(4) excludes co-operative banks other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. The Explanation to section 80P(4) defines a primary co-operative agricultural and rural development bank as a society whose area of operation is confined to a taluk and whose principal object is long-term credit for agricultural and rural development activities. The assessee's bye-laws showed that its area of operation was not confined to a taluk. It therefore did not satisfy the statutory definition. The decision relied on by the CIT(A) concerned a different class of co-operative societies and was not applicable.

Conclusion: The assessee was not entitled to deduction under section 80P and the denial of exemption was upheld, in favour of the Revenue.

Final Conclusion: The appeal succeeded, and the assessee's claim for deduction under section 80P was rejected.

Ratio Decidendi: A co-operative bank is outside the benefit of section 80P unless it strictly falls within the statutory exceptions in section 80P(4), and a society whose area of operation is not confined to a taluk cannot be treated as a primary co-operative agricultural and rural development bank.

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