Deduction under section 80P depends on the society's true status and activities, not labels alone, with fresh verification required.

Deduction under section 80P(2)(a)(i) depended on the assessee's true statutory character and the actual nature of its activities, not merely on labels used by the parties or the assessments. The Tribunal noted that absence of an RBI licence was relevant, but the operation still had to be examined against the Maharashtra State Co-operative Act, 1960 and the Maharashtra State Co-operative Regulations, 1961 to determine whether section 80P(4) applied. The matter was remanded for fresh verification of the assessee's status and activities, so the tax treatment would turn on that factual and legal examination.

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Issues: Whether the assessee was entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961, and whether the matter required verification of its status and activities before applying the restriction under section 80P(4).

Analysis: The appeals turned on whether the assessee's activities were confined to its members and whether it could be treated as a co-operative society eligible for deduction, or as a co-operative bank hit by section 80P(4). The Tribunal followed its earlier coordinate-bench decision in the assessee's own case and noted that the absence of a Reserve Bank of India licence was relevant, but the nature of the assessee's activities still required examination with reference to compliance with the Maharashtra State Co-operative Act, 1960 and the Maharashtra State Co-operative Regulations, 1961. The Tribunal also accepted that the issue could not be concluded merely from the labels used by the parties or from the assessments, and required proper factual verification on the statutory character of the assessee's operations.

Conclusion: The matter was remanded to the Assessing Officer for fresh examination of the assessee's activities and legal status; if the activities were found compliant and there was no RBI licence, section 80P(4) would not apply, otherwise appropriate action could be taken in accordance with law.

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