Co-operative credit society deduction under section 80P upheld where activities were limited to members, not public banking.

A co-operative credit society was treated as eligible for deduction under section 80P because its activities were confined to members and there was no material showing banking business with the public at large. The absence of a banking licence under section 22 of the Banking Regulation Act, 1949, and the distinction between a co-operative bank and a co-operative society were treated as material factors. The revenue's reliance on a cited Supreme Court decision was found inapplicable on the facts, while the view supporting the deduction was consistent with the Bombay High Court authority relied on by the CIT(A). The deduction under section 80P was therefore upheld.

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Issues: Whether the assessee, a co-operative credit society, was engaged in banking business so as to be denied deduction under section 80P, and whether the CIT(A) was justified in allowing the deduction.

Analysis: The assessee's activities were confined to its members, and there was no material to show that it carried on banking for the public at large. The absence of a banking licence under section 22 of the Banking Regulation Act, 1949, and the distinction between a co-operative bank and a co-operative society were material. The reasoning adopted by the revenue from the cited Supreme Court decision was held to be inapplicable on the facts, while the CIT(A)'s view was supported by the Bombay High Court decision relied upon by him.

Conclusion: The assessee was entitled to deduction under section 80P, and the revenue's challenge failed.

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