Co-operative credit society deduction under section 80P remains available where the entity is not a co-operative bank.

A co-operative credit society that provides credit facilities only to its members is not hit by the exclusion in section 80P(4) merely for that reason. The reasoning follows jurisdictional High Court authority and the CBDT circular, which make clear that section 80P(4) applies to co-operative banks, not to credit societies that do not fall within Part V of the Banking Regulation Act, 1949. On that basis, deduction under section 80P(2)(a)(i) remains available to such societies, and the exclusion cannot be used to deny the benefit.

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Issues: Whether a co-operative credit society providing credit facilities to its members is hit by section 80P(4) of the Income-tax Act, 1961 so as to deny deduction under section 80P(2)(a)(i).

Analysis: The claim for deduction was tested against the scope of section 80P(2)(a)(i) and the exclusion contained in section 80P(4). The deciding factor was that the assessees were co-operative credit societies and not co-operative banks. The jurisdictional High Court authorities relied upon held that the exclusion in section 80P(4) applies to co-operative banks and not to credit societies which merely provide credit facilities to members. The CBDT circular referred to in the reasoning also clarified that where the entity does not fall within the meaning of co-operative bank under Part V of the Banking Regulation Act, 1949, section 80P(4) does not apply.

Conclusion: The benefit of deduction under section 80P(2)(a)(i) could not be denied, and section 80P(4) did not apply to the assessees. The issue was answered in favour of the assessee.

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