Section 80P deduction remains available to a primary agricultural credit society despite associate members and the co-operative bank exclusion.

A co-operative society qualifying as a primary agricultural credit society was entitled to deduction under Section 80P, because the statutory definition treated associate members as members and membership of a separate class did not defeat relief. The exclusion in Section 80P(4) was confined to co-operative banks and did not extend to a primary agricultural credit society or a primary co-operative agricultural and rural development bank. On the facts, the Revenue did not establish that the society carried on banking activities of the kind excluded by the provision, so the deduction was allowed and the Revenue's challenge failed.

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Issues: Whether the assessee co-operative society was entitled to deduction under Section 80P, and whether it was hit by the exclusion for co-operative banks under sub-section (4).

Analysis: The relevant statutory definitions treated an associate member as a member, and the society was therefore not to be denied relief on the ground that it dealt with a separate class of members. The exclusion in Section 80P(4) was confined to co-operative banks and did not apply to a primary agricultural credit society or a primary co-operative agricultural and rural development bank. On the facts, the assessee fell within the category entitled to the deduction, and the Revenue had not shown that the society carried on banking activities of the kind excluded by the provision.

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

Ratio Decidendi: A co-operative society that answers the description of a primary agricultural credit society is entitled to deduction under Section 80P, and the exclusion in sub-section (4) applies only to co-operative banks, not to such societies merely because they admit associate members.

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