Associate member status under cooperative law supports Section 80P deduction; exclusion for cooperative banks did not apply here.

An associate member recognised as a member under the Tamil Nadu Cooperative Societies Act satisfies the membership requirement for deduction under Section 80P of the Income-tax Act. The Court applied the statutory definition of "member" and followed earlier Division Bench authority, holding that the assessee could not be denied Section 80P relief merely because it admitted associate members. It also held that the Section 80P(4) exclusion is directed at cooperative banks and does not bar a primary agricultural credit society from claiming the deduction on this ground. The assessee's claim for Section 80P deduction was therefore upheld.

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Issues: Whether the assessee was entitled to deduction under Section 80P of the Income-tax Act, 1961, and whether an associate member of a cooperative society is to be treated as a member for that purpose.

Analysis: The Court followed the earlier Division Bench decision on an identical issue and applied the statutory definition of "member" under the Tamil Nadu Cooperative Societies Act, 1983. It noted that the definition includes an associate member under Section 2(16), read with Section 2(6), and therefore the assessee society could not be denied the benefit of Section 80P merely on the basis of the distinction between classes of members. The Court also accepted that the exclusion in Section 80P(4) is aimed at cooperative banks and does not deny relief to a primary agricultural credit society of the kind before it.

Conclusion: The assessee was held entitled to deduction under Section 80P, and the question of law was answered in favour of the assessee.

Final Conclusion: The appeals succeeded and the assessee's claim for deduction under Section 80P was upheld.

Ratio Decidendi: For the purpose of Section 80P, an associate member recognised as a member under the cooperative society statute satisfies the membership requirement, and the exclusion in Section 80P(4) does not apply to a primary agricultural credit society merely because it accepts such members.

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