Can a cooperative society providing credit facility to its member be termed as Cooperative Bank?

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Can a cooperative society providing credit facility to its member be termed as Cooperative Bank?

The basic deduction that is available to the co-operatives societies is given under section 80P of the Income Tax Act, 1961. The sub-section 4 of section 80P clearly states that the provision of this section shall not apply to co-operative Banks. The section reads as under:

(4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank.

Explanation.—For the purposes of this sub-section,—

 (a) “co-operative bank” and “primary agricultural credit society” shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949);

 (b) “primary co-operative agricultural and rural development bank” means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities.

The question is that whether a cooperative credit society providing credit facilities to its members alone, and not to general public at large can be termed as co-operative bank and is not allowed with the deduction? Even the society do not receive monies by way of deposit from general public. Such societies would NOT be treated as co-operative banks and would be entitled to deduction under section 80P of the Income Tax Act, 1961. This was held in case of CIT v Kalpadi Co-operative Township Ltd.

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