In Brief
A cooperative society that operated as a lending institution, accepting deposits and granting loans to both members and non-members, appealed for tax exemption under Section 80P of the Income Tax Act. The Supreme Court held that the society could not claim this exemption because: (1) it violated cooperative principles by serving the general public, not just members; (2) it lacked mutuality—the essential principle requiring identity between fund contributors and profit sharers; and (3) it operated like a bank without regulatory approval. The Court affirmed that while Section 80P is beneficially construed, it applies only to genuine cooperative societies operating exclusively for members' benefit.
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