Assessee provided credit facilities to its members for agricultural and allied purposes and was classified as primary agricultural credit society by the Registrar of Co-operative Societies under the Kerala Co-operative Societies Act, 1969. It claimed deduction under s. 80P(2)(a)(i) of the Income-tax Act. Post insertion of S. 80P(4) which denied deduction to co-operative bank other than primary agricultural credit society, etc. AO denied the claim for deduction holding the agricultural credits given by the assessee to its members were negligible and that the credits given to such members were for purposes other than agricultural credit. Supreme Court held that section 80P being a benevolent provision must be read liberally and reasonably and in case of any ambiguity it must be interpreted in favour of the assessee. Supreme Court observed that section 80P(2)(a)(i) which covers a co-operative society engaged in the business of banking or providing credit facilities to its members does not require that the assessee has to be a primary agricultural credit society. Supreme Court noted that section 80P(2)(a)(i) does not require that the society has to give agricultural credit only. It further observed that once the co-operative society provides credit facility to its members, the fact that it also provides credit facility to non-members does not disentitle the society from availing of deduction. However, profits attributable to loans given to non-members cannot be deducted. Supreme Court observed that the object of section 80P(4) was to exclude co-operative banks that function at par with other commercial banks and noted that as primary agricultural credit societies are not entitled for obtaining a banking license would not be hit by this provision.  Ratio  in Citizen Co-Operative Society Ltd. v. CIT  [2017] 397  ITR  1 (SC ) explained (CA Nos. 7343-7350 and 8315 of 2019 dt. 12.01.2021) (AY. 2007 – 08 to 2010 – 11 ,2012 – 13)