Section 80P deduction for primary agricultural credit societies depends on State-law classification, which tax authorities cannot ignore.

A primary agricultural credit society classified by the competent authority under the Kerala Cooperative Societies Act, 1969 was treated as eligible for deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961, despite section 80P(4). The Tribunal followed the binding High Court view that income-tax authorities cannot disregard the State-law classification to deny section 80P relief. On that basis, the society was held entitled to the deduction and the Revenue's objection failed.

---

---

Issues: Whether the assessee, a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969, was entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 in view of section 80P(4) of that Act.

Analysis: The assessee was classified by the competent authority under the Kerala Cooperative Societies Act, 1969 as a primary agricultural credit society. The jurisdictional High Court authority relied upon held that where a society is so classified under the State law, the income-tax authorities cannot go behind that classification to deny the benefit of section 80P. The Tribunal followed that binding view and accepted that such a society falls within the category entitled to deduction under section 80P(2).

Conclusion: The assessee was entitled to deduction under section 80P of the Income-tax Act, 1961, and the Revenue's challenge failed.

---