Primary agricultural credit societies remain eligible for section 80P relief, and a belated return does not by itself bar the claim.
Primary agricultural credit societies classified under the Kerala Co-operative Societies Act are outside the exclusion in section 80P(4) because they are distinct from co-operative banks under the Banking Regulation Act, and the Income-tax authorities cannot recharacterise them when the statutory ingredients are met; exemption under section 80P was therefore available. A belated return, or a return filed in response to notice under sections 142(1) or 148, is not non est for this purpose, so the exemption claim cannot be rejected solely on that ground while proceedings remain pending. The matters were remanded for reconsideration of the remaining issues, including bad and doubtful debts.
Issues: (i) Whether primary agricultural credit societies classified under the Kerala Co-operative Societies Act, 1969 fall within the exclusion in section 80P(4) of the Income-tax Act, 1961 and are entitled to exemption under section 80P. (ii) Whether a claim for exemption under section 80P can be denied merely because the return was filed belatedly or after notice under sections 142(1) or 148 of the Income-tax Act, 1961, and whether such a return is non est for that purpose.
Issue (i): Whether primary agricultural credit societies classified under the Kerala Co-operative Societies Act, 1969 fall within the exclusion in section 80P(4) of the Income-tax Act, 1961 and are entitled to exemption under section 80P.
Analysis: Section 80P(4) excludes co-operative banks, but the definition scheme in the Banking Regulation Act, 1949 makes a primary co-operative bank distinct from a primary agricultural credit society. The latter is defined by reference to its principal object of providing agricultural credit, and societies registered and classified as such under the State co-operative law must be treated consistently with that classification. The authorities under the Income-tax Act cannot recharacterise such societies when the statutory ingredients are satisfied.
Conclusion: The issue is answered in favour of the assessee. Primary agricultural credit societies so classified are entitled to the benefit of section 80P and are not hit by section 80P(4).
Issue (ii): Whether a claim for exemption under section 80P can be denied merely because the return was filed belatedly or after notice under sections 142(1) or 148 of the Income-tax Act, 1961, and whether such a return is non est for that purpose.
Analysis: Where a return has in fact been filed and the assessment proceedings remain pending in the statutory hierarchy, the claim for exemption can be considered if it is otherwise legally admissible. A belated return does not become non est merely because it was filed beyond the time contemplated by the return-filing provisions or in response to notice under sections 142(1) or 148. Denial of exemption solely on that ground is unwarranted in pending proceedings.
Conclusion: The issue is answered in favour of the assessee. Belated filing does not by itself invalidate the claim for exemption under section 80P while proceedings remain pending.
Final Conclusion: The legal questions on entitlement to section 80P exemption and on the effect of belated returns were decided in favour of the assessees, but the connected matters were sent back for reconsideration on the remaining issues, including the claim relating to bad and doubtful debts.
Ratio Decidendi: A primary agricultural credit society, duly classified under the State co-operative law and satisfying the statutory definition, is entitled to section 80P benefit, and a belated return does not by itself bar consideration of that claim during pending assessment or appellate proceedings.