Primary agricultural credit society classification controls section 80P deduction, and income-tax authorities cannot override that status.

A co-operative society classified by the competent authority as a primary agricultural credit society under the Kerala Co-operative Societies Act was held entitled to deduction under section 80P(2). The Tribunal followed the jurisdictional High Court in Chirakkal Service Co-operative Bank Ltd., which held that once such classification exists, income-tax authorities cannot re-examine the society's underlying status or deny the deduction on the ground that it carries on banking activity. Applying that binding precedent, the assessee's claim succeeded and the Revenue's objection under section 80P(4) failed.

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Issues: Whether a co-operative society classified as a primary agricultural credit society under the Kerala Co-operative Societies Act, 1969, is entitled to deduction under section 80P(2) of the Income-tax Act, 1961, notwithstanding the Revenue's objection based on section 80P(4).

Analysis: The Tribunal followed the jurisdictional High Court decision in Chirakkal Service Co-operative Bank Ltd., which held that societies classified by the competent authority under the Kerala Co-operative Societies Act as primary agricultural credit societies are entitled to the benefit of section 80P. The High Court further held that, once such classification exists, the income-tax authorities cannot re-examine the underlying status to deny the deduction on the ground that the society is engaged in banking activities. Applying that binding precedent, the assessee's classification as a primary agricultural credit society was sufficient for grant of the deduction.

Conclusion: The assessee was entitled to deduction under section 80P(2), and the Revenue's challenge failed.

Ratio Decidendi: A society classified by the competent authority as a primary agricultural credit society under the State co-operative law is entitled to deduction under section 80P(2), and the income-tax authorities cannot deny that benefit by independently probing its status contrary to such classification.

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