Primary agricultural credit society status preserves section 80P deduction despite banking activity and excludes section 80P(4) denial.

A co-operative bank registered and classified as a primary agricultural credit society was held entitled to deduction under section 80P(2) because its statutory status under the Kerala Co-operative Societies Act, supported by the Registrar's certificate, brought it within the protected category. The Tribunal followed binding High Court authority that such societies are not denied the benefit merely because they carry on banking activities, so section 80P(4) did not apply to exclude the claim. The disallowance was therefore unsustainable.

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Issues: Whether a co-operative bank registered and classified as a primary agricultural credit society was entitled to deduction under section 80P(2) of the Income-tax Act, 1961 in view of section 80P(4).

Analysis: The claim for deduction depended on the assessee's status as a primary agricultural credit society under the Kerala Cooperative Societies Act, 1969. The Tribunal followed the binding High Court view that societies so classified, and supported by a certificate from the Registrar of Cooperative Societies, fall within the protected category and are not denied the benefit merely because they engage in banking activities. On that basis, the exclusion in section 80P(4) did not operate against the assessee.

Conclusion: The assessee was entitled to deduction under section 80P(2), and the disallowance was unsustainable.

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