Section 80P deduction for primary agricultural credit societies remains available where state classification is decisive.

A primary agricultural credit society classified as such under the Kerala Co-operative Societies Act, 1969 is entitled to deduction under section 80P of the Income-tax Act, 1961, and the section 80P(4) exclusion for co-operative banks does not apply where that statutory classification stands. The controlling principle is that tax authorities cannot disregard the competent authority's classification or recharacterise the society as a co-operative bank in the absence of a contrary statutory basis. Applying binding jurisdictional precedent, the society remained within the class eligible for the deduction, and the Revenue's challenge failed.

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Issues: Whether a primary agricultural credit society registered under the Kerala Co-operative Societies Act, 1969 is entitled to deduction under section 80P of the Income-tax Act, 1961, notwithstanding the exclusion in section 80P(4).

Analysis: The assessee was classified as a primary agricultural credit society under the State Co-operative Societies Act. The controlling legal position was that such classification and the society's principal object were ative for the claim under section 80P, and the tax authorities could not re-examine that status contrary to the competent authority's classification. Following the binding jurisdictional precedent, the society fell within the class entitled to the deduction and was not hit by the exclusion applicable to co-operative banks.

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

Ratio Decidendi: A primary agricultural credit society, duly classified as such under the Kerala Co-operative Societies Act, 1969, is entitled to deduction under section 80P of the Income-tax Act, 1961, and the tax authorities cannot deny that benefit by treating it as a co-operative bank in the absence of a contrary statutory classification.

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