Primary agricultural credit societies retain section 80P deduction when State-law classification is duly recognised.

A primary agricultural credit society duly registered and classified under the Kerala Co-operative Societies Act, 1969 is entitled to deduction under section 80P of the Income-tax Act, 1961. The controlling principle is that income-tax authorities cannot go behind the State-law classification to deny the benefit where the society is so recognised by the competent authority. Section 80P(4) does not displace that entitlement on these facts, and the deduction remains available to such societies. The conclusion is that the assessee qualified for section 80P relief.

---

---

Issues: Whether a primary agricultural credit society registered and classified under the Kerala Co-operative Societies Act, 1969 is entitled to deduction under section 80P of the Income-tax Act, 1961, despite the revenue's reliance on section 80P(4).

Analysis: The assessee was a primary agricultural credit society under the Kerala Co-operative Societies Act, 1969. The controlling precedent held that once a society is so classified by the competent authority under the State law, the income-tax authorities cannot go behind that classification to deny the benefit of section 80P. The precedent further held that such societies are entitled to the deduction under section 80P and that the restriction in section 80P(4) does not displace that entitlement in the facts of such societies.

Conclusion: The assessee was entitled to deduction under section 80P of the Income-tax Act, 1961. The issue was decided in favour of the assessee.

Ratio Decidendi: A primary agricultural credit society that is duly registered and classified under the relevant State cooperative law is entitled to deduction under section 80P, and the income-tax authorities cannot re-examine that statutory classification to deny the benefit.

---