Primary agricultural credit society status governs deduction under section 80P, and State classification cannot be re-opened for denial.

A primary agricultural credit society registered and classified under the Kerala Cooperative Societies Act was treated as entitled to deduction for co-operative society income. The jurisdictional High Court principle applied was that, once the competent State authority recognises the entity as a primary agricultural credit society, income-tax authorities cannot re-examine that status to deny the benefit. The exclusion in section 80P(4) was stated not to apply to genuinely recognised primary agricultural credit societies, and the Revenue authority's contrary reliance was held inapplicable.

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Issues: Whether a primary agricultural credit society registered under the Kerala Cooperative 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 by the competent authority under the State co-operative law as a primary agricultural credit society. Following the jurisdictional High Court, such classification is decisive for the entitlement to deduction under section 80P(2), and the income-tax authorities cannot re-examine the underlying status once the society is so recognised under the State enactment. The exclusion in section 80P(4) does not deny the benefit to societies that are genuinely primary agricultural credit societies. The decision relied on by the Revenue was held inapplicable to such societies.

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

Ratio Decidendi: A society classified under the relevant State co-operative law as a primary agricultural credit society is entitled to deduction under section 80P, and the income-tax authorities cannot disregard that classification for denying the statutory benefit under section 80P(4).

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