Section 80P deduction turns on the society's actual activities, with fresh factual verification required before disallowance.

Eligibility for deduction under section 80P depends on the actual nature of the society's activities for the relevant assessment year, not merely on its registration or classification certificate. The Assessing Officer must make a factual enquiry into those activities, including the character of any interest income claimed as part of the eligible business, before rejecting the claim. A rectification order cannot conclusively disallow the deduction without such verification. The disallowance was therefore set aside and the matter remitted for fresh examination on facts.

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Issues: Whether the denial of deduction under section 80P on the basis of the subsequent Full Bench decision, without examining the assessee society's activities, was sustainable.

Analysis: The earlier view that classification by the Registrar was was displaced by the Full Bench ruling, which held that eligibility for deduction under section 80P depends on the factual nature of the society's activities and not merely on the registration certificate. The Assessing Officer is required to conduct an enquiry for the relevant assessment year and determine whether the society satisfies the conditions for deduction under section 80P, including in relation to interest income claimed as part of the eligible business. In that light, the rectification order could not finally reject the claim without such verification, and the matter required restoration for fresh examination on facts.

Conclusion: The issue was decided in favour of the assessee to the extent that the disallowance was set aside and the question of deduction under section 80P was remitted for fresh consideration by the Assessing Officer.

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