Section 80P deduction turns on actual loan use, not registration status alone; matter sent back for fresh examination.

Deduction under Section 80P for a co-operative society cannot be determined from registration status alone; eligibility depends on the actual nature of the society's activities and, for each assessment year, whether loan disbursements were for agricultural purposes, in light of Section 80P(4). The earlier view that classification as a co-operative society was sufficient was not accepted. Because no detailed inquiry had been made into the nature and purpose of each loan disbursement, the factual basis for denying the deduction was incomplete, and the matter was restored to the Assessing Officer for fresh examination in accordance with law.

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Issues: Whether the assessee co-operative society was entitled to deduction under Section 80P of the Income-tax Act, 1961, and whether the matter required fresh examination of the nature and purpose of loan disbursements in the light of Section 80P(4).

Analysis: The claim for deduction under Section 80P could not be decided merely on the basis of the registration certificate or the classification of the society. The governing principle applied was that the Assessing Officer must examine the factual nature of the assessee's activities for each assessment year and determine whether the loans were or predominantly for agricultural purposes, because eligibility under Section 80P depends on the actual activities and the effect of Section 80P(4). The prior view that the registration status alone was sufficient was not accepted. Since a detailed inquiry into each loan disbursement had not been conducted, the factual basis for denial of the deduction was incomplete.

Conclusion: The denial of deduction was not finally sustained. The issue was restored to the Assessing Officer for fresh examination and decision in accordance with law, which is in favour of the assessee to the extent of remand.

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