Primary society classification governs deduction eligibility, so the matter must be re-examined on the correct statutory basis.

Deduction under Section 80P(2)(b)(i) depends on whether the assessee is a co-operative society qualifying as a primary society engaged in supplying milk. Because the term "primary society" is not defined in the Income-tax Act, its meaning had to be tested against the Tamil Nadu Co-operative Societies Act, 1983, including the statutory distinctions between primary, apex and central societies. The lower authorities had relied mainly on a Government Order and had not examined the assessee's status under the relevant statutory definitions. The deduction claim could not therefore be finally determined on the existing record, and the matter was remitted for fresh consideration of the assessee's classification before deciding eligibility.

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Issues: Whether the assessee was a "primary society" entitled to deduction under Section 80P(2)(b)(i) of the Income-tax Act, 1961, and whether the matter required remand because the relevant status had not been examined with reference to the Tamil Nadu Co-operative Societies Act, 1983.

Analysis: Deduction under Section 80P(2)(b)(i) is available only to a co-operative society being a primary society engaged in supplying milk. The expression "primary society" is not defined in the Income-tax Act, 1961, and its meaning had to be tested with reference to the Tamil Nadu Co-operative Societies Act, 1983, which defines primary society, apex society, and central society. The lower authorities had proceeded mainly on the basis of the Government Order and had not examined whether the assessee fell within the statutory definitions of primary society, apex society, or central society. Since that foundational inquiry was not undertaken, the correctness of the deduction claim could not be finally determined on the existing record.

Conclusion: The assessee's entitlement to deduction under Section 80P(2)(b)(i) was not finally decided on merits, and the matter was required to be re-examined by the Assessing Officer.

Final Conclusion: The impugned orders were set aside and the matter was remitted for fresh consideration of the assessee's status under the relevant co-operative society definitions before deciding the deduction claim.

Ratio Decidendi: Where eligibility for deduction depends on whether the assessee answers a specific statutory classification, and that classification has not been examined by the fact-finding authorities, the matter must be remitted for determination on the correct statutory basis.

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