Tribunal upholds deduction disallowance but gives chance to prove tax payment on commission.

The Tribunal upheld the disallowance of deductions under section 80P(2)(a)(i) and contributions to the Staff Retirement Benefit Fund. However, it provided the assessee an opportunity to prove that the payees had paid tax on the commission, potentially reversing the disallowance under section 40(a)(ia).

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Issues Involved:
1. Disallowance of deduction claimed under section 80P(2)(a)(i).
2. Disallowance of contribution to Staff Retirement Benefit Fund.
3. Disallowance of commission payment under section 40(a)(ia) for non-deduction of TDS.

Issue-wise Detailed Analysis:

1. Disallowance of Deduction under Section 80P(2)(a)(i):
The assessee claimed deductions under section 80P(2)(a)(i) for the assessment years 2012-2013 and 2014-2015. The Assessing Officer disallowed these claims, referencing a prior judgment by the Kerala High Court in the assessee's own case, which held that the assessee is a "co-operative bank" and thus not eligible for the deduction under section 80P(4). The CIT(A) upheld this disallowance. The Tribunal also affirmed the CIT(A)’s decision, referencing the Kerala High Court's judgment that the assessee is not a primary agricultural credit society and falls under the definition of a "co-operative bank" as per the Banking Regulation Act, 1949. Consequently, the Tribunal rejected the grounds related to the disallowance of deduction under section 80P(2)(a)(i).

2. Disallowance of Contribution to Staff Retirement Benefit Fund:
The assessee contributed to a Staff Retirement Benefit Fund, which was disallowed by the Assessing Officer under section 40A(9) read with section 36(1)(v) of the Act. The CIT(A) confirmed this disallowance, citing a decision by the ITAT, Cochin in the assessee’s case for previous assessment years, which held that the fund was neither a recognized provident fund nor an approved gratuity fund as required by sections 36(1)(iv) and 36(1)(v). The Tribunal upheld the CIT(A)’s decision, noting that the assessee did not raise any new facts or arguments that would warrant a different outcome. Thus, the disallowance was confirmed.

3. Disallowance of Commission Payment under Section 40(a)(ia):
For the assessment year 2014-2015, the assessee paid commission to PCARDB for mobilizing deposits but did not deduct tax at source. The Assessing Officer disallowed the commission payment under section 40(a)(ia) due to the failure to deduct TDS. The CIT(A) upheld this disallowance, stating that the payment was covered by the provisions of section 194H. The Tribunal agreed with the CIT(A) but allowed the assessee an opportunity to prove that the payees had paid the requisite tax on the commission received. The matter was remitted to the Assessing Officer to verify if the payees had paid the tax, in which case the disallowance would be reversed.

Separate Judgments:
- ITA No.566/Coch/2018: The appeal was dismissed.
- ITA No.567/Coch/2018: The appeal was partly allowed, permitting the assessee to provide proof of tax payment by the payees.
- Stay Applications: Dismissed as infructuous.

Conclusion:
The Tribunal upheld the disallowance of deductions under section 80P(2)(a)(i) and contributions to the Staff Retirement Benefit Fund. However, it provided the assessee an opportunity to prove that the payees had paid tax on the commission, potentially reversing the disallowance under section 40(a)(ia).

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