Tribunal rules in favor of assessee, allows appeal on interest payment disallowance

The tribunal allowed the appeal, ruling in favor of the assessee. The disallowance of interest payment under section 40(a)(ia) for non-deduction of TDS was deleted, amounting to Rs. 2,00,095 for A.Y. 2010-11. The tribunal considered the specific nature of the cooperative bank and legislative developments, concluding that TDS deduction on interest payments was not applicable to the assessee for the relevant assessment year. The delay in filing the appeal was condoned, and the decision was pronounced on September 29, 2022.

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Issues:
Challenge to correctness of interest payment disallowance due to non-deduction of TDS under section 40(a)(ia) for A.Y. 2010-11.

Analysis:
The appeal was against the CIT(A)-7, Pune's order regarding the disallowance of interest payment under section 40(a)(ia) for non-deduction of TDS. The assessee's ground challenged the lower authorities' action on this matter. The Hon'ble Supreme Court's decision in Mavilavi Service Co-operative Bank Ltd. V/s. CIT (2021) had already clarified the law related to TDS deduction on payments to members/non-members. The factual position supported the conclusion that TDS was not deducted on interest payments. The tribunal referred to various judgments to establish that a cooperative bank like the assessee was excluded from the purview of TDS deduction on interest payments for the relevant assessment year. Notably, the tribunal cited legislative developments and judicial decisions to support the assessee's position and deleted the disallowance of Rs. 2,00,095 under section 40(a)(ia).

Additional Points:
The delay of 23 days in filing the appeal was condoned in the interest of justice. The tribunal partly allowed the assessee's appeal based on the above analysis. The order was pronounced in the Open Court on September 29, 2022.

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