2016 (7) TMI 1408

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....rd together and are being disposed of by this consolidated order for the sake of convenience. However, reference is being made to the facts in ITA No.1225/PN/2016 to adjudicate the issue. 3. The assessee in ITA No. 1225/PN/2016 has raised the following grounds of appeal:- 1. On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the addition made by the A.O. of Rs. 4,48,873/- invoking the provisions of S.40(a)(ia). The Ld. CIT(A) failed to appreciate the retrospectively amended provisions of second proviso to S. 40(a)(ia) of the Act. Since the income of the deductee was entirely exempt u/s 80P(2)(a)(i) of the Act, the assessee had no obligation to deduct any tax of source. The additi....

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....ended before the Assessing Officer that the cooperative societies from whom the loan was taken, was engaged in the banking business and since the loan was taken for carrying on business purpose, the provisions of section 40(a)(ia) of the Act were not applicable. However, the Assessing Officer rejected the contention of assessee in this regard and addition of Rs. 4,48,873/- was made in assessment year 2006-07. 6. The CIT(A) upheld the order of Assessing Officer, against which the assessee is in appeal before the Tribunal. 7. The learned Authorized Representative for the assessee pointed out that where the payment was made to a credit co-operative society, whose income was entirely exempt under section 80P(2)(a)(i) of the Act, there was....

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....taxation. In the facts of the present case before the Tribunal, the plea of the assessee is one step further that the payee which is a credit co-operative society, engaged in the banking business, had received the interest paid by the assessee on the loans advanced by it to the assessee. The assessee further claims that the income of said credit co-operative society is exempt from tax and hence, there is no requirement for deduction of tax out of such payments being made to the credit co-operative societies. In the totality of the above said facts and circumstances of the case and issue raised, there is merit in the claim of assessee in this regard. In case, the amount is payable to a credit cooperative society, who in turn, has included th....