TaxTMI 
TaxTMI 
2018 (10) TMI 1492
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....ase is related to the interest on share capital paid to the members of the Bank. The Assessing Officer (AO) found that the assessee had debited the sum of Rs. 4,55,61,020/- for the assessment year 2012-13 towards the interest paid and out of which the amount of Rs. 23,64,321/- was paid towards interest on share capital for the year 2010-11. The AO issued the show cause notice calling the assessee's explanation as to why the interest on share capital should not be disallowed and the assessee has filed the explanation stating that the interest on share capital is required to be paid to the members as compulsory obligation without any choice as per A.P.Mutually Aided Cooperative Societies Act, 1995. The assessee further submitted that the share capital of the Cooperative Bank is not like equity share capital of a company registered under the Companies Act and the members having share capital are either the borrowers or the deposit holders of the bank and at the time of liquidating the deposit or the loan the share capital is required to the paid along with interest. The assessee further submitted that the members are directly or indirectly contributing to the business of the banks in ....
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....this ground of appeal raised by the Department." 5.1. Since the facts of the case are identical, respectfully following the view taken by the Coordinate Bench, we uphold the order of the Ld.CIT(A). However, we observe from the order of the AO that the interest on share capital was related to the year 2010-11 which is relevant for the assessment year 2011-12, but not the impugned year. Neither the Ld.CIT(A) nor the AO has given a clear finding with regard to the correct assessment year in which the interest was accrued. Therefore, we remit the matter back to the file of the AO to examine the issue with regard to the accrual of liability as per the system of accounting followed by the assessee and decide the issue afresh on facts and merits. The appeal of the revenue on this issue is allowed for statistical purpose. 6. The next issue is interest paid on deposits of members u/s 40(a)(ia) of the Act. This issue is involved for the assessment year 2012-13 and 2013-14. The AO found that the assessee has made the payment of Rs. 2,52,84,556/-as interest to the members over and above Rs. 10,000/- without deducting the TDS. Therefore, the AO disallowed interest u/s 40(a)(ia) of the Act. ....
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....the CBDT circular No.9 of 2002 dtd.11.09.2002. The relevant clarification in the circular reads as under: Under section 194A of the Income-tax Act, 1961, tax is deductible at source from any payment of income by way of interest other than income by way of interest on securities. Clause(v) of sub-section (3) of section 194A exempts such income credited or paid by a cooperative society to a member thereof from the requirement of TDS. On the other hand, clause (viia) of sub-section(3) of section 194A exempts from the requirement of TDS such income credited or paid in respect of deposits (other than timedeposits made on or after 1st July, 1995) with a cooperative society engaged in carrying on the business of banking. Representations have been received in the Board seeking clarification as to whether a member of a cooperative bank may receive without TDS interest on time deposit made with the cooperative bank on or after 1st July, 1995. The Board has considered the matter and it is clarified that a member of a cooperative bank shall receive interest on both time deposits and deposits other than time deposits with such cooperative bank without TDS under section 194A by virtue of the....
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....odified and rectified accordingly with reference to ground No.3 of the appeal. 44. The Ld. CIT(A) by following his own decision for the assessment year 2007-08 and also order of the Tribunal for the very same year in the rectification order he has deleted the addition made by the A.O. We find no reason to interfere with the order passed by the Ld. CIT(A). This appeal raised by the revenue is dismissed." 9.1. Since the facts are identical and the Ld.CIT(A) followed the order of Tribunal, we decide the issue in favour of the assessee and uphold the order of the Ld.CIT(A). The revenue's appeal on this ground is dismissed. The appeal of the revenue for the assessment year 2012-13 and 2013-14 on this issue is dismissed. 10. The 3rd issue is amortization of premium paid for acquisition of HTM securities. During the assessment proceedings, the AO found that the assessee made the claim of Rs. 34,037/- for the assessment year 2012-13 and Rs. 26,903/- for the assessment year 2013-14 as amortization on Government securities. The AO observed that the expenditure claimed by the assessee was not actually incurred but only a provision and is in the nature of contingent liability which may be....
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....acts has come before this Bench for the assessment year 2011-12 and 2012-13 in the case of Visakhapatnam Cooperative Bank Ltd. in ITA No.362 and 371 dated 31.12.2016. For the sake of clarity and convenience, we extract para No.67 of the order of this Tribunal which reads as under : "67. The very similar issue came up for consideration before the ITAT in the Assessment Year 2008-09 in ITA No.444/Vizag/2012, order dated 30.09.2016. The Tribunal has considered and remitted the matter back to the file of the Assessing Officer for fresh examination to decide in accordance with law. We find in the Assessment Year 2008-09, amortization of premium on government securities has been dissolved by the Assessing Officer on the ground that it is a contingent liability. The Commissioner of Income Tax (Appeals) has confirmed the order the of Assessing Officer. On appeal, ITAT remanded the matter back to the Assessing Officer for fresh consideration. In the year under consideration, the Commissioner of Income Tax (Appeals) allowed the ground raised by the assessee by following the CBDT Instruction No.17/2008 dated 26.09.2008 and also the decision of the Hon'ble Gujarat High Court in the case of....
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....ended the loans to 111 employees of AKMPC to the extent of Rs. 43.50 lakhs and there was default in loan repayment. The AKMPC had recovered the loans partly from the salaries of these employees and repaid to the Cooperative Bank. Meanwhile, the assessee had approached the Hon'ble A.P.High Court for settlement of the issue and the court directed the AKMPC to pay an amount of Rs. 40.95 lakhs and by that time the AKMPC had paid the sum of Rs. 88.02 lakhs which was over and above the sum directed by the Court and there was no need for further payment by AKMPC. Hence, the assessee bank written off the balance and bad debt. However, complete correspondence regarding the actual liability, the amount recovered and the balance remained was not produced before the AO. The assessee also did not arrive at the total amount due, the amount recovered and the actual bad debt. There was contradictory information with regard to the bad debts recovered, reported by the bank and as reflected in the letter. The assessee also claimed the provision for bad debt in the same year. Since there was no clarity in the information submitted by the assessee and made only the provision for bad debts and non-verif....