TaxTMI 
TaxTMI 
2019 (8) TMI 1332
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....,667/ (ii) Disallowance of interest accrued on standard assets - Rs. 19,10,753/- (iii) Interest received in earlier year excluded 2.2 Aggrieved by the order of assessment dated 25.03.2015 for Assessment Year 2012-13, the assessee filed an appeal before the CIT(A), Mysuru raising various grounds / additional grounds. The CIT(A) dismissed the assessee's appeal vide order dated 28.02.2018. 3.1 The assessee, being aggrieved by the order of the CIT(A), Mysuru, dated 28.02.2018 for Assessment Year 2012-13, has preferred this appeal wherein it has raised the following grounds:- 3.2 The assessee has also raised the following additional grounds:- 3.3 In the course of appellate proceedings, the learned AR for the assessee filed paper book (pages 1 to 69) containing various documents and copies of some judicial pronouncements. The learned DR for Revenue has also put forth submissions / cited a judicial pronouncement. The rival contentions / submissions put forth have been duly considered. 4. Ground Nos.1 and 7 (supra) being general in nature, do not call for adjudication thereon and are accordingly dismissed as infructuous. 5. Ground Nos. 3, 3.1 and 3.2 and Additional Ground Nos.1 t....
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....this issue be dismissed. 7.3 In rejoinder, the learned AR submitted that the case of the AO was not that the assessee had not furnished the requisite evidence to support its claim. The AO's case was that the provisions of section 194A(3)(v) of the Act were not applicable to the assessee; and that the AO arrived at the disallowance only on the basis of the submissions and details furnished by the assessee. According to the learned AR, the conclusion of both the AO and the CIT(A) was erroneous and the issue being squarely covered by the decisions of the Hon'ble jurisdictional High Court (supra), the disallowance under section 40(a)(ia) of the Act needs to be deleted. 7.4.1 We have considered the rival submissions and perused the material on record; including the judicial pronouncements cited. From a perusal of the record, it emerges that in the course of assessment proceedings, the AO required the assessee to explain the reasons for non-deduction of tax at source under section 194A of the Act in respect of interest paid by it to its Members on Fixed Deposits maintained by the Members. The assessee submitted that in terms of section 194A(3)(v) of the Act, applicable to Co-operative....
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....tified the interest on time deposits as Rs. 1,59,59,667/- and held the same liable for TDS. Therefore, the finding rendered by the CIT(A) is factually incorrect. 7.4.3 As regards the applicability of the provisions of section 195A(3)(i(b) of the Act; this issue has been decided by the Hon'ble Karnataka High Court in its judgment in the case of CIT Vs. Jamkhandi Urban Co-operative Bank in ITA No.1004 of 2015, wherein it held that the Amendment made to section 194(3)(V) of the Act, that the exemption is not applicable to payment of interest on term deposits to Members only w.e.f. 01.06.2015. In the aforesaid case of the Hon'ble Karnataka High Court (supra), the following was the substantial question of law before it: "1 Whether the Tribunal is right in concluding that the provisions of section 194A(3)(V) of the Income Tax Act, 1961 applies to all Co-operative Societies including Co-operative Society engaged in the business of banking?" The relevant portion of the judgment where the aforesaid substantial question of law was answered at Para 4 of the Hon'ble High Court's order is extracted hereunder:- 7.4.4 Respectfully following the decisions of the Hon'ble Karnataka High Court i....
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.... the case of CIT Vs. Pandarpura Sahakara Sakkare Kharkhane Ltd., (1998) 174 ITR 475 (KAR). 9.2 Per contra, the learned DR for Revenue supported the orders of the authorities below on this issue and placed reliance on the decision of the Coordinate Bench of this Tribunal in the case of Tumkur DCC Bank Ltd., in ITA No.1532 and 1533/Bang/2016 dated 31.01.2019. 9.3.1 We have considered the rival contentions and perused the material on record; including the judicial pronouncements cited. We have carefully perused the decisions cited by both parties (supra). The issue before the Hon'ble Karnataka High Court was directly on the point of whether the contribution to Co-operative Education Fund by a society governed by the Karnataka Societies Registration Act, was allowable. The issue before the Hon'ble Apex Court in the case of Vellore Electric Corporation Ltd., (supra) was on the issue of allowability of amounts transferred to contingency reserve, development reserve and tariff and dividend control reserve out of profits of an electric supply corporation under section 37(1) of the Act. The Apex Court came to the conclusion that the amounts appropriated to these reserves were available in....