TaxTMI 
TaxTMI 
2020 (10) TMI 1121
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....s not liable to deduct TDS on interest payments. The assessing officer erred in making additions u/s. 40(a)(ia) for not deducting TDS. The learned Commissioner of Income Tax(Appeals) erred in not considering this ground. 3. Appellant is eligible for deduction u/s. 80P. the learned Assessing Officer erred in not considering the CBDT Circular 133 of 2007 dated 09/05/2007. As per the clarification of CBDT, all co-operative societies other than co-operative banks are eligible for deduction u/s. 80P. The appellant do not fall within the definition of co-operative bank. 4. The Appellant craves leave to add, amend alter, vary and/or withdraw any or all the above grounds of appeal. 4. As regards ground No.1, relating to reopening of assessment is not argued by the learned Counsel for the assessee. Accordingly, the same is dismissed. 5. As regards ground No.2, relating to non-deduction of TDS on interest paid to the members of the assessee, the Assessing Officer observed that the assessee has not deducted tax at source from interest paid to its members, and accordingly, he disallowed the claim of the assessee u/s 40(a)(ia) of the I.T.Act. There was no discussion on t....
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....v. Kodungallur Town Co-operative Bank Ltd. [ITA Nos.527-529 & 526/Coch/2017 - order dated 31.05.2018] held that the assessees are not liable to deduct TDS u/s 194A of the I.T.Act on the interest paid to its own members. The relevant finding of the Tribunal reads as follow:- "6.6 The Ld. AR placed heavy reliance on the judgments of the Jurisdictional High Court in the cases of Moolamattom Electricity Board Employees' Cooperative Bank Ltd. & others (supra) and Thodupuzha Urban Co-operative Bank Ltd. and another (supra). In these cases, it was an admitted fact that the assesses are co-operative societies. Hence, the Jurisdictional High Court came to the conclusion that sub-clause(a) of clause (viia) of sub-section (3) of section 194A was applicable. But in the present case, the assessees are not cooperative society but co-operative bank carrying on banking business with the approval of the Reserve Bank of India and as such, the assessees are not liable to deduct TDS under section 194A of the I.T. Act on the interest paid to its own members. On the other hand, the present assessees are liable to deduct TDS on the interest payments to its non members only. This ground of the ap....
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....bunal. 12. The learned AR relied on the grounds raised. The learned Departmental Representative, on the other hand, strongly supported the order passed by the Income Tax Authorities. 13. We have heard the rival submissions and perused the material on record. The Hon'ble jurisdictional High Court in the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT [(2016) 384 ITR 490 (Ker.)] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) of the I.T.Act has to be granted to the assessee. However, the Full Bench of the Hon'ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra) had reversed the above findings of the Hon'ble Kerala High Court in the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT (supra). The Larger Bench of the Hon'ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra) held that the Assessing Officer has to conduct an inquiry into the factual situation as to the activities of the assessee society to....
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....itled to such exemption. 34. In Chirakkal [384 ITR 490] the Division Bench expressed a divergent opinion, without noticing the law laid down in Antony Pattukulangara [2012 (3) KHC 726] and Perinthalmanna [363 ITR 268]. Moreover, the law laid down by the Division Bench in Chirakkal [384 ITR 490] is not good law, since, in view of the law laid down by the Apex Court in Citizen Co-operative Society [397 ITR 1], on a claim for deduction under Section 80P of the Income Tax Act, by reason of sub-section (4) thereof, the Assessing Officer has to conduct an enquiry into the factual situation as to the activities of the assessee society and arrive at a conclusion whether benefits can be extended or not in the light of the provisions under sub-section (4) of Section 80P of the IT Act. In view of the law laid down by the Apex Court in Citizen Cooperative Society [397 ITR 1] the law laid down by the Division Bench Perinthalmanna [363 ITR 268] has to be affirmed and we do so. 35. In view of the law laid down by the Apex Court in Ace Multi Axes Systems' case (supra), since each assessment year is a separate unit, the intention of the legislature is in no manner defeate....