2011 (11) TMI 367 - ITAT AHMEDABAD

Co-operative Bank engaged in banking business – dis-allowance u/s 40(a)(ia) of clearing house charges and service/maintenance charges of Furniture &Fixture – addition made of accrued interest on NPA – Held that:- Assessee was only a sub-member of the clearing house. However, the clearing agent is Bhagyodaya Co-op. Bank Ltd. The MICR clearing charges of the assessee were, therefore, recovered from the said clearing agent by the clearing house. The said agent has duly deducted TDS on payment of MICR charges. Consequent thereupon, the assessee was required to reimburse the bank MICR charges to Bhagyodaya Bank. The said reimbursement charges were inclusive of TDS as well. Therefore, since the MICR charges were merely reimbursed by the assessee and that there was no payment by member of the bank to clearing agent as far as the assessee is concerned, therefore the assessee was not required to deduct the TDS on payment of reimbursement. Otherwise also, it would tantamount to double deduction of TDS on the same payment of MICR bank charges – Decided in favor of assessee.

"Services Charges", claimed by assessee stated to be in the nature of building maintenance and furniture and fixture charges – Held that:- Since the payment being connected to the part of the fixtures of the rented property, therefore, the assessee was required to deduct the tax on payment of service charges as it was held by the Revenue Authorities as "rent" – Decided against the assessee.

Accrued interest on NPA – Revenue contending that since the assessee being not covered by Section 43D therefore accrued interest should have been offered to tax - Held that:- By the insertion of a special provision to tax interest income in the case of public financial institution, etc. section 43-D has to be applied in its letter and spirit. In the case of UCO Bank (1999 - TMI - 5746 - SUPREME Court), it was held in respect of interest income on "sticky advances" to be taxed only when actually received as prescribed by CBDT Circular – Decided in favor of assessee.