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2014 (7) TMI 1176 - AT - Income TaxAllowability of deduction u/s. 80P(2) and 80P(2)(d) - Held that:- As decided in Kunnamangalam Co-operative Bank case [2014 (10) TMI 350 - ITAT COCHIN ] the deposits accepted are used by the Assessee co-operative society for lending or investment - This fact has not been denied - Even out of the deposits so received, the loans have been given to the members of the society in accordance with the objects - it cannot be said that the Assessee society was not carrying on banking business as it was accepting deposits from the persons who have no voting right - the paid up share capital and reserves in the case of the Assessee is more than ₹ 1 lac - all the three conditions in the case of the assessee for becoming primary cooperative bank stand complied with - the assessee is not entitled for deduction u/s. 80P of the Act on any reasoning – Decided against assessee. Deduction of 7.5% provision for bad and doubtful debts u/s. 36(1)(viia) - Held that:- Section 5(cci) of Banking Regulation Act though has brought in definition of co-operative bank, virtually every bank which is not a scheduled bank would fall under the definition of non-scheduled bank. Reading of definition of non-schedule bank along with meaning of rural branch under Explanation to Section 36(1) of the Act, clearly indicate that cooperative bank also falls under the category of non-schedule bank for the purpose of this Section. Therefore, reading of entire Section 36(1)(viia)(a) along with explanation would mean two kinds of deductions referred to in the section will be allowed to all those banks only if they satisfy the terms and conditions referred to in the provision.Therefore, we are of the opinion, authorities below were justified in opining that benefit of deduction of 10% of the aggregate average advances is applicable to co-operative bank also provided their rural branches have advanced such amounts.– Decided against assessee. Disallowance of interest paid without deducting tax to non members u/s. 40(a)(ia) - Held that:- In view of the admitted fact that the taxpayer is maintaining savings account, current account and providing cheque facility to its customers, it is obvious that the taxpayer is engaged itself in the business of banking apart from other trading activities. Exemption u/s. 194A(3)(viia) is applicable only in respect of agricultural cooperative societies. The agricultural cooperative banks are bound to deduct tax. In this case, admittedly, the tax payer is engaged in the banking activity and maintaining savings bank account, current account and providing cheque facility to its customers. Therefore, the taxpayer is bound to deduct tax in respect of interest on the deposits.– Decided against assessee. Disallowance of contribution to the employees pension fund/gratuity fund - Held that:- A similar issue came up for consideration of this Bench of the Tribunal in the case of Kadachira Service Cooperative Bank [2013 (2) TMI 208 - ITAT COCHIN ] wherein the issue was remitted back to the file of the Assessing officer to offer one more opportunity to the assessee to prove that the payment made to approved gratuity fund or LIC Pension Fund was within the time limit for filing return of income u/s. 139(1) of the Act. On the similar line, we are inclined to remit the issue back to the file of the Assessing officer for fresh examination. - Decided in favour of assessee for statistical purposes. Disallowance of unrealised interest on overdue loans - Held that:- As we have decided the issue against the assessee which deciding the ground relating to deduction of provision for bad and doubtful debts u/s. 36(1)(viia) of the Act. More so, the judgment of the Delhi High Court in the case of CIT vs. Talangang Co-op Group Housing Society Ltd. [2010 (7) TMI 83 - DELHI HIGH COURT ] is also against the assessee.
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