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2016 (7) TMI 1408 - AT - Income TaxDisallowance invoking the provisions of section 40(a)(ia) - retrospectively amended provisions of second proviso to S. 40(a)(ia) - assessee contended that the cooperative societies from whom the loan was taken, was engaged in the banking business and since the loan was taken for carrying on business purpose, the provisions of section 40(a)(ia) were not applicable - Held that:- There is merit in the claim of assessee in this regard. In case, the amount is payable to a credit cooperative society, who in turn, has included the same as part of its receipts, then irrespective of the fact whether any tax has been paid by the payee and applying the ratio laid down in Hindustan Coca Cola Beverage Pvt. Ltd. Vs. CIT (2007 (8) TMI 12 - SUPREME COURT OF INDIA) as per the amended provisions of the Act, no tax is to be deducted out of such payments, where the payee has included the said receipts as part of its income. Merely because the net income in the hands of such an entity is exempt from tax does not mean that since no tax has eventually been paid by the payee, the said second proviso to section 40(a)(ia) of the Act is not attracted. - Decided in favour of assessee.
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