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2012 (9) TMI 756 - AT - Income TaxAddition u/s 68 in respect of deposit accepted by the assessee - Revenue contended that assessee not produced the details namely, address of the depositor or any particulars of the depositor - co-operative society carrying on banking business for its members - Held that:- In the present case, assessee is a Society carrying on the Banking business to its own members and the business is carried on with certain set of guidelines and procedures. It is operating through 23 branches and each of the branches is headed by a Branch Manager and other staff. Deposits were accepted by staff along with the application at the counters. To the extent of the maintenance of the records is concerned, it is already seen that a systematic record was maintained by the assessee with regard to the transactions by the Bank. It has accepted all the documents as required under KYC norms. From the above facts it is proved that the assesses has proved the identity of the depositor. When the Society is having members of 63,000, one cannot come to a conclusion that the bank does not have furnished identity and proof of depositor by verifying few numbers. Being so, amounts in the accounts maintained by the assessee are deposits of the customers and/or not under the control of the assessee, and therefore, provisions of S. 68 are not applicable to the Bank. Further, Society/Bank not required to go for detailed verification of address/whereabouts of the customers and therefore, addition u/s 68 cannot be made merely because the address of the customers are incomplete. CIT(A) rightly deleted the addition - Decided in favor of assessee Deduction u/s 80P(2)(a)(i) - denial - Held that:- It is the fact that certain activities carried on by the assessee not complying with the requirements of the principles of Cooperative Society, more so, the assessee also engaged in the activity of bill discounting, providing accommodation cheques by taking cash from the member, being so, for the AY 2006-07 the claim of the assessee u/s 80P(2)(a)(i) cannot be allowed. For AY 2007-08 & 2008-09, it is observed that Society is carrying on the Banking business and for all practical purpose it acts like a co-op bank. It is governed by the Banking Regulations Act. Therefore the Society being a co-op bank providing banking facilities to members is not eligible to claim the deduction u/s 80P(2)(i)(a) after the introduction of sub-section (4) to section 80P, hence entitled for deduction u/s 80P(2)(a)(i) for AY 2007-08 & 2008-09 - Decided in favor of Revenue. Dis-allowance of advertisement expenditure u/s 40a(i)(a) for no deduction of TDS - Held that:- Section 40(a)(ia) of the Act is applicable only to the expenditure which is payable on 31st March of every year and cannot be invoked to disallow the amounts which are already been paid during the previous year, without deducting tax at sources. see Merilyn Shipping & Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM). Accordingly, this issue set aside to the file of the assessing officer for reconsideration. Interest on account of interest receivable on the loans advanced which are pending recovery for more than 6 months - assessee contesting direction of CIT(A) to AO for verification of claim - Held that:- CIT(A) was justified in issuing directions to verify the nature of interest whether it is on non performing assets or not and decide thereupon, since Supreme Court in the case of UCO Bank v. CIT [1999 (5) TMI 3 - SUPREME COURT ] held that interest credited to the suspense account and NPAs is to be excluded from the income - Appeal of assessee dismissed
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