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2019 (8) TMI 1332 - AT - Income TaxInterest under section 234B and 234C - HELD THAT:- The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon’ble Apex Court in the case of Anjum H. Ghaswala [2001 (10) TMI 4 - Supreme Court] and we, therefore, uphold the action of the AO in charging the assessee the aforesaid interest u/s 234B and 234C of the Act. The AO is, however, directed to re-compute the interest chargeable u/s 234B and 234C of the Act, if any, while giving effect of this order. Disallowance u/s 40(a)(ia) - payment of interest on term deposits to Members of Co-operative Bank - HELD THAT:- Amendment to section 194A(3)(V) operates prospectively w.e.f. 01.06.2015; we hold that the assessee, being a Co-operative Bank, is not required to deduct tax at source from the payment of interest on terms deposits to its Members in the year under consideration i.e., Assessment Year 2012-13. We consequently delete the disallowance under section 40(a)(ia) of the Act made by the AO and accordingly allow the ground No.2 and 2.1 raised by the assessee. Transfer of Reserve Fund - HELD THAT:- Respectfully following the decision of the Hon’ble Apex Court in the case of Vellore Electric Corporation Ltd., [1997 (7) TMI 13 - SUPREME COURT], we hold that the assessee is not entitled to claim deduction in respect of transfer to reserve fund. Transfer to Co-operative Education Fund - HELD THAT:- Decision of the Hon’ble Karnataka High Court in the case of Pandavapura Sahakara Sakkare Kharkane Ltd.[1988 (6) TMI 39 - KARNATAKA HIGH COURT], while deciding on the allowability of contributions to the Co-operative Education Fund, the Hon’ble Court considered them akin to consumer rebate reserve and, following the decision of the Hon’ble Apex Court in the case of Poona Electric Supply Company Ltd. [1965 (4) TMI 20 - SUPREME COURT], upheld its allowability. The ratio of the decision in the case of Poona Electricity Supply Company Ltd., [1965 (4) TMI 20 - SUPREME COURT] was upheld by the Hon’ble Apex Court in the case of Vellore Electric Corporation Ltd., [1997 (7) TMI 13 - SUPREME COURT], relied on by the Co-ordinate Bench of this Tribunal. We are, therefore, of the view that the decision of the Hon’ble Karnataka High Court in the case of Pandavapura Sahakara Sakkare Karkhane Ltd., (supra) would continue to hold the ground and is to be followed and respectfully following the same, allow the grounds 5 and 5.1 raised by the assessee.
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