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2020 (10) TMI 1121 - AT - Income TaxTDS u/s 194A - Non-deduction of TDS on interest paid to the members - disallowance u/s 40(a)(ia) - HELD THAT:- As decided in KODUNGALLUR TOWN CO-OPERATIVE BANK LTD. [2018 (5) TMI 1794 - ITAT COCHIN] and KADACHIRA SERVICE CO-OP. BANK LTD [2013 (2) TMI 208 - ITAT COCHIN] assessee are not cooperative society but co-operative bank carrying on banking business with the approval of the Reserve Bank of India and as such, the assessee are not liable to deduct TDS under section 194A of the I.T. Act on the interest paid to its own members. Denying the claim of deduction u/s 80P(2)(a)(i) - HELD THAT:- In the case of The Mavilayi Service Co-operative Bank Ltd. [2019 (3) TMI 1580 - KERALA HIGH COURT] we are of the view that there should be fresh examination by the AO as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. A.O. shall list out the instances where loans have been disbursed for non-agricultural purposes etc. and accordingly conclude that the assessees’ activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying the claim of deduction u/s 80P(2). The issue raised in these appeals is restored to the files of the AO. AO shall examine the activities of the assessee-societies - Appeals filed by the assessee are allowed for statistical purposes.
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