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2022 (9) TMI 710 - AT - Income TaxDeductibility of deduction u/s 36(1)(viia) w.r.t. deduction on account of 10% of aggregate average advances made by rural branches - disallowance of deduction under second limb of Section 36(1)(viia)(a) with respect to 10 % of the aggregate average advances made by rural branches - HELD THAT:- The assessee is a Co-operative society engaged in banking business. It is observed that the aforesaid effective issue in these two appeals is covered by decision of Zila Sahkari Bank Limited [2021 (11) TMI 522 - ITAT ALLAHABAD] which shall be applicable to the effective issue of disallowance of deduction under second limb of Section 36(1)(viia)(a) of the 1961 Act concerning disallowance of 10% of the aggregate average advances made by rural branches , arising in these two appeals filed by the assesssee for ay: 2009-10 and 2010-11, and we hold that the assessee shall be eligible for deduction u/s 36(1)(viia)(a) @ 10 % of the aggregate average advances made by rural branches subject to following issues to be verified by AO before granting deduction under second limb of Section 36(1)(viia)(a):- AO shall verify that the assessee holds banking license granted by RBI during the relevant year(s) under consideration , as is mandated u/s 22 of the 1949 Act - AO shall verify that the assessee satisfies the conditions of being a primary co-operative bank as are stipulated u/s 5(ccv) of the 1949 Act, as incorporated by virtue of Section 56 of the 1949 Act - The assessee will file computation for claiming deduction under second limb of Section 36(1)(viia)(a) , which computation shall be verified by AO before granting aforesaid deduction. The assessee is directed to appear before AO and file relevant evidences in support of its claim , so that the AO can verify the above facts concerning (a) to (c) above, before granting deduction.We order accordingly.
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