TMI Blog2016 (11) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... ating that the assessee is a primary agricultural credit society, thus hold that the assessee is entitled to the benefit of deduction u/s 80P(2) of the Act. Addition u/s 40 (a)(ia)- disallowance of the interest payment on deposits received from non members for the reason that there was no tax deduction at source - Held that:- The assessee is a primary agricultural credit society and as such it is entitled to the benefit of deduction u/s 80P(2) of the Act. Since the assessee is an primary agricultural credit society, the exemption provided for non deduction of tax to primary agricultural credit society u/s 194A(3)(viia) is applicable to the assessee society. Accordingly, the disallowance by invoking the provisions of section 40(a)(ia) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the exemption for tax deduction at source from interest payment as per provisions of section 194A(3)(viia) is not applicable in the assessee s case as the assessee not a primary agricultural credit society. 4 Aggrieved, the assessee society preferred appeal to the first appellate authority. The CIT(A) held that the assessee was not entitled to the benefit of deduction u/s 80P(2) of the Act. As regards the disallowance u/s 40(a)(ia) of the Act, the CIT(A), following the order of the Tribunal in the case of M/s Kadachira Service Coop Bank Ltd vs ITO, in ITA No.251/Coch/2012(order dated 31.1.2013) held that provision of section 194A(3)(viia) is applicable to the assessee and accordingly, the disallowance made u/s 40(a)(ia) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In considering the above substantial question of law, the Hon ble High Court rendered the following findings: 15. Appellants in these different appeals are indisputably societies registered under the Kerala co-operative societies Act, 1969, for sort, KCS Act and the bye-laws of each of them, as made available to this court as part of the paper books, clearly show that they have been classified as primary agricultural credit societies by the competent authority under the provisions of that Act. The parliament, having defined the term 'co-operative society' for the purposes of the BR Act with reference to, among other things, the registration of a society under any State law relating to co-operative societies for the time being; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record that the bye-laws of each of the appellants do . not permit admission of any other co-operative society as member, except may be, in accordance with the proviso to sub-clause 2 of section 5(cciv) of the BR Act. The different orders of the Tribunal which are impeached in these appeals do not contain any finding of fact to the effect that the bye- 1aws of any of the appellant or its classification by the competent authority under the KCS Act lS anything different from what we have stated herein above. For this reason, it cannot but be held that the appellants are entitled to exemption from the provisions of section 80P of the IT Act by virtue of sub- section 4 of that sect; on. In this view of the matter, the appeals succeed. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the Assessing Officer, exemption for tax deduction from interest paid/credited as per provisions of sec. 194A(3)(viia) is not applicable in assessee s case as the assessee is not a primary agricultural credit society. In the preceding paras, I have held that the assessee is a primary agricultural credit society and as such it is entitled to the benefit of deduction u/s 80P(2) of the Act. Since the assessee is an primary agricultural credit society, the exemption provided for non deduction of tax to primary agricultural credit society u/s 194A(3)(viia) is applicable to the assessee society. Accordingly, the disallowance by invoking the provisions of section 40(a)(ia) is not warranted. It is ordered accordingly. 10 In the result, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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