THE MANDAL NAGRIK SAHAKARI BANK LTD., ,MANDAL vs. ITO CIRCLE 3(1)(1), AHMEDABAD, AHMEDABAD

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ITA 774/AHD/2026Status: DisposedITAT Ahmedabad08 July 2026AY 2017-183 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that a prior order under Section 201(1)/201(1A) had determined the actual amount for which TDS was not deducted to be Rs. 1,23,505/-. Therefore, the disallowance under Section 40(a)(ia) should be restricted to this amount.

What were the facts?

The assessee co-operative bank faced disallowance of Rs. 21,95,739/- for non-deduction of TDS on interest paid to members. Another disallowance of Rs. 1,40,000/- was made for gratuity payment not made before the ITR due date.

What were the issues?

Whether the disallowance under Section 40(a)(ia) for non-deduction of TDS should be based on the total interest paid or only on the amount where TDS was actually not deducted, considering a prior determination under Section 201(1)/201(1A).

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 43B,Section 201(1),Section 201(1A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: Shri Sanjay Garg & Shri Narendra Prasad Sinha

For Appellant: Shri Arpan Shah, AR
Hearing: 06/07/2026Pronounced: 08/07/2026

आदेश/O R D E R Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), ADDL/JCIT(A)-1, Bengaluru [hereinafter referred to as ‘Ld. CIT(A)’] dated 07/01/2026 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2017- 18.

ITA No.774/Ahd/2026 The Mandal Nagrik Sahakari Bank Ltd. vs. ITO Asst.Year 2017-18 2 2. The assessee in this appeal is aggrieved by the action of the CIT(A) in upholding the disallowance made by the AO of Rs. 21,95,739/- u/s 40(a)(ia) of the Act for non-deduction of TDS on the interest paid to the members of the assessee co-operative bank. The assessee has further contested the disallowance of gratuity payment of Rs. 1,40,000/- on account of the fact that the same was not made before the due date of filing of ITR and hence, disallowed u/s 43B of the Act.

3.

At the outset, the Ld. Counsel for the assessee has furnished the copy of the order dated 29.03.2024 passed in the case of the assessee for A.Y. 2017-18 u/s 201(1)/201(1A) of the Income Tax Act. The Ld. Counsel for the assessee has demonstrated from the said order passed u/s 201(1)/201(1A) of the Act that the AO in the said order has noted that in respect of interest amount of Rs. 69,96,299/-, Form 15G and 15G were received by the assessee, the copies of which have also been verified by the AO. Further, TDS on interest of Rs. 5,32,984/- had been duly deducted. After reconciliation, it was found that the total amount for which the assessee has failed to deduct TDS was of Rs. 1,23,505/- only in respect of which the assessee was held as “assessee-in-default” u/s 201(1)/201(1A) of the Act. The Ld. Counsel for the assessee, therefore, has submitted that the disallowance u/s 40(a)(ia) of the Act should also be restricted to that extent.

4.

Considering the above submission, the impugned order of the CIT(A) is set-aside and the matter is restored to the file of the AO to

ITA No.774/Ahd/2026 The Mandal Nagrik Sahakari Bank Ltd. vs. ITO Asst.Year 2017-18 3 verify the aforesaid contention raised by the assessee and to recompute the disallowance u/s 40(a)(ia) of the Act accordingly.

5.

With the above observations, the appeal of the assessee is treated allowed for statistical purposes.

Order pronounced in the Open Court on 08/07/2026.

Sd/- Sd/- (Narendra Prasad Sinha) (Sanjay Garg) Accountant Member Judicial Member

अहमदाबाद/Ahmedabad, िदनांक/Dated 08/07/2025 Tanmay, Sr. P.S. TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु� अपील ( ) / The CIT(A)-(NFAC) 5. िवभागीय �ितिनिध आयकर अपीलीय अिधकरण अहमदाबाद /DR,ITAT, Ahmedabad. , , 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad

1.

Date of dictation (dictation pad is attached with the file)) : 06.07 2026 2. Date on which the typed draft is placed before the : 07.07.2026 Dictating Member. 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating : Member for pronouncement. 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the : 08.07.2026 Sr.P.S./P.S. 7. Date on which the file goes to the Bench Clerk. : 08.07.2026 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar : for signature on the order. 10. Date of Despatch of the Order :

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