ACIT, ROURKELA CIRCLE, ROURKELA, AAYAKAR BHAWA vs. KEONJHAR CENTRAL COOPERATIVE BANK LIMITED, KEONJHAR

Shri Ambika Prasad Mohanty, AR represented on behalf of the assessee and Shri Ashim Kr. Chakraborthy, CIT-DR represented on behalf of the revenue.

It was submitted by the ld. CIT-DR that the ld. CIT(A) has considered the assessee is in the business of banking as a cooperative society. It was the submission that the findings of the ld. CIT(A) is erroneous and is liable to be reversed. It was further submitted that the ld. CIT(A) has not considered the fact that TDS is liable to be deducted in respect of interest payments paid to non-members. It was the submission that this issue of interest payment to members and non-members have not been looked into by any of the authorities below. It was the submission that he had no objection if the issue is restored to the file of the Assessing Officer for verification.

In reply, the ld. AR submitted that this issue is squarely covered by the decision of Hon’ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. reported in 431 ITR 1 (SC). It was the submission that the ld. CIT(A) has considered the fact in the decision of Hon’ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. referred to supra and has directed the Assessing Officer to grant the assessee the benefit of deduction u/s 80P(2) of the Act. It was the submission that the Assessing Officer has not considered the fact that the assessee is also entitled to the deduction u/s 80P(2)(a)(ii) of the Act. It was the submission that the issues may be restored to the file of the Assessing Officer for verification. It was fairly agreed that the issue whether the interest has been paid to members or not has not been examined by any of the authorities below.

We have considered the rival submissions. A perusal of the facts of the present case clearly shows that the ld. CIT(A) has followed the decision of Hon’ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. referred to supra and also CBDT circular no.9 dated 11.09.2002. It is also noticed that the ld. CIT(A) has considered another CBDT circular no.19/2025 dated 27.11.2015. This being so, we find no error in the order of the ld. CIT(A) which calls for any interference. Further it has been specifically brought to the attention by the ld. CIT-DR and it has been accepted by the ld. AR that the break-up of interest payments whether any interest payments have been made to the non-members has not considered by the Assessing Officer. Only to the extent of verification as to whether any interest has been paid to non-members, the issues in this appeal are restored to the file of the Assessing Officer for examination and re- adjudication. If any interest has been paid to any non-members, the Assessing Officer shall also consider the applicability of provisions of section 194A(3) of the Act in respect of issues of deduction of TDS. It is also directed to the Assessing Officer to consider the assessee’s claim in respect of deduction allowable u/s 80P(2)(a)(ii) of the Act. With these directions, the appeals of the revenue and the appeals of the assessee and also the cross- objections filed by the assessee stand partly allowed for statistical purposes. All other findings of the ld. CIT(A) stand upheld.

In the result, the appeals of the revenue and the appeals of the assessee and also the cross-objections filed by the assessee are partly allowed for statistical purposes.