THE KODUNGALLUR TOWN CO-OP BANK LTD,KODUNGALLUR vs. ACIT, CIRCLE 2(1), THRISSUR

Brief facts of the case are that the appellant is a co-operative bank engaged in the business of banking. The return of income for AY 2010-11 was filed on 14.10.2010 declaring Nil income. Against the said return of income, the assessment was completed by the ACIT, Circle-2(1), Thrissur (hereinafter called "the AO") vide order Kodungallur Town Co-op. Bank Ltd. dated 05.03.2013 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total income of Rs. 4,37,29,894/-. While doing so, the AO made several disallowances. The disallowances, inter alia, includes disallowance u/s. 40(a)(i) of the Act of Rs. 2,05,98,051/- with which we are concerned with.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.

On further appeal before this Tribunal, this Tribunal in dated 31.04.2018 held that the appellant is a co- operative bank, therefore, the appellant is liable to deduct tax at source on interest paid to non-members. While passing the consequential order to ITAT order, the AO had made disallowance for non deduction of tax at source on interest paid to non members.

Being aggrieved with the consequential order an appeal was filed before the CIT(A) who vide impugned order confirmed the order of the AO by holding that while passing the consequential order, the directions of the Tribunal is binding and no new plea can be taken.

Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.

We have heard the rival contentions and perused the material available on record. The issue that arises for our consideration is Kodungallur Town Co-op. Bank Ltd. whether the AO was justified in making addition u/s. 40(a)(ia) of the Act in respect of interest paid to non members including co- operative societies or not while passing the consequential order to the ITAT order. We have carefully perused the order passed by the Tribunal in the earlier round of proceedings, wherein it is clearly stated that the appellant being a co-operative bank is liable to deduct tax at source on deposit of non members. No distinction drawn between co-operative societies and non co-operative societies. Therefore, the AO cannot travel beyond the scope of the directions of the Tribunal, while passing consequential order. Therefore, the order passed by the AO is in consonance with the directions of this Tribunal. We do not find any illegality of perversity in the orders passed by learned lower authorities.

In the result, the appeal filed by the assessee stands dismissed.