THALAKKAD SERVICE COOPERATIVE SOCIETY BANK LIMITED,TIRUR vs. ITO, MALAPPURAM

Brief facts of the case are that is a co-operative society registered under the Kerala State Co-operative Societies Act, 1969. It is classified as a primary agricultural credit co-operative society. The Income Tax Officer-TDS, Tirur, on verification of the TDS returns submitted by the appellant society found that the appellant Thalakkad Service Co-op. Bank Ltd. society had failed to deduct tax at source in respect of contribution made by the appellant to superannuation fund to the Kerala Co- Operative Employees Pension Board as the same was not recognised or approved fund under the Fourth Schedule to the Income Tax Act. Accordingly, the TDS Officer held that the assessee is an ‘assessee in default’ and demanded tax of Rs. 4,81,059/- vide order dated 13.07.2023 for AY 2020-21. Subsequently, on receipt of the said order an application u/s. 154 of the Act was filed before the TDS Officer seeking rectification of the order by stating that Kerala State Co-operative Employees Pension Board has been approved u/s. 10(23AAA) vide ITBA/ASK/F/73/2022-23/1049830641(1) vide order dated 16.02.2023. However, the said application was rejected by the TDS Officer by holding that approval was not granted under Part B of the Fourth Schedule of the Income Tax Act. Therefore, the contribution made by the appellant society would be taxable as perquisites in the hands of the employees u/s. 17(2) of the Act. Accordingly, dismissed the application vide order dated 21.09.2023.

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