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TMI Blog2019 (2) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... nor the assessee was able to prove fresh facts are not required to be examined. Hence, this plea of the assessee is rejected. Therefore, the order of the CIT(A) on this issue is confirmed. TDS u/s 195 - Disallowance of expenditure for non-deduction of TDS of commission to PCARDB - Held that:- The assessee having failed to deduct tax at source, the commission payment was rightly disallowed as per the provisions of section 40(a)(ia). In the interest of justice and equity, we are of the view that the assessee should be given an opportunity to prove that the deductees / payees have duly paid the tax on receipt of commission. The matter is restored to the AO. The assessee shall produce such proof as mandated by second proviso to section 40(a)(ia) read with 1st proviso to section 201 to prove that payees have duly paid taxes on the commission received by it from assessee. If the assessee is able to prove that the deductees / payees paid the tax on the commission that it had received from the assessee, such commission expenses shall not be disallowed. - ITA No.566/Coch/2018, ITA No.567/Coch/2018, SA No.44/Coch/2018 And SA No.45/Coch/2018 - - - Dated:- 7-2-2019 - Shri Chandra Pooja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a staff welfare measure, for the purpose of benefit of the employees and accordingly eligible as deduction as business expenditure under section 37 of the Act. 4.1 We shall adjudicate the issue ground-wise as under:- Ground No.1 5. The assessee for the assessment year 2012-2013 had claimed deduction u/s 80P of the I.T.Act amounting to ₹ 81,55,90,334. The Assessing Officer disallowed the claim of deduction u/s 80P of the I.T.Act by following the judgment of the Hon ble Kerala High Court in assessee s own in ITA No.103 of 2011 dated 26.11.2015. 5.1 Aggrieved by the order of assessment denying the benefit of deduction u/s 80P, the assessee filed an appeal to the first appellate authority. The CIT(A) rejected the claim of the assessee. The relevant finding of the CIT(A) reads as follows:- 4.3.1. The Appellant in the return of income had claimed deduction under section 80P of the Act amounting to ₹ 81,55,90,334. The Assessing Officer disallowed the same on the ground that the Appellant is not eligible to claim the same. During the appeal proceedings, the learned AR has argued that the Appellant is eligible for deduction under section 80P of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as claimed by the Appellant. 5.2 Aggrieved by the order of the CIT(A), the assessee has raised this issue before the Tribunal. The Ld. Counsel for the assessee submitted that as per the RTI information received from NABARD, the assessee is not a co-operative bank. The Ld. AR contended that since the assessee is not a co-operative bank, the provisions of section 80P(4) does not have application and therefore, the assessee is entitled to the benefit of deduction u/s. 80((2) of the Act. 5.3 The Ld. DR, on the other hand, submitted that the Tribunal order which has been relied on by the CIT(A) for deciding the issue in favour of the Revenue, has been upheld by the Hon ble High Court of Kerala vide judgment dated 26/11/2015 in ITA No. 103/2011. 5.4 We have heard the rival contentions and perused the material on record. The Hon ble High Court of Kerala has categorically held in assessee s own case for the assessment year 2007-08 (supra) that the assessee is not a primary agricultural credit society and it is a co-operative bank. The Hon ble High Court further held that the assessee is not entitled to deduction u/s 80P(2) of the Act, in view of introduction of section 80P(4) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Sub-Clause (2) of Clause (cciv) of Section 5 of the BR Act and hence, it is not a co-operative bank which is a primary agricultural credit society. 5.5 In view of the above judgment of the Hon ble High Court of Kerala in assessee s own case (supra), we hold that the orders of the A.O. and CIT(A) in denying the benefit of deduction u/s. 80P(2) of the Act is correct and is in accordance with law. It is ordered accordingly. Hence, the grounds relating to disallowance of deduction u/s. 80P(2)(a)(i) of the Act are rejected. Ground No.2 6. The CIT(A) had confirmed the disallowance made by the Assessing Officer by observing as under:- 4.2.1 The Appellant had paid ₹ 2,44,46,754 towards contribution to Staff Retirement Benefit Fund. During the assessment proceedings, the Assessing Officer noticed that the said payment is in contravention of the provisions of section 40A(9) r.w.s. 36(1)(v) of the Act and therefore disallowed the said amount. During the appeal proceedings, the Appellant has submitted that the said expenditure is purely a labour welfare expense and therefore allowable as business expenditure under section 37 of the Act. 4.2.2 The argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be examined. Hence, this plea of the assessee is rejected. Therefore, the order of the CIT(A) on this issue is confirmed. 7. In the result, the appeal of the assessee in ITA No.566/Coch/2018 is dismissed. ITA No.567/Coch/2018 8. The grounds raised in the above appeal read as follows:- 1. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals), Thiruvananthapuram ( CIT(A) ) has erred in disallowing the deduction claimed by the Appellant under section 80P(2)(a)(i) amounting to ₹ 123,99,28,586 and restricting the deduction under section 80P only to the extent of profits earned by the Appellant from the 'Land Development Bank' activity without considering the fact that the Appellant is a Co-operative Society registered under the Kerala Co-operative Societies Act, 1969 and is in the business of providing credit facilities to its members not as a co-operative bank, but as a credit institution and a co-operative society by virtue of its nature of business of providing credit facilities to its members. The CIT(A) has erred in not considering the fact that to be denied the benefit of Section 80P, the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowance of commission payment, the assessee preferred an appeal to the first appellate authority. The CIT(A) confirmed the disallowance made by the Assessing Officer. The relevant finding of the CIT(A) reads as follows:- 4.1.2 The arguments of the Appellant are considered. The Appellant is paying commission to the PCARDB for the services rendered by it to the Appellant in terms of mobilizing deposits. The Appellant has not explained how the said payment is not covered by the provisions of section194H of the Act. Under the given facts, it is apparent that the said payment is covered by the provisions of section 194H of the Act. Hence, the disallowance of ₹ 1,21,86,468 is upheld and the grounds raised on this issue are dismissed. 11.2 The assessee being aggrieved, has raised this issue before the Tribunal. The learned AR reiterated the submissions made before the Income-tax authorities. The learned AR further submitted that the assessee may be given an opportunity to produce the necessary certificate before the A.O. to prove that the deductees / payees have paid the requisite tax and hence expenses may be allowed as deduction. 11.3 The learned Departmenta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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