Section 37, 40, 194A, 234B, 234C of Income Tax Act, 1961—In the instant case, appeal is filed by assessee against the order of CIT.

 In ground no. 6 the assessee denies itself liable to be charged interest u/s 234B and 234C of the Act. The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon’ble Apex Court in the case of Anjum H. Ghaswala (252 ITR 1) (SC) and we, therefore, uphold the action of the AO in charging the assessee the aforesaid interest u/s 234B and 234C of the Act.

At ground no. 2 the assessee submitted that the disallowance under section 40(a)(ia) of the Act made by the Assessing Officer (AO) was erroneous because of the specific exemption available to the assessee, a Co-operative Society, under section 194A(V) of the Act and as such the assessee was not required to deduct tax at source. It was also submitted that the Amendment to the said section was w.e.f. 01.06.2015 and since it is prospective in nature was not applicable to the Assessment Year 2012- 13.

We hold that the assessee, being a Co-operative Bank, is not required to deduct tax at source from the payment of interest on terms deposits to its Members. We consequently delete the disallowance under section 40(a)(ia) of the Act.

In ground no. 5 assessee submitted that in the course of assessment proceedings, the assessee had made a plea for deduction of an amount of Rs.  1,24,330/-; being the amount transferred to the Co-operative Education Fund from out of the profits of the assessee or in the alternate, allow the same as a deduction under section 37 of the Act.
AR submitted that the issue was covered in favour of the assessee by the decision of the Hon’ble Karnataka High Court in the case of CIT Vs. Pandarpura Sahakara Sakkare Kharkhane Ltd.

We are, therefore, of the view that the decision of the Hon’ble Karnataka High Court in the case of Pandavapura Sahakara Sakkare Karkhane Ltd., (supra) would continue to hold the ground and is to be followed and respectfully following the same, allow the grounds raised by the assessee.[M/S. KANYAKAPARAMESHWARI CO-OPERATIVE BANK LIMITED VERSUS THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE – 1 [1] , MYSURU.] [2019] 16 ITCD Online (35) [ITAT BANGALORE]