Pattuvam Service Co-op Bank Ltd, Kannur V. The ITO, Kannur

ITA 577/COCH/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8512 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 08-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 24-12-2014
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: R KRISHNA IYER
• Keywords: Question of law; Competent authority

Judgement Text

ITA NO.576-580/COCH/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE.K, JM I.T.A. NO. NAME OF THE ASSESSEE REVENUE A.Y. CIT(A ) AND THE DATE OF THE ORDER 576/COCH/2014 M/S. PATTUVAM SERVICE CO-OPERATIVE BANK LTD., PATTUVAM P.O., TALIPARAMBA, KANNUR-670 143. [PAN:AADCP 6738N] I.T.O.,WARD- 4, KANNUR 2007-08 CIT(A), KOZHIKODE 24/09/2014 577/COCH/2014 -DO- -DO- 2008-09 -DO- 578/COCH/2014 -DO- -DO- 2010-11 -DO- 579/COCH/2014 M/S. KUTTIYERI SERVICE CO- OPERATIVE BANK LTD., KUTTIYERI P.O., TALIPARAMBA, KANNUR-670 141. [PAN:AAABK 0485D] -DO- 2007-08 -DO- 580/COCH/2014 -DO- -DO- 2008-09 -DO- ASSESSEE BY SHRI R. KRISHNA IYER, CA REVENUE BY SHRI A. DHANARAJ, SR. DR DATE OF HEARING 08/06/2016 DATE OF PRONOUNCEMENT 09/06/2016 ITA NO.576-580/COCH/2014 2 ORDER PER B.P. JAIN, AM: THESE FIVE APPEALS IN THE CASE OF TWO ASSESSE S FOR DIFFERENT ASSESSMENT YEARS ARISE FROM DIFFERENT ORDERS AS PER DETAILS HEREINAB OVE. 2. SINCE THE ISSUES IN ALL THE FIVE APPEALS WITH R ESPECT TO THE TWO ASSESSEES ARE IDENTICAL, ACCORDINGLY, ALL THE APPEALS ARE BEING T AKEN UP BY THIS CONSOLIDATED ORDER AS UNDER:- 3. THE LD. COUNSEL FOR THE ASSESSES HAS LISTED 11 PAGES OF GROUNDS OF APPEAL IN EACH OF THE YEARS IN EACH CASE OF THE ASSESSES WITH RESPECT TO TWO ISSUES WHICH ARE LISTED AS UNDER:- I) DISALLOWANCE OF CLAIM U/S. 80P AND II) DISALLOWANCE OF DEDUCTION U/S. 40(A)(IA) OF THE ACT. 4. THE FIRST ISSUE IS WITH RESPECT TO THE DISALLO WANCE OF CLAIM U/S. 80PAND THE SECOND ISSUE IS WITH RESPECT TO THE DISALLOWANCE OF DEDUCTION U/S. 40(A)(IA) OF THE ACT. SINCE THE ISSUES ARE COMMON IN ALL THE FI VE APPEALS MENTIONED HEREINABOVE, WE CONSIDER IT FIT TO TAKE UP THE APPE AL IN THE CASE OF M/S. ITA NO.576-580/COCH/2014 3 PATTUVAM SERVICE CO-OPERATIVE BANK LTD. IN ITA NO. 576/COCH/2014 FOR THE ASSESSMENT YEAR 2007-08 AND OUR ORDER HEREINBELOW S HALL BE IDENTICALLY APPLICABLE IN ALL OTHER APPEALS WITH RESPECT TO BOT H THE ASSESSES. 5. THE BRIEF FACTS OF THE CASE IN THE CASE OF M/S . PATTUVAM SERVICE CO-OPERATIVE BANK LTD. IN ITA NO. 576/COCH/2014 FOR THE ASSESSME NT YEAR 2007-08 WITH RESPECT TO THE FIRST ISSUE IS THAT THE ASSESSEE IS A PRIMAR Y AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES A CT, 1969. IT IS ENGAGED IN THE BUSINESS OF PROVIDING AGRICULTURAL CREDIT TO ITS ME MBERS. THE CLAIM OF DEDUCTION U/S 80P (2) WAS DENIED BY THE AO FOR THE REASON THA T THE ASSESSEE IS PRIMARILY ENGAGED IN THE BUSINESS OF BANKING AND IN VIEW OF S ECTION 80P(4) OF THE ACT, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80P(2) O F THE ACT. THE VIEW TAKEN BY THE AO WAS CONFIRMED BY THE CIT(A). 6. THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD AR SUBMITTED THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSE SSEE BY THE RECENT JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF THE CHIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS IN ITA NO.212 OF 2013 ( JUDGMENT DATED 15 TH FEBRUARY 2016). 7. THE LD. DR WAS UNABLE TO CONTROVERT THE ABOVE SU BMISSIONS OF THE ASSESSEE. ITA NO.576-580/COCH/2014 4 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F THE CHIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS (SUPRA) HAS HELD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERAT IVE SOCIETIES ACT, 1969 IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2). T HE HONBLE HIGH COURT WAS CONSIDERING THE FOLLOWING SUBSTANTIAL QUESTION OF L AW: A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION, THE TRIBUNAL IS CORRECT IN LAW IN DE CIDING AGAINST THE ASSESSEE, THE ISSUE REGARDING ENTITLEMENT FOR EXEMP TION UNDER SECTION 80P, IGNORING THE FACT THAT THE ASSESSEE IS A PRIMARY AG RICULTURAL CREDIT SOCIETY? 9. IN CONSIDERING THE ABOVE QUESTION OF LAW, THE H ONBLE HIGH COURT RENDERED THE FOLLOWING FINDINGS: 15. APPELLANTS IN THESE DIFFERENT APPEALS ARE INDI SPUTABLY SOCIETIES REGISTERED UNDER THE KERALA CO- OPERATIVE SOCIETIES ACT, 1969, FOR SORT, KCS ACT AN D THE BYE-LAWS OF EACH OF THEM, AS MADE AVAILABLE TO THIS COURT AS PART OF THE PAPER BOOKS, CLEARLY SHOW THAT THEY HAVE BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPET ENT AUTHORITY UNDER THE PROVISIONS OF THAT ACT. THE PARLIAMENT, HAVING DEFINED THE TERM 'CO-OPERATI VE SOCIETY' FOR THE PURPOSES OF THE BR ACT WI TH REFERENCE TO, AMONG OTHER THINGS, THE REGISTRATION OF A SOCIETY U N DER ANY STATE LAW RELATING TO CO-OPERATIVE SOCIETIES FOR THE TIME BEING; IT CANN OT BUT BE TAKEN THAT THE PURPOSE OF THE SOCIETIES SO REGISTERED UNDER THE STATE LAW AND ITS OBJECTS H AVE TO BE UNDERSTOOD AS THOSE WHICH HAVE BEEN APPROVED BY THE COMPETENT AUTHORITY UNDER SUCH STATE LAW. THIS, WE VISUALISE AS DUE RECIPROCATIVE LEGISLATIVE EXERCISE BY THE PARLIAMEN T RECOGN I SING THE PREDOMINANCE OF DECISIONS RENDERED UNDER THE RELEVANT STATE LAW. IN TH I S VIEW OF THE MATTER, ALL THE APPELLANTS HAV I NG BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CRED I T SOC I ET I ES B Y THE COMPETENT AUTHOR I TY UNDE R TH E KCS ACT , I T HAS NECESSAR IL Y TO BE HELD THAT THE PRINCIPAL OBJECT OF SUCH SOCI ETIES IS TO UNDERTAKE AGR I CULTURAL CREDIT ACTIVITIES AND TO PROVIDE LOANS AND ADVANCE S FOR AGRICULTURAL PURPOSES , THE RATE ' OF INTEREST ON SUCH LOANS AND ADVANCES TO BE AT THE RATE FIXED BY THE REGISTRAR OF CO - OPERATIVE SOCIETIES ITA NO.576-580/COCH/2014 5 UNDER THE KCS ACT AND HAV I NG I TS AREA OF OPERATION CONFINED TO A VILLAGE, PANCHAYAT OR A MUNICIPALITY. THIS IS THE CONSEQUENCE OF THE DEFINI TION CLAUSE IN SECTION 2(OAA) OF THE KCS ACT. THE AUTHORITIES UNDER THE IT ACT CANNOT PROBE INTO ANY ISSUE OR SUCH MATTER RELATING TO SUCH APPLICANT S. 16. THE POSITION OF 1 AW BEING AS ABOVE WITH REFERENCE TO THE STATUTORY PROVISIONS, THE APPELLANTS HAD SHOWN TO THE AUTHORI TIES AND THE TRIBUNAL THAT THEY ARE PRIMARY AGRICULTURA L CREDIT SOCIETIES IN TERMS OF CLAUSE (CCIV) OF SECTION 5 OF THE BR ACT, HAVING REGARD TO THE PRIMARY OBJECT OR PRINCIP AL BUSINESS OF EACH OF THE APPELLANTS. IT IS ALSO CLEA R FROM THE MATERIALS ON RECORD THAT THE BYE-LAWS OF EACH OF THE APPELLANTS DO . NOT PERMIT ADMISSION OF ANY OTHER CO-OPERATIVE SOCIETY AS MEMB ER, EXCEPT MAY BE, IN ACCORDANCE WITH THE PROVISO TO SUB - CLAUSE 2 OF SECTION 5(CCIV) OF THE BR ACT. THE DIFFERENT ORDERS OF THE TRIBUNAL WHICH ARE IMPEACHED IN THESE APPEALS DO NOT CONTAIN ANY FINDING OF FACT TO THE E FFECT THAT THE BYE- 1AWS OF ANY OF THE APPELLANT OR ITS CLASS I FICATION BY THE COMPETENT AUTHORITY UNDER THE KCS ACT LS ANYTHING DIFFERENT FROM WHAT WE HAVE STATED HEREIN ABOVE. FOR THIS REASON, IT CANNOT BUT BE HELD THAT THE APPELLANTS ARE ENTITLED TO EXEMPTION FROM THE PROVISIONS OF SECTION 80P OF THE IT ACT BY VIRTUE OF SUB- SECTION 4 OF THAT SECT; ON. IN THIS VIEW OF THE MATTER, TH E APPEALS SUCCEED. 17. IN THE LIGHT OF THE AFORESAID, WE ANSWER SUBSTA NTIA 1 QUESTION 'A' IN FAVOUR OF THE APPELLANTS AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE REGARDING THE ENTITLEMENT OF EXEMPT I ON UNDER SECTION 80P AGAINST THE APPELLANTS. WE HOLD T HAT THE PRIMARY AGRICULTURAL CREDIT SOCIETIES, REGISTERED AS SUCH UNDER THE KCS ACT; AND CLASSIFIE D SO, UNDER THAT ACT, INCLUDING THE APPELLANTS ARE ENTITLED TO SUCH EXEMPTION. 10. IN THE INSTANCE CASE, THE CERTIFICATE OF RE GISTRATION OF THE ASSESSEE UNDER THE KERALA COOPERATIVE SOCIETIES ACT AND THE BYE-LA WS ARE PLACED ON RECORD. IT IS CLEAR FROM THE PERUSAL OF THE SAME THAT THE ASSE SSEE IS PRIMARY AGRICULTURAL CREDIT SOCIETY AND PROVIDING AGRICULTURAL CREDIT FA CILITIES TO ITS MEMBERS. THE HONBLE JURISDICTIONAL HIGH COURT, IN THE ABOVE CIT ED JUDGMENT HAS HELD THAT SUCH SOCIETIES ARE ENTITLED TO THE BENEFIT OF DEDUC TION U/S 80P(2) OF THE ACT. IN ITA NO.576-580/COCH/2014 6 VIEW OF THE ABOVE FINDINGS OF THE HONBLE JURISDICT IONAL HIGH COURT (SUPRA), WE ALLOW THE GROUND ON THIS ISSUE. 11. NOW WE SHALL TAKE UP THE SECOND ISSUE WITH RES PECT TO THE DISALLOWANCE OF DEDUCTION U/S. 40(A)(IA)OF THE ACT. THE AVERMENT M ADE BY THE ASSESSEE IS THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE ONLY IN RESPECT OF THE AMOUNT PAYABLE AND NOT IN RESPECT OF THE AMOUNT ACTUALLY PAID AND HENCE DISALLOWANCE U/S. 40(A)(IA) WAS INCORRECT. I T IS THE CASE OF THE ASSESSEE THAT THE LORRY HIRE CHARGES WERE ACTUALLY PAID TO T HE LORRY DRIVERS AND NO PROVISION WAS MADE TO SHOW THEM AS PAYABLE IN THE B OOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE RELIED UPON THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING SERVIC ES (2013) 357 ITR 642 WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) A RE APPLICABLE IN RESPECT OF EXPENDITURE FOR WHICH THE PROVISION WAS MADE AT THE END OF THE YEAR. THE SAID DECISION OF THE HONBLE HIGH COURT WAS CHALLENGED B Y THE REVENUE IN THE HONBLE SUPREME COURT AND THE HONBLE SUPREME COURT DISMISSED THE SLP FILED BY THE DEPARTMENT IN LIMINE. 12. THE LD. DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE LD. CIT(A). ITA NO.576-580/COCH/2014 7 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE FACTS OF THE CASE. THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE EXTRACTED HEREINBELOW: 40(A)(IA) (A) IN THE CASE OF THE ASSESSEE - (IA) ANY INTEREST, COMMISSION OR BROKERAGE, (RENT, ROYALTY) FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT AN Y WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 13 9: PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB-SECTION(1) OF SECTION 139, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX H AS BEEN PAID: EXPLANATION - FOR THE PURPOSES OF THE SUB-CLAUSE:- (I) COMMISSION OR BROKERAGE SHALL HAVE THE SAME M EANING AS IN CLAUSE (I) OF THE EXPLANATION TO SECTION 194H; (II) FEES FOR TECHNICAL SERVICES SHALL HAVE THE S AME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION(1) OF SECTION 9; (III) PROFESSIONAL SERVICES SHALL HAVE THE SAME M EANING AS IN CLAUSE (A) OF THE EXPLANATION TO SECTION 194J; (IV) WORK SHALL HAVE THE SAME MEANING AS IN EXPLA NATION III TO SECTION 194C; ITA NO.576-580/COCH/2014 8 (V) RENT SHALL HAVE THE SAME MEANING AS IN CLAUS E (I) TO THE EXPLANATION TO SECTION 194I; (VI) ROYALTY SHALL HAVE THE SAME MEANING AS IN E XPLANATION 2 TO CLAUSE (VI) OF SUB-SECTION (1) OF SECTION 9; . 14. THE TERM PAYABLE APPEARING IN THE AFORESA ID PROVISION HAS BEEN THE SUBJECT MATTER OF JUDICIAL INTERPRETATION IN VARIOU S JUDGMENTS. THE SPECIAL BENCH OF THE ITAT IN THE CASE OF M/S. MERILYN SHIPP ING & TRANSPORTS VS. ACIT REPORTED IN 136 ITD 23 (SB) HAD HELD THAT DISALLOW ANCE UNDER SECTION 40(A)(IA) IS TO BE RESTRICTED TO THE EXPENDITURE THAT IS PAYABLE AND THE EXPENDITURE THAT HAS BEEN PAID DURING THE YEAR SHALL NOT COME WITHIN ITS PURVIEW. THE SAID JUDGMENT WAS STAYED BY THE HONBLE HIGH COURT OF AN DHRA PRADESH. THE ITAT, MUMBAI BENCH IN THE CASE OF ACIT VS. AMIT NARESH SI NHA IN I.T.A. NO. 4154/MUM/2013 HAS TAKEN THE VIEW THAT UNLESS THE DE CISION OF M/S. MERILYN SHIPPING & TRANSPORTS (SUPRA) IS REVERSED BY THE HO NBLE HIGH COURT OF ANDHRA PRADESH, THE SAME HAS TO BE FOLLOWED BY THE TRIBUNA L. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF M/S. VECTOR SHIPPING SERV ICES (SUPRA) HAS TAKEN THE VIEW IN FAVOUR OF THE ASSESSEE. 15. HOWEVER, A CONTRARY STAND HAS BEEN TAKEN BY TH E HONBLE JURISDICTIONAL KERALA HIGH COURT IN THE CASE OF THOMAS GEORGE MUTH OOT IN I.T.A 278 OF 2014 DATED 3.7.2015 WHEREIN IT WAS HELD THAT PROVISION O F SECTION 40(A)(IA) DOES NOT ITA NO.576-580/COCH/2014 9 WARRANT AN INTERPRETATION THAT IT WOULD BE ATTRACTE D ONLY IF THE EXPENDITURE REMAINED PAYABLE ON THE LAST DATE OF THE FINANCIAL YEAR. IN THE AFORESAID DECISION, IT WAS HELD AS UNDER: 17. ANOTHER CONTENTION THAT WAS PRESSED INTO SERVI CE WAS THAT THE APPELLANTS HAD ALREADY PAID THE AMOUNT AND THEREFORE, THE PROVISIO NS OF SECTION 40 (A)(IA), APPLICABLE ONLY IN RESPECT OF THE AMOUNT WHICH I.T. ACT 278/14 & CON CASES REMAINS TO BE PAYABLE ON THE LAST DAY OF THE FINANC IAL YEAR, IS NOT ATTRACTED. THEREFORE, ACCORDING TO THE APPELLANTS, DISALLOWANC E CANNOT BE SUSTAINED. THIS CONTENTION WAS SOUGHT TO BE SUBSTANTIATED BY RELYIN G ON THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN COMMISSIONER OF INCOME TAX V. VECTOR SHIPPING SERVICES (P) (2013) 387 ITR 642 (ALL.). PRIMARILY, THIS CON TENTION SHOULD BE ANSWERED WITH REFERENCE TO THE LANGUAGE USED IN THE STATUTORY PRO VISION. SECTION 40(A)(IA) MAKES IT CLEAR THAT THE CONSEQUENCE OF DISALLOWANCE IS AT TRACTED WHEN AN INDIVIDUAL WHO IS LIABLE TO DEDUCT TAX ON ANY INTEREST PAYABLE TO A R ESIDENT ON WHICH TAX IS DEDUCTIBLE AT SOURCE, COMMITS DEFAULT. THE LANGUAGE OF THE SE CTION DOES NOT WARRANT ON INTERPRETATION THAT IT IS ATTRACTED ONLY IF THE INT EREST REMAINS PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR. IF THIS CONTENTION IS T O BE ACCEPTED, THIS COURT WILL HAVE TO ALTER THE LANGUAGE OF SECTION 40(A)(IA) AND SUCH AN INTERPRETATION IS NOT PERMISSIBLE. THIS VIEW THAT WE HAVE TAKEN IS SUPPO RTED BY JUDGMENTS OF THE CALCUTTA HIGH COURT IN CRESCENT EXPORTS SYNDICATE A ND ANOTHER (ITAT 20 OF I.T.A. 278/14 & CON CASES 2013) AND THE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SIKANDARKHAN N TUNVAR (I.T.A. NOS . 905 OF 2012 & CONNECTED CASES), WHICH HAVE BEEN RELIED ON BY THE TRIBUNAL. RESULTANTLY, WE DO NOT FIND ANY MERIT IN THE CONTEN TIONS AND QUESTIONS OF LAW ARE ANSWERED AGAINST THE ASSESSEE. APPEALS ARE ONLY TO BE DISMISSED AND WE DO SO. 16. THE SAID DECISION ALSO REFERS TO THE JUDGME NT OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING S ERVICES (2013) 357 ITR 642. THE AFORESAID VIEW OF THE HONBLE KERALA HIGH COURT IS ALSO SUPPORTED BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. SIKANDARKHAN N ITA NO.576-580/COCH/2014 10 TUNVAR & ORS. REPORTED IN 357 ITR 312 WHEREIN THE H ONBLE GUJARAT HIGH COURT WAS PLEASED TO HOLD THAT THE DECISION OF THE SPECIA L BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ACIT REPORTED IN 136 ITD 23 (SB) DOES NOT LAY DOWN THE CORRECT LAW. FURTHERMORE, TH E HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF PMS DIESELS VS. CIT IN I.T.A. NO. 716 OF 2009 DID NOT AGREE WITH THE VIEW TAKEN BY THE DIVISION BENCH OF THE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES (SUPR A) AND REJECTED THE CONTENTION THAT THE DISALLOWANCE CONTEMPLATED BY SE CTION 40(A)(IA) CANNOT BE APPLIED WHEN THE PAYMENT HAS ALREADY BEEN MADE BY T HE ASSESSEE TO THE PAYEE. IT IS PERTINENT TO MENTION THAT THE ITAT, C OCHIN BENCH IN THE CASE OF SIRAJ V E VS. ITO IN I.T.A. NO. 147/COCH/2015 DATED 07/10 /2015 BY FOLLOWING THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CA SE OF THOMAS GEORGE MUTHOOT (SUPRA) HELD THE ISSUE AGAINST THE ASSESSEE . IN VIEW OF THE DECISIONS OF THE ITAT, COCHIN BENCH IN THE CASE OF SIRAJ V E AND THOMAS GEORGE MUTHOOT (SUPRA), THE GROUND ON THE SECOND ISSUE IS DISMISSE D AND THE DISALLOWANCE OF DEDUCTION U/S. 40(A)(IA) IS CONFIRMED. THUS THE APPEAL OF THE ASSESSEE IN I.T.A. NOS. 576/COCH/ 2014 IS PARTLY ALLOWED. 17. NOW WE SHALL TAKE UP THE APPEALS IN THE CASE OF M/S. PATTUVAM SERVICE CO- OPERATIVE BANK LTD. IN I.T.A. NOS. 577&578/COCH/201 4 FOR THE ASSESSMENT YEARS 2008-09 AND 2010-11 AND IN THE CASE OF M/S. KUTTIYE RI SERVICE CO-OPERATIVE BANK ITA NO.576-580/COCH/2014 11 LTD. IN I.T.A. NOS. 579&580/COCH/2014 FOR THE ASSES SMENT YEARS 2007-08 AND 2008- 09 AS UNDER:- 18. THE FACTS IN THE PRESENT CASES ARE IDENTICAL TO THE FACTS IN THE CASE OF M/S. PATTUVAM SERVICE CO-OPERATIVE BANK LTD. IN I.T.A. N O. 576/COCH/2014 FOR THE ASSESSMENT YEAR 2007-08 DECIDED BY US HEREINABOVE A ND THEREFORE, OUR ORDER HEREINABOVE IN I.T.A. NO.576/COCH/2014 SHALL BE IDE NTICALLY APPLICABLE IN THE CASE OF BOTH THE ASSESSES IN I.T.A. NOS. 577-580/CO CH/2014. ACCORDINGLY, ALL THE ABOVE FOUR APPEALS ARE PARTLY ALLOWED. 19. IN THE RESULT, THE APPEALS IN THE CASE OF M/ S. PATTUVAM SERVICE CO- OPERATIVE BANK LTD. IN I.T.A. NOS. 576-578 AND IN T HE CASE OF M/S. KUTTIYERI SERVICE CO-OPERATIVE BANK LTD. IN I.T.A. NOS. 579&5 80/COCH/2014 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COUR T ON 09-06-2016 SD/- SD /- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : COCHIN DATED: 9TH JUNE , 2016 GJ COPY TO: ITA NO.576-580/COCH/2014 12 1. M/S. PATTUVAM SERVICIE CO-OPERATIVE BANK LTD., PATTUVAM P.O., TALIPARAMBA, KANNUR-670 143. 2. M/S. KUTTIYERI SERVICE CO-OPERATIVE BANK LTD., KUTTIYERI P.O., TALIPARAMBA, KANNUR-670 141. 3. THE INCOME TAX OFFICER, WARD-4, KANNUR. 4. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE. 5. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 6. THE DR/ITAT, COCHIN BENCH. 7. GUARD FILE. BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN