These appeals are heard and disposed of together.

2. There is one substantial question of law which is common in all the appeals namely,

“Whether the interest paid to members of a Co-operative Bank above Rs.10,000/-should be added to tax or not?

The point is squarely covered by a Division Bench judgment of this Court in ITA No.100116/2014 between the Commissioner of Income Tax and another vs. The Bagalkot District Central Cooperative Bank dated 16.12.2015 wherein, with reference to a circular of the Government of India bearing No.19/2015 in F.No.142/14/2015 TPL, it has been held as follows:

“42.5 In view of this, the provisions of the section 194(3)(v) of the Income-tax Act have been amended so as to expressly provide that the exemption provided from deduction of tax from payment of interest to members by a co-operative society under Section 194A(3)(v) of the Income-tax Act shall not apply to the payment of interest on time deposits by the co-operative banks to its members. As this amendment is effective from the prospective dated of 1st June, 2015, the cooperative bank shall be required to deduct tax from the payment of interest on time deposits of its members, on or after the 1st June 2015. Hence, a cooperative bank was not required to deduct tax from the payment of interest on time deposits of its members paid or credited before 1st June 2015.”

In view of the above circular, the said substantial question of law does not survive for consideration.

3. The further substantial question of law that arises for consideration in Appeal No.ITA.200002/15 & ITA.200004/2014 is,

“Whether the gratuity payable to its employees is available for deduction?”

The Tribunal having held that it is so deductible, is sought to be questioned in the light of Section 36(1)(v) of the Income Tax Act, 1961. However, even this has been answered by a Division Bench judgment of this Court as early as in the case of Chief Commissioner (Admn) and Another vs. Karnataka Electricity Board in 1991 ITR 197 page 48, wherein it was held that the mere fact that the contribution would not come within the ambit of the provisions of section 36(1)(iv) would not disentitle the assessee to claim the benefit under Section 37(1) if the requirements thereunder were satisfied. Reference in the said judgment is also made to CIT vs. Eastern Spinning Mills Ltd (1980) 126 ITR 686, a decision of the Calcutta High Court, wherein in pursuance of a statutory requirement under the West Bengal Employees’ Payment of Compulsory Gratuity Act, 1971, a special liability was incurred by the assessee and the provision made to meet this liability was claimed as a deduction under Section 37, and reasonable amount was allowed as a deduction by the Income-tax officer. The High Court held that a prudent estimate of the liability was entitled to deduction under Section 37; the contention that gratuity is a subject covered by section 36(1) and hence deduction could be claimed only on satisfying its provisions, was not accepted.

Similar was the view of the Gujarat High Court in CIT vs. Chhotabhai Jethabhai Patel Tobacco Products Co. Ltd. (1981) 128 ITR 702.

4. The learned counsel for the respondent would submit that notwithstanding that such deduction was permissible only in respect of an approved gratuity fund as laid down in Section 36(1)(v), by the provision under Section 40(A) sub-section (7) clause (a), it was permissible for the deduction to be made even in respect of gratuity fund, which is not an approved fund. If the provision was made, it would be sufficient to make a deduction.

However, the learned counsel for the revenue would point out that the said sub-section has been substituted with effect from the 1.4.2000 and therefore, even merely making a provision for payment of gratuity would not entitle the assessee to make a deduction.

The counsel for the assessee would be quick to point out that even if it is not permissible to make a deduction, in such an event, on making payment as provided