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TMI Blog2015 (7) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13, the assessee had not deducted tax at source in respect of interest paid to members relying on the specific exception provided for under the provisions of section 194A(3)(v) of the Act. The Assessing Officer was of the view that the provisions of section 194A(3)(v) of the Act are not applicable to a co-operative society carrying on the business of banking; but rather the provisions of Section 194A(3)(viia) of the Act. The Assessing Officer held that the assessee had failed to deduct tax at source as per the provisions of section 194A(3) of the Act. On the basis of the details of interest paid in the period relevant to Assessment Years 2011-12 and 2012-13, the Assessing Officer passed orders under Section 201(1) and 201(1A) of the Act dt.31.3.2014 determining the following demands :- Asst. Year Demand u/s.201(1) Demand u/s. 201(1A) 2011-12 31,32,522 11,27,708 2012-13 31,24,020 7,49,765 2.2 Aggrieved by the orders of the ITO (TDS), Mysore dt.31.3.2014 for both Assessment Years 2011-12 and 2012-13, the assessee preferred appeals before the CIT (Appeals), Mysore. The learned CIT (Appeals), allowed the assessee's appeals following th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon'ble ITAT, Bangalore which failed to appreciate that the clause 194A(3)(v) is a general clause applicable to co-operative societies in general, it is a normal principle of interpretation of law that in the presence of a specific provision the general provision will not apply. For these and other grounds that may be raised during the course of appeal and actual hearing, the appellant prays that the order of learned CIT (Appeals) may be set aside and cancelled." For A.Y. 2012-13 " 1. The learned CIT (Appeals) has erred in granting relief contrary to the findings in the earlier part of the order. 2. The learned CIT (Appeals) has erred in relying on the decision of Hon'ble ITAT, Bangalore Bench in the case of The Bagalkot District CentralCo-op. Bank Vs. JCIT in ITA No.1512/Bang/2013 which is erroneous and against the law. 3. The learned CIT (Appeals) ought to have considered the orders of the Hon'ble ITAT, Pune (857 ITD 569) and Hon'ble ITAT, Panaji Bench order in the case of Bailhongal Urban Co-operative Bank dt.28.8.2013, which have been decided in favour of the Department. 4. The learned CIT (Appeals) erred in relying on the decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions would disclose that: a) U/s. 194A(3)(i)(b) a Co-operative Bank need not deduct tax at source if the amount of interest paid does not exceed Rs. 10,000 whether the payment is made to a member or non- member or whether the interest is on time deposit or non-time deposit. b) U/s 194A (3)(v) a Co-operative Society irrespective of its nature of activity need not deduct tax at source on any interest paid to its members whether on time deposits or non-time deposits c) U/s l94A(3)(viia)(a), a primary agricultural credit Co-operative Society or a Cooperative land mortgage bank or a co-operative land development bank need not deduct tax at source on any interest paid by it in respect of deposits received by it. d) U/s 194A(3)(viia)(b) of the Act a co-operative society other than a co-operative society or a bank referred to in Clause (a) need not deduct tax at source on interest paid on any deposit other than time deposits. 2.3 The following chart explains the position: Type of Interest / Payee Rs.10,000 or Less 1 94A(3)(i)(b) Any Amount/Any type of interest paid by a Co-op Society 194A(3)(v) Interest on deposits other than time deposits 194A(3)(viia)(b) Inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a non-member depositor of the cooperative bank, who shall receive interest only on deposits other than time deposits made on or after July 1, 1995 without TDS under section 194A". It was also submitted by him that the learned Assessing Officer has stated that the Circular was struck down in Jalgaon District Central Cop-operative Bank Ltd Vs Union of India (265)ITR 423. According to him the observations of the AO in this regard were not correct as the Hon'ble High Court struck down only that portion of circular which dealt with Boards clarification as to who is a member. The court never had an occasion to go into a question whether S. 194A(3)(v) of the Act would cover- a co-operative bank or not. It was finally submitted that the Assessee is entitled to deduction and no disallowance is called for u/s 40(a)(ia) of the Act. 14. The learned DR while reiterating the stand of the AO/CIT(A)further relied on the decision of the ITAT Panaji Bench in ITA No.85/PN/2013 for AY 09-10 in the case of The Bailhongal Uraban Co-op Bank Ltd. Vs. JCIT order dated 28.8.2013 wherein the Tribunal followed the order of SMC Bench in the case of Bhagani Nivedita Sah Bank Ltd. Vs. ACIT 87 ITD 569 (Pune). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 194A(3)(i)(b) of the Act. Similarly u/s.194A(3)(viia)(b) interest on deposits other than time deposits even if the payment is made to a non-member by a co-operative society, the co-operative society need not deduct tax at source. Thus this section carves out another exception to Sec.194A(3)(i)(b) of the Act. We do not think that any of the above provisions can be called a general provision and other provisions called specific provisions. Each provision over-lap and if read in the manner as indicated above, there is perfect harmony to the various provisions. We do not agree with the view expressed by the Pune ITAT SMC in the case of Bhagani Nivedita Sahakari Bank Ltd. (supra) when it says that Co-operative society as mentioned in cl. (v) is a general species, whereas the other five categories of co-operative societies which are specifically referred to in other provisions are specific co-operative societies. The further conclusion in the said decision that the term 'co-operative society' in cl. (v) of s. 194A(3) has to be interpreted as co-operative society other than co-operative bank, is again unsustainable. The law is well settled that by a process of interpretation one cannot ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to a member of co-operative bank-Reg. & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to receive share from the profits of the co-operative bank. &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of challenge to para-3 of CBDT Circular No.9 dated 11.9.2002 which tried to interpret the word "member" as given in Sec.194A(3)(v) of the Act. It is only that part of the Circular that had been quashed by the Hon'ble Bombay High Court and the other paragraphs of the Circular had no connection with the issue before the Hon'ble Bombay high Court. How could it be said that the entire circular has been quashed by the Hon'ble Bombay High Court? In our view para-2 of the Circular still holds good and the conclusion of the ITAT Pune Bench in the case of The Bailhongal Uraban Co-op Bank Ltd.(supra) are not factually correct. Consequently, the conclusions drawn in the aforesaid decision also contrary to facts and hence cannot be considered as precedent. 20. The learned counsel for the Assessee has brought to our notice that the ITAT Vishakapatnam Bench in the case of The Visakhapatnam Co-operative Bank ITA No.5 and 19 of 2011 order dated 29.8.2011 has held that co-operative societies carrying on banking business when it pays interest to its members on deposits it need not deduct tax at source in view of the provisions of Sec.194A(3)(v) of the Act. Similar view has also been expressed b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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