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TMI Blog2015 (8) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot over-ride the prescription of statute passed by the parliament. And, there is no quarrel that assessee is a co-operative society engaged in banking business and the exemption for deducting tax at source for payment of interest is only up to ₹ 10,000/-. So the assessee had to deduct TDS for payment of interest above 10,000/-. In the said scenario, the ld CIT(A) has rightly confirmed the order of the ITO (TDS) and we do not find any infirmity in the said order. Therefore, we confirm the order of the ld. CIT (A). - Decided against assessee. - ITA Nos.5112 & 5113/Del./2014 - - - Dated:- 31-7-2015 - SHRI R.S. SYAL AND SHRI A.T. VARKEY, JJ. For The Assessee : S/Shri O.P. Sapra Sandeep Sapra, Advocates For The Revenue : Shri P. Dam Kanunjna, Senior DR ORDER PER A.T. VARKEY, JUDICIAL MEMBER : The appeals preferred by the assessee are directed against the order of the Commissioner of Income-tax (Appeals), Ghaziabad dated 27.08.2014 for the assessment years 2012-13 2013-14. 2. The grounds of appeal for assessment year 2012-13 read as under :- 1. That the Appellant was not liable to make TDS on the interest payments made to its members on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Ld. CIT(A) against the Appellant is arbitrary, unjust and illegal: a) Rs.41,27,401 on account of alleged short deduction u/s 201 b) ₹ 6,81,049 on account of interest on alleged short deduction u/s 201 (1A) Total Rs.48,08,420 Various observations made by the authorities below in their respective orders are either incorrect or are untenable. Written submissions and the case laws relied upon by the Appellant had been completely ignored by not taking them into consideration while deciding the issue. 4. That without prejudice to Ground No. 1 to 3 above, the demand as created by the AO is very excessive. 5. That the Appellant reserves its right to add, amend/modify the grounds of appeal. 4. Since common issues are involved the both the appeals are decided together. 5. The sole ground before us is whether the assessee should have deducted TDS on the interest disbursed to its members. 6. The appellant/assessee is a Co-operative Bank registered under the U.P. Co-operative Act, 1965 and carrying on the banking business after obta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r co-operative society;] Further, ld. AR submitted that Finance Bill 2015 has proposed an amendment in section 94A(3)(v) by inserting clause 42 as follows:- Clause 42. In section 194A of the Income-tax Act, in sub-section (3), with effect from 1st day of June, 2015,- (b) in clause (v), for the words paid by a co-operative society to a member thereof or , the words and brackets paid by a co-operative society (other than a co-operative bank) to a member thereof or to such income credited or paid by a co-operative society shall be substituted; So, according to the ld. AR, from the plain reading of the above provision, it is evident that as per Section 194A(3)(v), interest paid by a Co-operative Society to its members irrespective of the nature of deposit or amount is exempt from deduction of TDS. He also brought to our notice that CBDT had issued a Circular No.9 of 2002 and the relevant portion is reproduced below:- 1. . 2. Representations have been received in the Board seeking clarification as to whether a member of a co-operative bank may receive without TDS interest on time deposit made with the cooperative bank on or after 1-7-1995. The Board has considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve society. In the instant case, it is the claim of the assessee that all the interest payments have been made only to its members. In that case, the assessee is squarely covered by the exemption provided under section 194A(3)(v). Accordingly, the order passed by the Commissioner (Appeals) was to be upheld. [Para 4]. (ii) In the case of Assistant Commissioner of Income-tax, Circle-1, Nashik v. Ozer Merchant Co-operative Bank Ltd. Reported in [2014] 41 taxmann.com 110 (Pune - Trib.) (copy at pages 69-72 of paper book), it has been held In this background, the CIT(A) has concluded that assessee had credited the impugned interest to the credit of the members, and no tax was required to be deducted in view of Section 194A(3)(v) of the Act. The aforesaid finding of the CIT(A) has not been controverted by the Revenue before us on the basis of any cogent material or reasoning. In the absence of any cogent material brought out by the Revenue, we hereby affirm the aforesaid conclusion of the CIT(A). Accordingly, the CIT(A) was justified in holding that on account of Section 194A(3)(v) of the Act, assessee was not liable to deduct TDS on the impugned payments and thus invoking of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bombay High Court? In our view para-2 of the Circular still holds good and the conclusion of the ITA T Pune Bench in the case of the Bailhongal Urban 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 Asstt. CIT v. Visakhapatnam Co-operative Bank Ltd. [2011] 47 SOT 295/13 taxmann.com 190 has held that cooperative 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 by the Pune Bench of the ITA T in the case of Asstt. CIT v. Ozer Merchant Co-operative Bank Ltd. [2014] 62 SOT 14/41 taxmann.com 110. We may add that in both these decisions the discussion did not turn on the interpretation of Sec.194A(3)(i)(b) of the Act vis-a-vis Sec.194A(3)(v) of the Act. It is thus clear that the preponderance of judicial opinion on this issue is that co-operative societies carrying on banking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ARG Securities Printers (Jurisdictional Delhi High Court). (iii) 300 ITR 75, (Delhi), Director of Income Tax (E) Escorts Cardiac Diseases. Ld. AR also brought to our notice the order passed by in the case of Kashipur Urban Cooperative Bank Ltd. Vs. ITO in ITA No.5329/Del/2013 dated 14.11.2014 for assessment year 2012-13 wherein the order was passed by the author of this order relying on the decision of Vizag Bench of ITAT in the case of Vishakapatnam Co-operative Bank vs. DIT in ITA No.5/2011 19/2011 and held that the assessee cooperative bank was not obliged to deduct TDS on the interest paid to its members. Ld.AR concluded that thus viewed from whatever angle, the appeal deserves to be allowed because the issue is fully covered by various judgments and the CBDT Circular as cited above. 9. The ld. DR submitted that the assessee society has disbursed interest to its members and the ITO (TDS) has sought the details of interest given more than ₹ 10,000/- , since as per Section 194A(3)(i) (b) exemption of interest paid by Co-Operative Society engaged in banking business up to ₹ 10,000/- to members as well as non-members irrespective of the nature of deposit is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o-operative society is into banking can be termed as a species of the said genus; And, section 194A(3)(i)(b) is a special provision for co-operative society engaged in banking business. The maxim generalia specialibus non derogant means literally that general provisions will not abrogate special provisions. When the legislature has given its attention to a separate subject and made provision for it, the presumption is that a subsequent general enactment is not intended to interfere with the special provision unless it manifests that intention very clearly. The maxim has been frequently applied to resolve apparent conflicts between provisions of the same statute or of different statutes and applying the said maxim to the instant case, we find that argument of the ld AR that section 194A(3)(v) absolves assessee from deducting TDS, cannot be accepted. Further, the order of the Tribunal in the case of Kashipur Urban Cooperative Bank Ltd vs. ITO, Kashipur (ITA No.5329/D/2013 for Assessment Year 2012-13) was cited before us, wherein one of us is the author of this order, and said co-operative bank s contention that it need not deduct tax at source was upheld, to our considered opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [Lord Goddard, CJ, in Moore Vs. Hewitt (1947 (2) AIl.ER 270]. The concept gets attracted either when an important provision of law eluded the attention of the Court or where the Court was allusive to such provisions while rendering the decision. Instances of per incuriam may also arise where the decision is rendered ignoring a binding precedent. Since we find that section 194A (3)(3)(ib) of the Act has not been brought to the notice of the Bench while passing order in Kashipur Urban Cooperative Bank Ltd. (supra) cannot be called a good law and it was a per incuriam order and so cannot be called a valid precedent to bind us. 9.2 Likewise, the Ld.AR, heavily relied on the CBDT circular (supra), to bolster his case, which cannot be countenanced because it is a trite law that CBDT circular cannot over-ride the prescription of statute passed by the parliament. And, there is no quarrel that assessee is a co-operative society engaged in banking business and the exemption for deducting tax at source for payment of interest is only up to ₹ 10,000/-. So the assessee had to deduct TDS for payment of interest above 10,000/-. In the said scenario, the ld CIT(A) has rightly confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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