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TMI Blog2015 (9) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act was conducted on the assessee on 03/11/2011. In course of survey, it was found that the society was paying interest on deposits kept with it to different categories of members such as regular members, associate members and nominal members. However, while making such interest payments, assessee society has not deducted tax at source. When assessee was called upon to explain the reason for not deducting tax on interest payments, it was submitted by assessee on the principle of mutuality, TDS provisions on interest payments to members would not apply in view of provision contained u/s 194A(3)(v) of the Act. AO after examining the submissions of assessee, found that during the relevant year, assessee had 851 regular members, 4880 asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding on both assessee and revenue. Holding as aforesaid, AO proceeded to compute demand u/s 201(1) and 201(1A), as under: Member FY 2010-11 Interest paid Tax u/s 201(1) Interest u/s 201(1A) Associate Member 14,89,26,397 1,48,92,640 35,74,233 Nominal Member 14,80,706 1,48,070 35,536 Total 15,04,07,103 1,50,40,710 36,09,769 Thus, AO passed the order accordingly on 30/03/2013 raising he total demand of Rs. 1,86,50,479. Being aggrieved of the assessment order so passed, assessee preferred appeal before ld. CIT(A). 3. Before the ld. CIT(A) assessee reiterated what was stated before AO. Ld. CIT(A) after considering the submissions of assessee and following the decision of the Hon'ble Bombay High Court in case of Jagaon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption provided u/s 194A(3)(v) does not apply to associate/nominal members. Ld. AR submitted, the Hon'ble Bombay High Court in case of the Jalgaon District Central Cooperative Bank Ltd. & anr. Vs. Union of India and others, [2004] 265 ITR 423 has settled the issue holding that while applying the provisions of section 194A(3)(v), no distinction can be made between different categories of members of a cooperative society. He submitted, the aforesaid decision of the Hon'ble Bombay High Court has been affirmed by the Hon'ble Supreme Court while dismissing SLP filed by department. Ld. AR further submitted, when ld. CIT in exercise of power u/s 263, revised the assessment order passed by AO by holding that TDS provisions will apply even to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le examining the provision contained u/s 194A(3)(v), held that exemption granted to a cooperative society u/s 194A(3)(v) cannot be taken away by creating a distinction between duly registered member and nominal member. The aforesaid decision of the Hon'ble Bombay High Court has been affirmed by the Hon'ble Supreme Court while dismissing SLP preferred by the department. In view of the the principle laid down in the judicial precedents, as noted above, to the effect that no distinction can be made between different categories of members while applying the provisions of section 194A(3)(v) of the Act, in our view decision of ld. CIT(A) cannot be interfered with. It may be worthwhile to note here that the impugned assessment order was also subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A)'s order holding that interest payment to associate/nominal members is exempt from deduction of tax at source in view of section 194A(3)(v) would also impliedly apply to the regular members as she came to such conclusion on the principle that no differentiation can be made between members of the cooperative society. That being the case, order passed by ld. CIT(A) also covers the issue of application of section 194A(3)(v) to regular members also. Explanation 'c' to section 263(1) clearly spells out that ld. CIT can exercise his power u/s 263 to an issue which is not contested and decided in appeal proceeding. Therefore, as in the present case, the issue in dispute is clearly the subject matter of appeal before ld. CIT(A) and a dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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