9911796707
TMI Blog2015 (9) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... s of members. The language used u/s 194A(3)(v) is ‘Member’, the Hon’ble Bombay High Court in case of the Jalgaon District Central Cooperative Bank Ltd. & anr. Vs. Union of India and others (2003 (9) TMI 56 - BOMBAY High Court ), while 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is registered under the AP State Cooperative Societies Act, 1964. For verifying assessee s compliance to TDS provisions, a survey u/s 133A of 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id Circular has been quashed by the Hon ble Bombay High Court, but, since the Board has not withdrawn or repealed the said Circular, it is binding on both assessee and revenue.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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot exempt. He, therefore, submitted, assessee was liable to deduct tax as far as interest payment to associate/nominal members are concerned. 6. Ld. AR, on the other hand, strongly supporting the view expressed by ld. CIT(A) submitted a reading of section 194A(3)(v) would make it clear that no differentiation has been made as far as categories of members are concerned. Therefore, AO was not justified in holding that 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( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l members are not covered under the said provision. However, on perusal of the provisions contained u/s 194A(3)(v), it is very much clear that there is no distinction made under the said provision between different categories of members. The language used u/s 194A(3)(v) is Member , the Hon ble Bombay High Court in case of the Jalgaon District Central Cooperative Bank Ltd. anr. Vs. Union of India and others (supra), while 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 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exemption provision of section 194A(3)(v) of the Act. In fact, ld. CIT himself while issuing notice u/s 263 as well as in more than one place in the impugned order has held the assessment order passed to be erroneous and prejudicial to the interests of revenue on the reasoning that no differentiation between members can be made while applying TDS provision u/s 194A(3). Thus, applying the same logic, it is to be held that 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 so ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
