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TMI Blog2018 (4) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... H COURT), we hold that the assessee had not defaulted in not deducting tax at source out of such payments made to its members / Co-operative societies. Thus, there was no liability to deduct tax at source and the assessee cannot be said to have violated the provisions of section 194A(1) of the Act. - Decided in favour of assessee - ITA No.52/PUN/2016 - - - Dated:- 5-4-2018 - MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM For The Appellant : Shri C.H. Naniwadekar For The Respondent : Shri Rajeev Kumar, CIT ORDER PER SUSHMA CHOWLA, JM: The appeal filed by the assessee is against the order of CIT(A)-1, Thane, dated 20.10.2015 relating to assessment year 2014-15 against order passed under section 201(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A; but while verifying the TDS payments, the Assessing Officer noted that deductor Co-operative bank was not deducting TDS on interest paid to members and Co-operative societies. Show cause notice was issued to the assessee as to why TDS was not deducted on interest paid to Co-operative societies, members and shareholders. The assessee explained that under section 194A(3)(v) of the Act, it is provided that provisions of section 194A(1) of the Act will not apply to such income credited or paid by Co-operative society to its members or to any other Co-operative society. The assessee explained that it was Co-operative Society registered under Multiple State Co-operative Societies Act carrying on the business of banking, hence it was not liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers on time deposits as per provisions of section 194A and 194A(3)(i) of the Act. The assessee was held to be in default and demand under section 201(1) of the Act was raised at ₹ 74,24,089/- and interest was charged under section 201(1A) of the Act at ₹ 8,16,650/-, totaling ₹ 82,40,739/-. 5. The CIT(A) upheld the order of Assessing Officer after referring to provisions of section 194A of the Act and relying on different decisions. 6. The assessee is in appeal against the order of CIT(A). 7. The learned Authorized Representative for the assessee pointed out that liability to deduct tax has been fastened on Co-operative society vis- -vis deduction of tax at source on interest paid to members and other Co-operative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest payments made by the assessee to its members or other Co-operative societies and on time deposits. The assessee had claimed shelter under section 194A(3)(v) of the Act. Section 194A(1) of the Act lays down that any person who is responsible for paying to a resident any income by way of interest, then he shall be liable at the time of credit of such income to the account of payee or at the time of payment thereof in cash or by cheque / draft or by any other mode, whichever is earlier, to deduct income tax thereon at the rates in force. In respect of an individual or Hindu Undivided Family, the said provisions are applicable on satisfaction of certain conditions, but for deciding the present issue before us, same are not relevant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le for payment of interest to member depositors by the amendment. The provisions of section 194A(3)(v) of the Act have been amended so as to expressly provide that exemption provided from deduction of tax from payment of interest to members by Co-operative society shall not apply to the payment of interest on deposits by the Co-operative Bank to its members. This amendment was made effective from prospective date of 01.06.2015 as explained in clause 42.5 of Explanatory Notes and it was directed that Co-operative bank shall be required to deduct tax from payment of interest on time deposits of its members, on or after 01.06.2015. It is also clarified that Hence, a cooperative bank was not required to deduct tax from the payment of interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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