9911796707
TMI Blog2018 (4) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... upholding that the interest paid by the assessee bank to its members & other co-operative societies (amounting to Rs. 7,42,40,899/-) as liable to TDS u/s 194A and consequently erred in upholding ITO(TDS)'s action of levying tax and interest of Rs. 82,40,740/-. The learned CIT(A) failed in appreciating the scheme and logic behind sec.194A and the correct legal position in this behalf. 2. Without prejudice to the above, the learned Commissioner of Income Tax (Appeals) erred on facts and in law in not giving an opportunity to the assessee to establish and not holding that the assessee is not in default as contemplated under the 1st proviso to sec. 201(1) of the Act. 3. The issue which arises in the present appeal is against the liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the business of banking, who shall received interest on deposits other than time deposits made on or after 1st July, 1995. It was also pointed out that the said provisions would be applicable to income credited or paid to non member depositors and the said provision has been complied with by the assessee. Reference was made to CBDT Circular No.9/2002, dated 11.09.2002. The Assessing Officer did not agree with the contention of assessee that it was not under legal obligation to deduct tax on interest paid to members under the pretext of section 194A(3)(v) of the Act. Reference was made to provisions of section 194A of the Act and it was noted by the Assessing Officer that the said section talks about deposits which are neither defined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perative Banks for deduction of tax at source under section 194A of the Act. Our attention was drawn to the above said Explanatory Notes with special reference to paras 42.4 and 42.5. The learned Authorized Representative for the assessee further pointed out that the Hon'ble Bombay High Court at Goa had decided similar issue of liability or obligation of Co-operative Bank in assessment years 2010-11 to 2013-14 based upon the then existing provisions of law and interpretations given to the section. Reference was made to the issue decided in Saraswat Co-operative Bank Ltd. Vs. (1) ITO & (2) Union of India in Tax Appeal No.3, 4, 5, 6, 7, 8, 9 & 11 of 2015, judgment dated 07.03.2017. He referred to the decision, wherein Explanatory Notes were t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) thereunder, which reads as under:- "194A(3) The provisions of sub-section (1) shall not apply - ..... (v) - to such income credited or 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 to any other co-operative society." 11. The assessee seeks shelter under the said section for the relevant year to point out that in view of specific provisions of clause (v) to section 194A(3) of the Act, where the assessee is a Co-operative Society being Co-operative Bank, then any payment made to its members or Co-operative society being interest income is outside the purview of section 194A(1) of the Act. 12. The assessee in this regard has point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 27.11.2015, wherein the position was clarified about obligation of Co-operative banks from deduction of tax at source under section 194A of the Act. The Hon'ble High Court referred to the Explanatory Note para 42.5 and stated that position of relevant law is clearly specified in the said para and held that Explanatory Note has made the position of law clear that such Co-operative banks are not liable to deduct any amount of TDS prior to the effective date of 01.06.2015. 14. In the facts of the present case also, the year under appeal is assessment year 2014-15 i.e. prior to the date of introduction of amendment from 01.06.2015 and under the old provisions of section 194A(3)(v) of the Act, the assessee Co-operative bank was not oblige ..... X X X X Extracts X X X X X X X X Extracts X X X X
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