9911796707
TMI Blog1998 (7) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. They have challenged the notices issued by the Income-tax Officer in reference to tax deduction on interest other than interest on securities required under section 194A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The impugned notices proceeded on the basis that the co-operative societies would be governed by section 194A of the Act for the purpose of deduction of tax at source from the interest paid or credited on deposits and their failure to deduct tax at source amounts to violation of the provisions of the Income-tax Act. The co-operative societies have taken up the stand that they are exempted under section 194A and they are not coming within the purview of the said section. Therefore, the question for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Act, as follows : "' co-operative society' means a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies." The case of the petitioners is that for the purpose of understanding the expression "co-operative society" one need not go beyond the definition given under the Income-tax Act. According to section 2(19), it means a cooperative society registered under the Co-operative Societies Act. The petitioners satisfy this definition. It is further submitted that sub-section (3)(v) deals with such income credited or paid by a co-operative society to a member, whereas sub-section (3)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents, an additional statement has been filed. According to them, a co-operative society doing banking business is governed by the Banking Regulation Act which is a special enactment and, therefore, definition obtained in the Banking Regulation Act will govern the petitioners. As per the definition under the said Act, primary credit society whose paid up capital and reserve being more than Rs. 1,00,000 would cease to be a primary credit society and they would become primary co-operative bank. Therefore, they would not come within the saving clause of section 194A(3)(viia)(a) of the Income-tax Act. The provision under sub-section (3)(i) of section 194A is available only if the amount does not exceed Rs. 2,500 and under the proviso the figure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society, three conditions are to be fulfilled. (1) The primary object or principal business of which is the transaction of banking business ; (2) The paid-up share capital and reserves of which are less than one lakh of rupees ; (3) The bye-laws of which do not permit admission of any other co-operative society as a member. In case of dispute as to the primary object of the society, it has to be determined by the Reserve Bank of India. Clause (ccvii) states that "co-operative society" shall have the meaning assigned to it in the National Bank for Agricultural and Rural Development Act, 1981. Section 3 of the Banking Regulation Act excludes the pro-visions of the said Act to a primary agricultural credit society, co-operative land mortgage b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deals only with the time deposit and secondly the expression used is "the co-operative society engaged in carrying on business of banking". There may be many co-operative societies that may come under sub-section (3)(viia)(b). The proviso could be referable only to those co-operative societies and cannot be to primary credit societies to which class the petitioners belong. The contention of learned senior counsel for the Revenue referring to the Supreme Court decision in CIT v. Bagyalakshmi and Co. [1965] 55 ITR 660, to the effect that except where there is specific provision of the Income-tax Act which derogates from any other statutory law or personal law, the provision will have to be considered in the light of the relevant branches of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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