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TMI Blog2023 (12) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the respective appellate authority physically before transfer of the matter to the National, Faceless Assessment Centre. In this regard, he has relied upon the letter written by the appellant dated 15/05/2018 to the ld.CIT(A), Navanagar, Hubli whereby whereunder all relevant documents in support of the case made out by the assessee were duly submitted which was further acknowledged by the Office of the ld.CIT(A), Navanagar, Hubli. The entire details of such relevant documents claimed to have been filed before the CIT(A) physically were also annexed to the paper book filed before us as pointed out by the ld.Sr. counsel appearing for the assessee. Under this premise, he has vehemently argued against the observation made by the ld.CIT(A) in disposing of the appeal without considering the relevant documents which ought to have been considered while disposing of the issue on merit. In that view of the matter, the ld.AR prayed for quashing of the ex-parte impugned order passed by the National Faceless Assessment Centre as the same suffers from the violation of principle of natural justice. 3. The ld.AR further submitted before us that the issue involved in this particular case as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue involved in the appeal preferred before the First Appellate Authority and in the absence of the same, the entire proceedings initiated by the ld.CI(TA) is found to be bad in law and requires re-adjudication of the same. We, therefore, find it fit and proper to direct the ld.AO to consider the issue afresh upon consideration of the relevant evidences already been placed by the assessee or any other evidences appellant chooses to file at the time of hearing of the matter. We further note that we have considered the order passed in assessee's own case by the coordinate bench for assessment year 2010-11 and 2011-12. We find while dealing with the issue that the co-ordinate bench has been pleased to observe as follows:- "17. We also find that the CBDT in Circular No.9 dated 11.9.2002 clarified certain aspects which are relevant to the present case. The same reads thus: "Circular No. 9 of 2002 "Sub : Tax deduction at source under section 194A of the Income-tax Act, 1961 -Applicability of the provisions in respect of income paid or credited to a member of co-operative bank-Reg. 1110912002 TDS 194A Under section 194A of the Income-tax Act, 1961, tax is deductible at source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The above interpretation of the provisions by the CBDT which is in favour of the Assessee, in our view is binding on the tax authorities. 19. In the case decided by ITAT Panaji Bench in ITA No. 85/PN/2013 for AY 2009-10 in the case of The Bailhongal Uraban Co-op Bank Ltd. Vs. JCIT order dated 28.8.2013, the tribunal proceeded on the footing that the aforesaid circular has been quashed by the Hon'ble Bombay High Court in the case of The Jalgaon District Central Co-operative Bank Ltd. Vs. Union of India 265 ITR 423 (Born) and therefore chose to follow the decision rendered by Pune ITAT SMC in the case of Bhagani Nivedita Sahakari Bank Ltd. (supra). In our view the Hon'ble Bombay High Court in the case of Jalgaon District Central Cooperative Bank Ltd.'s case was dealing with a case of challenge to para-3 of CBDT Circular No. 9 dated 11.9.2002 which tried to interpret the word "member" as given in Sec. 194A(3)(v) of the Act. It is only that part of the Circular that had been quashed by the Hon'ble Bombay High Court and the other paragraphs of the Circular had no connection with the issue before the Hon'ble Bombay high Court. How could it be said that the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch of TAT in the case of Bagalkot District Central Co-op Bank, Vs. JCIT (2014) 48 Taxmann.com 117 (Bangalore-Trib) held that co-operative societies carrying on banking business while paying interest to members on time deposits and deposits other than time deposits need not deduct tax at source u/s194A of the Act by virtue of exemption granted u/s.194A(3)(v) of the Oct. The learned DR relied on the orders of the revenue authorities. 14. We have considered the rival submissions. This tribunal in the case of Bagalkot District Central Co-operative Bank (supra) dealt with identical issue and identical stand taken by the revenue and the Assessee in the case of co-operative society engaged in banking business and have upheld identical order of CIT(A). The relevant observations of the Tribunal in this regard were as follows:- "15. We have given a very careful consideration to the rival submissions. We are of the view that the submissions made by the learned counsel for the Assessee deserves to be accepted. As rightly contended by him Sec. 194A(3)(i)(b) of the Act is a provision which mandates deduction of tax at source by a cooperative Society carrying on the business of banking, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Kerala High Court in the case of Moolamattom Electricity Board Employees Co-op Bank Ltd. (supra) supports the plea of the Assessee before us. The petitioners in that case were primary credit societies registered under the Kerala Co-operative Societies Act. In view of the specific provisions of Sec. 194A(3(viia) of the Act, they claimed that they need not deduct tax at source on interest paid. It was submitted by the petitioner that subs.194A(3)(v) deals with such income credited or paid by a cooperative society to a member whereas sub-s. (3)(viia)(a) provides a total exemption to deposits with the primary credit society. The Hon'ble Kerala High Court accepted their plea and in their judgment have observed that Sec.194A (3)(i) exemption limit of Rs. 10,000 to interest paid on time deposits with cooperative societies engaged in carrying on business of banking is allowed but that does not mean that all co-operative societies who have credited or paid exceeding Rs. 10,000 are liable to deduct tax at source. The Court held that co-operative society engaged in carrying on business of banking and primary credit societies stand on different footing and belong to different class. That doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion has also been raised as to whether normal members, associate members and sympathizer members are also covered by the exemption under section 194A(3)(v). It is hereby clarified that the exemption is available only to such members who have joined in application for the registration of the cooperative society and those who are admitted to membership after registration in accordance with the bye-laws and rules. A member eligible for exemption under section 194A(3)(v) must have subscribed to and fully paid for at least one share of the co-operative bank, must be entitled to participate and vote in the General Body Meetings and/or Special General Body Meetings of the co-operative bank and must be entitled to receive share from the profits of the co- operative bank. F. No. 275/106/2000-IT(B)] (2002) 177 CTR (St) 1" 18. It can be seen from para-2 of the Circular referred to above that the CBDT has very clearly laid down that Co- operative societies carrying on banking business when it pays interest on deposits by its members need not deduct tax at source. The above interpretation of the provisions by the CBDT which is in favour of the Assessee, in our view is binding on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3)(v) of the Act. 21. For the reasons given above, we hold that the Assessee which is a co-operative society carrying on banking business when it pays interest income to a member both on time deposits and on deposits other than time deposits with such co- operative society need not deduct tax at source under section 194A by virtue of the exemption granted vide clause (v) of sub- section (3) of the said section. 15. In our view, the above decision rendered by the co- ordinate bench is squarely applicable to the facts of the present case. Respectfully following the decision of the co-ordinate bench referred to above, we set aside the orders of the lower authorities and hold that to the extent interest is paid to members of the society there is no obligation to deduct tax at source." 7. It was further pointed out by the ld.counsel appearing for the assessee that amendment to the Rule though has been made by the Finance Act, 2015 to this effect that no such deduction would be required for interest paid by a cooperative society to its members in terms of the provision of sec. 194A(3)(v) of the Act, he has relied upon the order passed by the Chennai Tribunal in ITA No.1111/Chen/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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