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2015 (4) TMI 1250 - AT - Income TaxTDS u/s 194A - cooperative society engaged itself in the business of banking liability to deduct tax on the income/interest paid to depositors/ members - Held that:- Section 194A(3)(v) of the Act says that when the interest is credited or paid by a co-operative society to a member or any other co-operative society, tax need not be deducted. Section 194A(3)(v) of the Act does not refer to a cooperative society carrying on the business of banking. It simply says that “income paid or credited by a co-operative society”. Therefore, the provisions of Section 194A(3)(v) may not be applicable to a co-operative society which carries on the banking business, since the co-operative society which carries on banking business is differently treated by the Parliament in Section 194A(3)(i)(b) of the Act. Assessee's being co-operative societies engaged in carrying on the business of banking, are liable to deduct tax in respect of interest on time deposit to the members when it exceeds ₹ 10,000/-. However, in view of Section 194A (3)(viia)(b) in respect of other deposits, such as Savings Bank deposit, Recurring Deposit, other than time deposit, the assessee are not liable to deduct tax. Since the assessee's are co-operative societies engaged in banking business, they cannot have any transaction with non-members. Therefore, the question of payment of any interest to non-members does not arise for consideration. In the case before us, no details are available with regard to nature of deposit on which interest was paid. It is not clear whether the interest was paid on the time deposit or in respect of other deposits, such as Savings Bank deposit, Recurring Deposit, etc. Therefore, the matter needs to be verified. Accordingly, orders of the lower authorities are set aside and the issue of deduction of tax is remitted back to the file of the Assessing Officer for a limited purpose of verifying the nature of deposits on which the interest was paid. It is made clear that the assessees are liable to deduct tax on the interest paid to their members on the time deposit. However, the assessees are not liable to deduct tax on the interest paid on Savings Bank account and Recurring deposit account. - Decided partly in favour of assessee.
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