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2015 (9) TMI 437 - AT - Income TaxCompliance to TDS provisions - whether interest payment to associate/nominal members are not covered under the said provision of exemption u/s 194A(3)(v) - difference in rights and privileges between regular members on one side and associate/nominal members on the other found by AO and observed that ‘member’ as envisaged u/s 194A(3)(v) only refers to a regular member and not all the members of the society - Held that:- On perusal of the provisions contained u/s 194A(3)(v), it is very much clear that there is no distinction made under the said provision between different categories of members. The language used u/s 194A(3)(v) is ‘Member’, the Hon’ble Bombay High Court in case of the Jalgaon District Central Cooperative Bank Ltd. & anr. Vs. Union of India and others (2003 (9) TMI 56 - BOMBAY High Court ), while examining the provision contained u/s 194A(3)(v), held that exemption granted to a cooperative society u/s 194A(3)(v) cannot be taken away by creating a distinction between duly registered member and nominal member. The aforesaid decision of the Hon’ble Bombay High Court has been affirmed by the Hon’ble Supreme Court while dismissing SLP preferred by the department. In view of the the principle laid down in the judicial precedents, as noted above, to the effect that no distinction can be made between different categories of members while applying the provisions of section 194A(3)(v) of the Act, in our view decision of ld. CIT(A) cannot be interfered with. It may be worthwhile to note here that the impugned assessment order was also subject matter of revision proceeding u/s 263 of the Act. Ld. CIT while revising the assessment order u/s 263 of the Act, held that AO should also have applied TDS provisions to registered/regular member and ITAT held that Explanation ‘c’ to section 263(1) clearly spells out that ld. CIT can exercise his power u/s 263 to an issue which is not contested and decided in appeal proceeding. Therefore, as in the present case, the issue in dispute is clearly the subject matter of appeal before ld. CIT(A) and a decision has already been rendered by ld. CIT(A) much prior to the exercise of power u/s 263 of the Act, in our view, assessment order has merged with the order of ld. CIT(A), hence, could not have been revised by invoking the provisions of section 263. Therefore, the exercise of power u/s 263 is invalid - Decided in favour of assessee.
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