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2021 (2) TMI 134 - HC - Income TaxTDS u/s 194A - interest paid to various members of the Society ( where individual interest amount exceeded ₹10,000/-) in terms of Section 40(a)(ia) - ITAT deleted the addition - Whether the ld. ITAT has erred in not appreciating that there is nothing in 194A(3)(i)(b) or 194A(3)(viia)(b) to restrict their application to only non members particular when the legislature has not so intended and the explanatory memorandum to these clauses also does not bring out any such restricted interpretation? - HELD THAT:- Liability to deduct tax at source arises from the provisions of Section 194A(1) - Section 194A(3) provides that the provisions of sub-section (1) of Section 194A will not apply in certain contingencies. One of the contingencies is provided in sub clause (v). This contingency relates to income credited or paid by a cooperative society to a member thereof. There is no dispute that this was the position for the Assessment Year 2012-2013 and therefore, we feel that the CIT (Appeals) as well as the ITAT were quite right in reversing the Assessing Officer's order and holding that there was no liability for deducting tax at source in respect of amount of interest paid by the cooperative society to its members, even though such amount may have exceeded ₹10,000/-. No doubt, by the Finance Act, 2015 which entered into force with effect from 01.06.2015, clause (v) of Section 194A(3) came to be amended and the exemption from application of provisions of subsection (1) of Section 194A was restricted to co-operative society other than a co-operative bank. This subsequent amendment, will however not apply for the Assessment Year 2012-2013 with which we are concerned in the present case. Further, the very fact that the Legislature had to step in and specifically exclude the co-operative banks with effect from 01.06.2015, indicates that prior to the said date the benefits of exemption were very much available to the co-operative banks like the Assessee as well - Decided in favour of assessee.
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