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2022 (7) TMI 1048 - AT - Income TaxTDS u/s 194A(3)(V) - Disallowance u/s 40(a)(ia) - deduction of TDS on interest paid by a cooperate society to a member thereof - as per AO assessee was not a cooperative society but a cooperative society engaged in the business of banking - CIT-A deleted the addition - HELD THAT:- As assessee is registered under Tamilnadu Cooperative Societies Act, 1983 and it has obtained license from RBI to carry out banking activities u/s. 22(1) read with Section 56(6) of Banking Regulation Act, 1949. It has paid interest and submits that there is no requirement of deduction of tax at source in this year. On the other hand, the case of Ld. AO is that the statutory provisions provide for different effect to co-operative society and central district co-operative society engaged in the business of banking. Therefore, the assessee was obligated to deduct TDS on Time/Term deposits and the failure to do so would attract disallowance u/s. 40(a)(ia). The amendment brought in by Finance Act, 2015 was only to clear the doubt regarding the applicability of provisions of Sec. 194A(3)(v) to cooperative banks. As rightly held in the impugned order, this issue has been held in assessee's favor by Hon'ble High Court of Madras in the case of Coimbatore District Central Cooperative Bank Ltd.[2016 (1) TMI 370 - MADRAS HIGH COURT] none of the State or Central enactments such as the Tamil Nadu Co-operative Societies Act, 1983, the Multi-State Co-operative Societies Act, 2002, the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949 and the National Bank for Agriculture and Rural Development Act, 1981 make any distinction between a co-operative society engaged in carrying on banking business and a co-operative bank. However, the amendment as brought in by Finance Act, 2015 was prospective in nature and applicable only from 01.06.2015. It is only on and from 01.06.2015, the assessee could be held liable for such TDS but not before that date. On the basis of this decision, it could be concluded that the co-operative banks have thus been taken out of the purview of beneficial exception only from 01.06.2015 and not before that. We order so. In the result, the impugned order could not be faulted with. - Decided against revenue.
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