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2015 (4) TMI 802 - AT - Income TaxDis-allowance of expenses u/s 40(a)(ia) of the Income Tax Act, 1961 - TDS u/s 194A not deducted on interest paid on deposits - Special provision for deduction of TDS in case of Co-operative bank - Payee shown interest in return of income and paid tax - Held that:- The assessee is liable to deduct the tax at source on the term deposit of members and cooperative societies as per the provisions of sec. 194A(3)(vii)(b) of the Act. Section 194A(3)(vii)(b) deals with cooperative societies engaged in the business of banking. If the amount paid or credited to any depositor during the year exceeds ₹ 10,000/-, the provisions of sec. 194A(1) of the Act shall apply to the cooperative society engaged in the banking business shall have to deduct tax on such payment. From the facts of the case, it is seen that the ITO has categorically brought out the material on record to prove that the assessee bank is covered by the provisions of sub-clause (b) of clause (viia) of sec. 194A(3) of the Act. We have taken the consistent view taken by the ITAT, Panaji Bench in the case of Saraswat Co-operative Bank Ltd. [2015 (1) TMI 743 - ITAT PANAJI].Following the this decision, we hold that the assessee in these assessment years has paid interest above ₹ 10,000/-, to each of the depositors, therefore it is liable to deduct tax at source and the assessee is deemed to be default. Our view was confirmed by the Hon'ble Bombay High Court vide decision in the case of The Marathawada Urban Bank Co-op Association Ltd. [2015 (4) TMI 374 - BOMBAY HIGH COURT]. We dismiss the ground that assessee is not liable to deduct tax at source. We hold that if the amount more than ₹ 10,000/- is credited as an interest on time deposits, then the urban cooperative Bank is liable to deduct the TDS as is laid down in the said provisions of section 194A and that urban co-operative Bank is not liable to deduct TDS if the interest accrued on time deposits is less than ₹ 10,000/-. Therefore, we reverse the finding of Ld. CIT(A) and restore this issue back to the file of Assessing Officer to verify this fact as per the decision of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages P. Ltd. [2004 (3) TMI 333 - ITAT DELHI] and also the decision of CIT Vs. Eli Lilly & Co. reported in [2009 (3) TMI 33 - SUPREME COURT] whether payee has paid tax on the interest income received from the assessee society and shown the same in his income tax return. The Assessing Officer is directed to verify the same and pass the order in accordance with law. - Accordingly disposed off.
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