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M/s. The Goa State Co-Op Bank Versus ITO (TDS) Ward-1 Panaji-Goa

2015 (7) TMI 978 - ITAT PANAJI

Eligibility for exemption u/s. 194A(3)(v) from TDS on interest paid/credited on time deposits to its members - assessee is a cooperative bank - Held that:- Considering all the facts in totality in the light of the memorandum explaining the provisions in the Finance Bill 2015 and the clarification by the Board that the Circular has not been withdrawn, makes it ample clear that the impugned provisions relating to the liability of TDS would come with effect from 01/06/2015, we, therefore, set aside .....

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hri Mehboob Ali Khan, DR ORDER Per: N k Billaiya: These bunch of appeals is preferred by the assessee against the separate orders of the Ld. CIT(A) involving common issues and grievance, therefore they were heard together and disposed of by this consolidated order for the sake of convenience. 2. The common grievance in all these appeals is that the Ld. CIT(A) grossly erred in law and on facts in holding that the assessee cooperative bank is not eligible for exemption u/s. 194A(3)(v) of the Act f .....

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194A(3)(i) of the Act provide for deduction of tax on interest (other than interest on securities)'over a spec-ified threshold, i.e., ₹ 10,000 for interest payment by banks, co-operative society engaged in banking business (co-operative bank) and post office and ₹ 5,000 for payment of interest by other persons. Further, sub-section (3) of section 194A, inter alia, also provides for exemption from deduction of tax in respect of following interest payments by co-operative society: .....

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ction 194A(3)(viia)(a) of the Act. [Section 194A(3)(viia)(b) of the Act] Therefore, as per the provisions of section 194A(1) read with provisions of section 194A(3)(i)(b) and 194A(3)(viia)(b), co-operative bank is required to deduct tax from interest payment on time deposits if the amount of such payment exceeds specified threshold of ₹ 10,000. However, as the pro-visions of section 194A(3)(y) of the Act provide a general exemption from making tax deduction from payment of interest by all .....

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The matter has been carried to judicial forums and in some cases a view has been taken that the provisions of section 194A(3)(viia)(b) of the Act makes no distinction between members and non-members of co-operative banks for the purposes of deduction of tax, hence, the co-operative banks are required to deduct tax on payment of interest on time deposit and cannot avoid the same by taking the plea of the general exemption provided under section 194A(3)(v) of the Act. This is because the specific .....

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xation regime which is similar to that for the other commercial banks. Therefore, there is no rationale for treating the co-operative banks differently from other commercial banks in the matter of deduction of tax and allowing them to avail the exemption meant for smaller credit co-operative societies formed for the benefit of small number of members. However, as mentioned earlier, a doubt has been created regarding the applicability of the specific provisions mandating deduction of tax from the .....

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ot apply to the payment of interest on time deposits by the cooperative banks to its members." 3.1 It was observed that with this amendment, the impugned provision was not applicable during the years under appeal and it is clear that the provisions are applicable w.e.f. 01/06/2015. The Bench has also considered Circular No. 09/2002 of the CBDT and stated that the Board has clarified that the provisions of TDS are not enforceable in respect of interest paid by the Cooperative Society/Bank to .....

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h in the case of Bailhongal Urban Co. Bank Ltd. (supra), wherein the Tribunal has held that circular No. 9 of 2002 dated 11/09/2002 issued by the CBDT has been quashed and set aside by the Hon'ble High Court of Bombay in the case of Jalgaon District Co. Bank (supra). Therefore, assessee's reliance on the said case and the circular is found to be ill-founded. The Tribunal decided the appeal in favour of the Revenue and against the assessee. With due respect to the said decision of the Tri .....

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