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Dy. Commissioner of Income Tax (TDS) , Circle 1 (1) , Bangalore Versus Sir M. Visweshwaraiah Co-op. Bank Ltd.

TDS u/s 194A - payment of interest by the assessee to its members and to the other co-operative societies for want of deduction of tax at source - invoking provisions of sections 201(1) and 201(1A) - Held that:- Identical issue was considered and decided by the co-ordinate bench of this Tribunal vide order dt.30.5.2014 in the case of Bagalkot Central District Co-operative Society (2015 (1) TMI 1005 - ITAT BANGALORE ) wherein the Bench has held that co-operative society carrying on banking busine .....

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dents : Mrs. Sheetal, Advocate. ORDER Per Bench : These five appeals by the Revenue are directed against the orders of Commissioner of Income Tax (Appeals)-13 dt.24.3.2015 arising from the order passed under Section 201(1) and 201(1A) of the Income Tax Act, 1961 (in short 'the Act') for the Assessment Years 2012-13 and 2013-14 respectively. 2. The assessee is a co-operative society and engaged in the banking services. There was a survey under Section 133A at the business premises of the .....

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y, the Assessing Officer has raised the demand under Sections 201(1) and 201(1A). The assessee challenged the action of the Assessing Officer before the CIT (Appeals) and contended that by virtue of section 194A(3)(v) of the Act, the assessee was not obliged to deduct tax at source when the interest payments was made to members or to another co-operative society. Thus the assessee contended before the CIT (Appeals) that there was no failure on the part of assessee for complying the provisions of .....

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mental Representative as well as learned Authorised Representative and considered the relevant material on record. There is no dispute that the Assessing Officer has invoked the provisions of sections 201(1) and 201(1A) of the Act in respect of the payment of interest by the assessee to its members and to the other co-operative societies for want of deduction of tax at source. At the outset, we note that an identical issue was considered and decided by the co-ordinate bench of this Tribunal vide .....

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in the case of ITO Vs. Hubli Urban Co-operative Bank Ltd. in ITA Nos.1191 to 1194/Bang/2014 has again reiterated the same view by following the decision in the case of The Bagalkot District Central Co-operative Bank (supra). We note that in the case of Hubli Urban Co-operative Society (supra), the co-ordinate bench of this Tribunal while dealing with an identical issue has held in paras 12 to 14 as under :- 12. We have heard the rival submissions. The learned counsel for the Assessee after refer .....

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or non-time deposit. b) U/s 194A (3)(v) a Co-operative Society irrespective of its nature of activity need not deduct tax at source on any interest paid to its members whether on time deposits or non-time deposits c) U/s l94A(3)(viia)(a), a primary agricultural credit Co-operative Society or a Cooperative land mortgage bank or a co-operative land development bank need not deduct tax at source on any interest paid by it in respect of deposits received by it. d) U/s 194A(3)(viia)(b) of the Act a .....

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Exempt TDS to be made Exempt TDS to be made According to him the above chart would clearly show that when a cooperative society is paying interest to its members, it need not deduct tax at source. It was his submission that the Assessee is a co-operative society registered under the Mysore Co-operative Societies Act vide the certificate issued by the Registrar of Co-operative Societies. 13. With regard to the reliance placed by the learned Assessing Officer on the decision of the Hon ble ITAT P .....

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interest on deposits other than time deposit whether to members or non-members whereas S. 194A(3)(v) applies to payment to members including interest on time-deposits . The classification itself is different. S.194A(3)(v) classifies the payees into members or non-members whereas 194A(3)(viia)(b) classifies the nature of interest whether it is on time deposit or a non-time deposit When the classification is on a totally different criterion, there cannot be any conflict between the two sections. .....

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eposits and deposits other than time deposits where such co-operative bank without TDS under Section 194A by virtue of exemption granted vide clause (v) of sub-section (3) of the said section. The provisions of clause (viia) of the said sub-section are applicable only in case of a non-member depositor of the cooperative bank, who shall receive interest only on deposits other than time deposits made on or after July 1, 1995 without TDS under section 194A . It was also submitted by him that the le .....

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submitted that the Assessee is entitled to deduction and no disallowance is called for u/s 40(a)(ia) of the Act. 14. The learned DR while reiterating the stand of the AO/CIT(A)further relied on the decision of the ITAT Panaji Bench in ITA No.85/PN/2013 for AY 09-10 in the case of The Bailhongal Uraban Co-op Bank Ltd. Vs. JCIT order dated 28.8.2013 wherein the Tribunal followed the order of SMC Bench in the case of Bhagani Nivedita Sah Bank Ltd. Vs. ACIT 87 ITD 569 (Pune). Without prejudice to hi .....

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