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ITO (TDS) , Ward-3 (3) , Guntur Versus The Tenali Co-Operative Urban Bank Ltd.

2016 (5) TMI 345 - ITAT VISAKHAPATNAM

TDS u/s 194A - interest payment to a member - assessee is a co-operative society engaged in the business of banking - Held that:- Clause (v) of sub section (3) of section 194(1) of the Act provides for exemption in respect of interest on deposits paid to a member of a co-operative society including co operative bank. Prior to the amendment of section 194(1)(3)(v) of the Act w.e.f. 1.6.2015, there was no distinction between a member of a cooperative society and member of a co-operative bank. Ther .....

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declaration form furnished by the assessee has accepted the claim of assessee and deleted the additions. Therefore, we are of the opinion that the CIT(A) has rightly deleted the additions. - Decided in favour of assessee - I.T.A.No.251/Vizag/2014 - Dated:- 31-3-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri M.N. Murthy Naik, DR For The Respondent : Smt. A. Aruna, AR ORDER PER G. MANJUNATHA, Accountant Member: This appeal filed by the .....

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ee on 27.10.2011 to verify the assessee s compliance to the TDS provisions as per chapter 17B of the Act. During the course of survey proceedings, it was noticed that the assessee has not deducted TDS on the interest on deposits paid to members and non members and also salaries to its staff. However, it has complied with the TDS provisions, in respect of payments of professional services and commission. Thereafter, consequent to the survey proceedings, the A.O. has taken up the case and issued a .....

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to members, as per the provisions of section 194A(1)(3)(v) of the Act, TDS is not applicable on interest payments to members. The assessee further submitted that wherever interest payment exceeds ₹ 10,000/-, it has accepted form no.15G/15H from the depositors, where they have declared that the taxable income is less than taxable limit. Therefore, there is no defaults in TDS compliances and hence, it cannot be considered as assessee in default under sec. 201(1) of the Act. The A.O., after .....

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T(A). Before the CIT(A), the assessee reiterated the submissions made before the A.O. The assessee further submitted that it has complied with the TDS provisions in respect of interest on term deposits, where the interest amount exceeds ₹ 10,000/-, in case of non members. However, as per section 194A(1)(3)(v) of the Act, any interest payment to a member is exempt from deduction of TDS, therefore, not deducted TDS on interest payment to its members. The assessee further submitted that in ca .....

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i Bench, the assessee is liable for TDS u/s 194A of the Act. The A.O. further held that the term co-operative society and co-operative bank in clause (v) to sub section (3) of section 194A of the Act is not defined. The CIT(A) after considering the submissions of the assessee and also taking into account the remand report of the assessing officer, deleted the additions made by the A.O. The CIT(A) held that as per the provisions of section 194A(1)(3)(v) of the Act, no TDS is deductible for intere .....

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tax under clause (v) of sub section (3) of section 194A of the Act. The Ld. D.R. argued that the CIT(A) should have appreciated assessing officer s stand, in view of the decision of the Hon ble High Court in the case of Moolamattois Electricity Board Employees Co-operative Bank Ltd., reported in 238 ITR 63 and also in view of the ITAT, Panaji Bench decision, in the case of Bhagani Nivedita Sahakari Bank Ltd. (supra), where it has been clearly held that section 194A(3)(vii)(a)(b) of the Act make .....

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ive Bank Ltd. in ITA No.5/Vizag/2011. Therefore, requested to upheld the CIT(A) order. 5. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The factual matrix of the case is that the assessee is a co-operative society engaged in the business of banking. A survey operation u/s 133A of the Act is conducted in the business premises of the assessee. During the course of survey proceedings, it was noticed that the assessee .....

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section 194(1)(3)(v) of the Act, interest payment to a member is exempt from deduction of tax at source. The assessee further submitted that in respect of non members, where interest payment exceeds ₹ 10,000/-, the depositors have furnished declaration in form no.15G/15H, therefore, it has not deducted TDS. We find force in the argument of the assessee, for the reason that clause (v) of sub section (3) of section 194(1) of the Act provides for exemption in respect of interest on deposits .....

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ment exceeds ₹ 10,000/. In few cases, where interest exceeds ₹ 10,000/-, the depositors have furnished declaration in form no.15G/15H, therefore, no TDS is deducted. The CIT(A) during the course of appellate proceedings, after examining the declaration form furnished by the assessee has accepted the claim of assessee and deleted the additions. Therefore, we are of the opinion that the CIT(A) has rightly deleted the additions. There is no error or infirmity in the order of CIT(A). Hen .....

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al, under similar circumstances held that interest on deposits paid to members of cooperative society is exempt from TDS provisions u/s 194A(1) of the Act. The relevant portion is reproduced hereunder: It can be seen that neither sec.2(19) nor sec. 194A(3) makes any discrimination between the co-operative societies carrying on banking business and other co-operative societies. However, as per sec. 194A(3), the said exemption is available only to the interest payments made to its members or to an .....

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