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2015 (11) TMI 1542

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..... not have been treated as one in default u/s.201 (1) nor was it liable for of interest u/s.201(1A) of the Act. Ld. CIT (A) was justified in taking a view in favour of the assessee. - ITA. 856 to 860/Bang/2015 - - - Dated:- 10-11-2015 - SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI. VIJAYPAL RAO, JUDICIAL MEMBER Assessee by : Shri. S. Ramasubramanian, CA Revenue by : Shri. Sunil Kumar Agarawala, JCIT O R D E R PER BENCH : In these appeals filed by Revenue, grievance raised is that CIT (A) held the assesses to be not liable for deducting tax at source for interest paid by it to its members on their time deposits. 02. Facts apropos are that assesses are branches of a cooperative bank and had not .....

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..... trict Central Cooperative bank (supra). This Tribunal after considering the decisions of the various coordinate benches on similar issue, had held as under at paras 15 to 21 of its order dt.30.05.2014 : 15. We have given a very careful consideration to the rival submissions. We are of the view that the submissions made by the learned counsel for the Assessee deserves to be accepted. As rightly contended by him Sec.194A(3)(i)(b) of the Act is a provision which mandates deduction of tax at source by a cooperative Society carrying on the business of banking, where the income in the form of interest which is paid by such society is in excess of ten thousand rupees. Sec.194A(3)(v) of the Act provides that tax need not be deducted at sour .....

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..... rative societies which are specifically referred to in other provisions are specific co-operative societies. The further conclusion in the said decision that the term co-operative society in cl. (v) of s. 194A(3) has to be interpreted as co-operative society other than co-operative bank, is again unsustainable. The law is well settled that by a process of interpretation one cannot add on words that are not found in the text of the statute. Such a course is permitted only when there is causus omisus . We do not think that the provisions of Sec.194A(3)(v) suffers from any causus omisus as has been interpreted by the ITAT Pune Bench SMC. 16. We are also of the view that the decision of the Hon ble Kerala High Court in the case of Moo .....

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..... arly laid down that Co-operative societies carrying on banking business when it pays interest on deposits by its members need not deduct tax at source in view of the provisions of Sec.194A(3)(v) of the Act. 17. We also find that the CBDT in Circular No.9 dated 11.9.2002 clarified certain aspects which are relevant to the present case. The same reads thus: Circular No.9 of 2002 Sub : Tax deduction at source under section 194A of the Income-tax Act, 1961 -Applicability of the provisions in respect of income paid or credited to a member of co-operative bank-Reg. 11/09/2002 TDS -194A - Under section 194A of the Income-tax Act, 1961, tax is deductible at source from any payment of income by way of interest other tha .....

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..... t the exemption is available only to such members who have joined in application for the registration of the co-operative society and those who are admitted to membership after registration in accordance with the bye-laws and rules. A member eligible for exemption under section 194A(3)(v) must have subscribed to and fully paid for at least one share of the co-operative bank, must be entitled to participate and vote in the General Body Meetings and/or Special General Body Meetings of the cooperative bank and must be entitled to receive share from the profits of the co-operative bank. [F. No. 275/106/2000-IT(B)] (2002) 177 CTR (St) 1 18. It can be seen from para-2 of the Circular referred to above that the CBDT has very clearly .....

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..... lhongal Urban Co-op Bank Ltd.(supra) are not factually correct. Consequently, the conclusions drawn in the aforesaid decision also contrary to facts and hence cannot be considered as precedent. 20. The learned counsel for the Assessee has brought to our notice that the ITAT Vishakapatnam Bench in the case of The Visakhapatnam Co-operative Bank ITA No.5 and 19 of 2011 order dated 29.8.2011 has held that co-operative societies carrying on banking business when it pays interest to its members on deposits it need not deduct tax at source in view of the provisions of Sec.194A(3)(v) of the Act. Similar view has also been expressed by the Pune Bench of the ITAT in the case of Ozer Merchant Cooperative Bank ITA No.1588/PN/2012 order d .....

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