TMI Blog2016 (6) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... t may independently consider the matter and may hold that in view of specific provision, general exemption would not be available to co-operative bank. Hence the TDS from the interest exceeding the amount of ₹ 10,000/- was required to be deducted by the respondent-assessee in the present case which is a co-operative bank. As such, we are not impressed by the submission that there is any specific provision and therefore general exemption would not apply for the simple reason that the word ‘Members’ is missing in clause (b). Further, in Circular No.19/2015 dated 27.11.2015 at paragraph 42.5 it has been inter alia mentioned as under: “………Hence, the Co-operative Bank was not required to deduct tax from the payment of interest on the time deposits of its members paid or credited before first June 2015’. Under the circumstances, the question of specific provision as against general provision would not arise for further consideration. - ITA No.604/2015 C/W ITA Nos.606/2015, 607/2015, 608/2015, 609/2015, 610/2015, 612/2015, 613/2015, 614/2015, 615/2015. - - - Dated:- 21-6-2016 - MR. JAYANT PATEL AND MR. B. SREENIVASE GOWDA JJ. APPELLANTS (BY SRI.K.V.ARAVIND, ADVOCATE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the Tribunal in this regard were as follows: 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 co-operative 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 source where the income in the form of interest is credited or paid by a co-operative society to a member thereof or to any other co-operative society. This provision therefore applies to all co-operative societies including co-operative society engaged in the business of banking. It is not possible to exclude co-operative society engaged in the business of banking from the provisions of sec. 194A(3)(v) of the Act on the ground that the same is covered by the provisions of sec. 194A(3)(i)(b) of the Act. Sec.194A(3)(v) of the Act refers to payment by a co-operative society to a member and payment b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime deposits with co-operative societies engaged in carrying on in business of banking is allowed but that does not mean that all co-operative societies who have credited or paid exceeding ₹ 10,000/- are liable to deduct tax at source. The Court held that co-operative society engaged in carrying on business of banking and primary credit societies stand on different footing and belong to different class. That does not mean that Sec.194A(3)(v) of the Act is applicable only to co-operative societies other than co-operative societies carrying on the business of banking as observed in para 37 of its judgment the Pune ITAT in the case of Bhagani Nivedita Sah Bank Ltd(supra). In fact in para 2 of Circular No.9 dated: 11.09.2002, the CBDT has very clearly 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 11.09.2002 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 Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 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. The above interpretation of the provision by the CBDT which is in favour of the Assessee, in our view is binding on the tax authorities. 19. In the case decided by 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 28.08.2013 , the Tribunal proceeded on the footing that the aforesaid Circular as been quashed by the Hon ble Bombay High Court in the case of The Jalgaon District Central Co- Operative Bank Ltd. Vs. Union of India 265 ITR 423(Bom) and therefore choose to follow the decision rendered by Pune ITAT SMC in the case of Bhagani Nivedita Sahakari Bank Ltd(supra). In our view the Hon ble Bombay High Court in the case of Jalgaon District Central Co-Operative Bank Ltds case was dealing with a case of challenge to para 3 of CBDT Circular No.9 dated: 11.09.2002 which tried to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the CIT (A). 3. The aforesaid shows that the Tribunal was bound by its earlier decision in case of Bagalkot District Central Co-operative vs. JCIT (2014) 48 Taxmann.com 117. When we further enquired from the learned counsel for the Revenue as to whether the decision of the Tribunal was carried by the Department before this Court or not and in response thereto, the learned counsel for the appellants has brought to our notice the decision of this Court dated 16.12.2015 in ITA 100116/2014 whereby, the view taken by the Tribunal has not been interfered with. We may record that this Court in the above referred decision observed thus: In this appeal by the Revenue, the issue involved is for consideration whether the Co- operative Bank was required to deduct tax while paying interest to its members on time deposits under Section 194-A of the Income Tax Act. 2. The Ministry of Finance, Government of India vide Circular No.19/2015 in F.No.142/14/2015- TPL, has held that the Co-operative Banks are not required to deduct tax at source on time deposits of its members paid or credited on or before 1.7.2015. The relevant portion of the circular reads as under: ..... 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