TMI Blog2016 (6) TMI 1409X X X X Extracts X X X X X X X X Extracts X X X X ..... - I.T.A. NO. 526/2015 - - - Dated:- 27-6-2016 - THE HON'BLE MR. JUSTICE JAYANT PATEL AND THE HON BLE MR. JUSTICE B.SREENIVASE GOWDA For the Appellant : SRI.DILIP, ADV. AND SRI.K.V. ARAVIND, ADV. JUDGMENT This appeal is preferred by the Revenue by raising the following substantial questions of law. (i)Whether the Tribunal is right in law in relying on Circular No.9/2002 when the same has been quashed by the Hon.Mumbai High Court in the case of Jalgaon District Central Co-operative Bank Ltd.? (ii)Whether the Tribunal was correct in holding that Co-operative Bank are not liable to deduct tax on the interest paid to its members on the ground that they are exempt u/s 194A(3)(v) of the IT Act, 1961? (iii)Whether the Tribunal is right in law in overlooking the established principle of generalia specialibus non derogant vis- -vis the specific provisions of Sec.194A(3)(viia)(b) and general provisions of Sec.194A(3)(v) of the Act? (iv)Whether the tribunal was correct in not appreciating the fact that the provision of Section 194A(3)(v) is a general provision granting benefit to all co-operative societies, whereas, the provisions of Section 194A(3)(i)(b) dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and deposits other than time deposits need not deduct tax at source U/s 194-A of the Act by virtue of exemption granted U/s 194-A(3)(v) of the Act. The learned DR relied on the stand taken by the revenue in the grounds of appeal filed before the Tribunal. 13. We have considered the rival submissions. This tribunal in the case of Bagalkot District Central Co-operative Bank (supra) dealt with identical issue and identical stand taken by the revenue and the Assessee in the case of co-operative society engaged in banking business and have upheld identical order of CIT(A). The relevant observations 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered under the Kerala Co-operative Societies Act. In view of the specific provisions of Sec.194A(3)(viia) of the Act, they claimed that they need not deduct tax at source on interest paid. It was submitted by the petitioner that sub-s.194A(3)(v) deals with such income credited or paid by a co-operative society to a member whereas sub.s(3)(viia)(a) provides a total exemption to deposits with the primary credit society. The Hon ble Kerala High Court accepted there plea and in their judgment have observed that Sec.194A(3)(i) exemption limit of ₹ 10,000/- to interest paid on time 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 j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that 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 co-operative 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 refered 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposits and on deposits other than the deposits with such co-operative society need not deduct tax at source Under Section 194A by virtue of the exemption granted vide Clause (V) of Sub Section (3) of the said section 22. In our view the above decision rendered by the co-ordinate bench is squarely applicable to the facts of the present case. In fact the CIT (A) in canceling the order of the AO has placed reliance on the aforesaid decision. Respectfully following the decision of the co-ordinate bench referred to above, we uphold the 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.com117. 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 appellant has brought to our notice the decision of this Court dated 16.12.2015 in ITA 100116/2014 whereby, the view taken by the Tribunalhas not been interfered with. We may record that this Court in the above referred decision observed thus: In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case which is a co-operative bank. 6. As such, we are not impressed by the submission that there is any specific provision andtherefore general exemption would not apply for thesimple reason that the word Members is missing inclause (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 . 7. Under the circumstances, the question of specific provision as against general provision would not arise for further consideration. Hence, we find that no substantial questions of law would arise for consideration. All appeals are dismissed. 4. In view of the aforesaid reasons, the question of specific provisions as against general provision would not arise for consideration. Hence, we find that, no substantial questions of law would arise for consideration. Under circumstances, this appeal is dismissed. In view of the aforesaid decision on the merits ofthe appeal, the office objection, if any, would notsurvive. - - TaxTMI - TMITax - I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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