9911796707
TMI Blog2022 (9) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... wer authorities action in making section 194(1) r.w.s. 40a(ia) disallowance of Rs.3,49,386/- on account of non-deduction of TDS on interest payments made to its members wherein the CIT(A) has affirmed the assessment findings to this effect as follows. "5. Ground No. 3 of the appeal relates to disallowance made u/s. 40(a)(ia) on the default of deducting TDS on interest payments made to non-members. 5.1 The appellant submitted that the member is defined in clause 9 of the by- laws which specifies certain category of persons. The AO relied on the entities specified therein to hold that other entities like HUF, Trust and Cooperative Societies are not eligible to be members. It is submitted that the AO has ignored the definition of nominal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the by-laws of the appellant bank have defined as to which persons are entitled to the members of the society. The AO has the mandate to determine the tax liability of the appellant bank and also to ensure that the appellant bank has complied with the provisions of the IT Act. The IT Act provides for exemption from deduction of TDS on interest paid to members of the society. In view of this provision, it is incumbent upon the AO to determine and find as to who are the members of the society for allowing the exemption from deduction of TDS. It is in pursuance of this power, the AO has examined the by-laws of the society and found that the society has violated its own by-laws in admitting some persons as nominal members and not ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to deduct TDS on the payments made to other cooperative societies. The AO shall verify and allow the exemption to all such cooperative societies. No distinction is made between credit and non credit cooperative societies in the section and therefore the AO shall allow the exemption to all cooperative societies. Even otherwise it is not the responsibility of the bank to find whether cooperative societies to whom interest is paid are actually cooperative societies in the true sense as laid down by the Supreme Court decision in the case of Citizen Cooperative Society and it is only mandated to ensure that they are registered as cooperative societies under the Maharashtra Cooperative Society Act before making the payments without TDS. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olating section 119 of the Act. Their lordship's further decisions in ITA No. 100001 of 2014 dated 16.12.2015 in The Bailhongal Urban Cooperative Bank Ltd., V/s. CIT and Tax Appeals No. 3 to 9 and 11 of 2015 dated 07.03.2017 in Saraswat co-operative Bank V/s. ITO take note of forgoing legislation developments to hold that a co-operative bank/ assessee has no liability to deduct TDS on interest payments made to members. We thus delete the impugned section 194A r.w.s. 40 (a)(ia) disallowance of Rs.3,49,386/- in very terms therefore. The assessee's third substantive grievance is accepted. 4. Learned counsel does not press for assessee's former twin substantive grounds challenging validity of reopening at this stage. Rejected accordingly. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
