TaxTMI 
TaxTMI 
2016 (2) TMI 736
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....on u/s.80P of the Act. 2.2. Additional grounds: The CIT(A) ought to have appreciated that the Appellant activities are with its members and hence the income of the society dividend from the Members are exempted from income tax liability on account of mutuality. 3.1 The brief facts of the case are that the assessee is a Credit Cooperative Society, deriving income from carrying on the business of providing credit facilities to its members and income from House property, selling of plots and dividend income. Since the assessee had not filed its return of income for the assessment years 2008-09, 2009-10, 2010-11 & 2011-12, the notice u/s.148 was issued to the assessee. Thereafter, assessee filed its returns after claiming exemption u/s.80P of the Act. Thereafter, the ld. Assessing Officer completed the assessments wherein the Ld.AO disallowed the claim of deduction u/s.80P of the Act for all the four assessment years by treating assessee housing society as a co-operative bank. 3.2 On appeal, the Ld. CIT(A) confirmed the order of the ld. Assessing Officer with the following observations:- "Thus perusal of the provisions of this statute and object of the cooperative society it is n....
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....terest paid to its members? (ii) "Whether there is any distinction between a co-operative bank and a co-operative society carrying on banking business and if so, under which category the appellant would fall?" On the second question framed by the Hon'ble Madras High Court, it was held as follows:- "45. The second substantial question of law that we have framed for consideration is as to whether there exists a substantial or marked difference between a co-operative society engaged in carrying on banking business and a co-operative bank and if so, under which category the appellant would fall. The answer is too obvious in view of the foregoing discussion. Except the provisions of sub-clause (b) of clause (i), subclause (a) of clause (iii) and sub-clauses (a) and (b) of clause (viia) of subsection (3) of section 194A, we do not find anywhere a dichotomy created between a co-operative bank and a co-operative society engaged in carrying on banking businesses. Therefore our answer to the second substantial question of law would be that none of the State or central enactments such as the Tamil Nadu Co-operative societies Act, 1983, the Multi-State Co-operative Societies Act, 2002, th....
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....g the financial year does not exceed fifty thousand rupees;" (e) in Explanation 1 below clause (xi), for the word "excluding", the word "including" shall be substituted." 62. The relevant portion of the memorandum explaining the clauses in the Finance Bill reads as follows: "Section 194A(1) read with section 194A(3)(i) of the Act provide for deduction of tax on interest (other than interest on securities) over a specified threshold, i.e. Rs. 10,000/- for interest payment by banks, cooperative society engaged in banking business (co-operative bank) and post office and Rs. 5,000/- for payment of interest by other persons. Further, sub-section (3) of section 194A inter alia also provides for exemption from deduction of tax in respect of following interest payments by cooperative society: (i) Interest payment by a co-operative society to a member thereof or any other co-operative society. [Section 194A(3)(v) of the Act] (ii) Interest payments on deposits by a primary agricultural credit society or primary credit society or co-operative land mortgage bank or co-operative land development bank. [Section 194A(3)(viia)(a) of the Act] (iii) Interest payment on deposits oth....
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....it cooperative societies formed for the benefit of small number of members. However, as mentioned earlier, a doubt has been created regarding the applicability of the specific provisions mandating deduction of tax from the payment of interest on time deposits by the cooperative banks to its members by claiming that general exemption provided is also applicable for payment of interest to member depositors. In view of this, it is proposed to amend the provisions of the section 194A of the Act to expressly provide from the prospective date of 1 June, 2015 that the exemption provided from deduction of tax from payment of interest to members by a co-operative society under section 194A(3)(v) of the Act shall not apply to the payment of interest on time deposits by the cooperative banks to its members." 63. It can be seen from the last part of the portion extracted above that the very note explaining the clause was specific to the effect that the proposal was to bring forth an amendment with prospective effect from 1.6.2015. There is no dispute now that on and from 1.6.2015 the appellant cannot escape the liability from deduction of tax at source. 64. Once an amendment is introduce....