TaxTMI 
TaxTMI 
2016 (7) TMI 205
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....terest u/s 201(1A) at Rs. 9,11,428/- in respect of trusts which are regular assessee and have filed return declaring Nil income being exempt under the provision of section 10(25) and section 10(23AAA) of the Income Tax Act is bad in law and needs to be deleted in view of the Judicial Decisions in this behalf. 3. That the order of the Income Tax Officer (TDS-II), Chandigarh as upheld by the Commissioner of Income Tax (Appeals)-2, Chandigarh upholding the levy of Tax u/s 201(1) at Rs. 3645715/- in respect of trusts which are regular assessee and have filed return declaring Nil income being exempt under the provision of section10(25) and section 10(23AAA) of the Income Tax Act is bad in law and needs to be deleted in view of the Judicial Decisions in this behalf. 4. That the appellant craves leave to add, delete, alter any of the grounds of appeal before the same is heard finally. It is therefore humbly prayed that the levy of tax under section 201(1) and interest u/s 201(1A) amounting to Rs. 36,45,715/- and Rs. 9,11,428/- respectively may kindly be deleted." 4. The brief facts in relation to assessee's appeal are as follows : The assessee is a cooperative society registe....
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....x cannot be recovered from deductor in case the deductee has shown the payment as its income in its books of accounts and paid the tax due on such payment. The applicant has not produced the books of accounts of the deductee before the assessing officer evidencing that the deductee has included this payment as its income in the books of accounts and no evidence/ledger also produced before the undersigned during appellate proceeding. The trusts i.e. M/s Punjab State Coop Bank Pension Fund and M/s Board of Trustee Provident Fund in case they have included the payment as their income and is exempt from taxation being trust, the appellant was required to obtain certificate of non deduction/lower deduction from the Assessing Officer u/s 197 of the Act, but no such certificate was obtained. Therefore appellant as held by the Assessing Officer is liable u/s 201(1) as person-in-default for not deducting the tax at source u/s 194A(1) of the IT Act, 1961 and is also liable to pay interest u/s 201(1A) of the IT. Act, 1961. Therefore demand created by the Assessing Officer on the appellant with regard to the default in respect of payments made to M/s Punjab State Coop Bank Pension Fund and M/s....
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....come has been filed for the relevant assessment year. Similar certificate is also issued by Punjab State Cooperative Bank, Provident Fund Trust. Therefore, it is evident from the certificates that these two entities who are in receipt of interest income from the assessee had duly accounted the same in their books of account and filed their return of income for the concerned assessment year. The Hon'ble Apex Court in the case of Hindustan Coca-cola Beverages (P) Ltd. (supra) had held that the recovery of tax cannot be made from the deductor when the deductee had filed the return and paid the tax on the same. The Hon'ble Jurisdictional High Court in the case of CIT (TDS) Vs. Assistant Manager (Accounts) Food Corporation of India, reported in 326 ITR 106 had held on identical facts, that the TDS was not required to be deducted by the deductor, since the deductee has disclosed the income in its books of account and filed the return of income, evidencing the receipt of such income. In view of the fact that the recipient of interest has disclosed the same in its books of account and filed the return of income, we are of the view the judgment of the Hon'ble Apex Court in the c....
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.....11.2015). 15. We have heard the rival submissions and perused the material available on record. The CIT (Appeals) had considered the amended provision of section 194A(3)(v) of the Act (w.e.f. 1.6.2015). The CIT (Appeals) has also considered various orders of the Tribunal on this aspect and has given a very elaborate findings, which read as follows: '5.3 The submission of the appellant have been considered. The amended provisions of section 194A(3)(v) are effective from 01.06.2015 . The relevant portion of the chapter on "rationalization of provision relating to deduction of tax on interest (other than interest on securities)" in the Finance Bill, 2015 is as under: "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, co-operative society engaged in banking business (cooperative 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 co-operative society:....
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....e Act, 2006 and Finance Act, 2007 amended the provisions of the Act to provide for co-operative banks a taxation regime which is similar to that for the other commercial banks. Therefore, there is no rationale for treating the co-operative banks differently from other commercial banks in the matter of deduction of tax and allowing them to avail the exemption meant for smaller credit 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 co-operative 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 1st 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. Howeve....
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....-ordinate bench referred to above, we set aside the orders of the lower authorities and hold that to the extent interest is paid to members of the society there is no obligation to deduct tax at source." 5.3(b) There were conflicting decisions of various Tribunals on applicability of the specific provisions mandating deduction of tax from the payment of interest on time deposits by the co-operative banks to its members by claiming that general exemption provided is also applicable for payment of interest to member depositors, provisions of the section 194A of the Act is amended to expressly provide from the prospective date of 1st 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 co-operative banks to its members. While proposing amendment in section 194A(3)(v) of the Act, legislature was aware of the fact that the matter has been carried to judicial forums and in some cases a view has been taken that the provisions of section 194A(3)(viia)(b) of the Act makes no distinction between members and non-members....