TaxTMI 
TaxTMI 
2016 (6) TMI 1409
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....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) deals with co-operative society carrying on the business of banking, hence specific provisions in any case overrides the general provisions?" 2. We have heard Mr.Dilip for Sri K.V. Aravind, learned counsel appearing for the appellant-Revenue. 3. After hearing the learned counsel appearing for the appellant-Revenue, we find that, the issues which arise for consideration in the present appeal are already covered by the decision of this Court dated 21.6.2016 in ITA No.604/2015 and other matters in case of The Commissioner of Income Tax and others Vs. TheNational Co-operative Bank Limited. In the abovereferred decision, this Court observed thus: "In all matters, the appellant-Revenue has preferred the appeals by raising following substantial questions of law: "1. Whether the Tribunal is right in law in relying on Circular No.9/2002 when the sam....
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....serves 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 by a co-operative society to non-member continue to be governed by the provisions of Sec.194A(3)(i)(b) of the Act. Similarly U/s 194A(3)(viia)(b) interest on deposits other than time deposits even if the payment is made t....
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....x 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 Section 194A of the Income Tax Act 1961- Applicability of the provisions in respect of income paid or credited to a member of co-operative bank - Reg. 11.09.2002 TDS 194A Under Section 194A of the Inco....
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....cieties 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 has 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 interpret the word "member" as given in Sec.194A(3)(v) of the Act. It is only that part of the Circular that had been quashed by the Hon'ble High Court and the other paragraphs of the Circular had no connection wit....
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.... 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 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: "42.5. In view of this, the provisions of the section 194A(3)(v) of the Income-tax Act have been amended so as to expressly provide that the exemption provided from deduction of tax from payment of i....