2022 (9) TMI 1080

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....nce challenging correctness of the both the lower 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 s....

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.... non-members. 5.2 Various claims made by the appellant have been examined. It is a 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 so....

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....lar No. 19/2015 explaining the provisions of the Finance Act 2015, the appellant bank is not required 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 soc....