TaxTMI 
TaxTMI 
2016 (11) TMI 1766
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....essing Officer, the provisions of section 194A(3)(viia)/(b) being specific provision requiring tax deduction at source by co-operative societies on time deposits overruled the general provisions granting exemption from the same, of section 194A(3)(v) of the Act. The Assessing Officer relied upon the case of Bhagani Nivedita Sahakari Bank Ltd. Vs. ACIT 87 ITD 569(Pune) and held that the assessee was liable o deduct tax on the interest payments made. Accordingly, the PR was held to be an assessee in default and liability under section 201(1)/201(1A) of the Act was determined at Rs. 14,51,636/-. 3. Aggrieved by the same, the assessee carried the matter in appeal before the Ld. CIT (Appeals), where he made detailed submissions which are reproduced at para 3.1 of the order of the CIT (Appeals). The gist of the contentions raised by the assessee was that as per section 194A(3)(v) of the Act the assessee being a cooperative society was not required to deduct tax at source on interest payment made to other cooperative societies/members. The assessee further submitted that all provisions ofsection 194A(3)(i)(b)/(iii)(a)/(v)/(viia)(a) & (b) were specific and there was no conflict between th....
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....that the exemption provided under section 194A(3)(v) of the Act with regard to deduction of tax at source from interest payment by a cooperative society to another cooperative society existed before the amendment and continued to apply even after the amendment. The learned counsel for the assessee stated that the issue in the present case is squarely covered by the aforesaid order of the I.T.A.T., Chandigarh Bench and the Revenue's appeal therefore, ought to be dismissed. 5. The Ld. DR, on the other hand, relied upon on the order of the Assessing Officer and stated that the provisions of section 194A(3)(viia)(b) being specific provisions requiring cooperative societies to deduct tax at source on all time deposits, the same were applicable in the present case and would overrule the provisions of section 194A(3)(v) exempting cooperative societies from deduction of tax at source of interest payments made to members and other cooperative societies which was a general provision. 6. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The undisputed facts which are necessary for adj....
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....s. 856 to 860/Bang/2015, (order dated 10.11.2015). 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 inter....
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....her commercial banks, the Finance 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 cooperative 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 cooperati....
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....lowing the decision of the co-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 bet....