TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1036
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.... the appeal except for variation in the amount of demand raised. Accordingly, for the sake of brevity, grounds of appeal raised by the assessee in of the appeals in ITA No. 2571/Mum/2025 are reproduced as under: "1. In the facts and circumstances of the case, the lower authorities have erred in law as well as in fact treating assessee in default in respect alleged non- deduction of tax from interest paid to co-operative societies u/s. 194A of the Income Tax Act 1961. 2. Without prejudice to Ground No 1 above, the lower authorities have erred in law as well as in fact that interest received by co-operative societies is deductible u/s. 80P of the Act. Therefore, the requirement of TDS u/s. 194A is redundant hence TDS applicability u/s. 194A is infructuous. 3. The appellant craves leave to add, alter, omit or substitute any of the grounds at the time of hearing of the appeal." 3. Common issue is involved in all these 20 appeals which are identical in nature expect for various in the quantum of tax liability imposed on the assessee by holding the assessee as 'assessee in default' for non-deduction of tax at source from payment of interest to various co-operative societies as per....
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....,000/-. Ld. AO did take note of provision contained in section 194A(3)(v) which provides a general exemption on making tax deduction from payment of interest by all the co-operative societies to its members and according to him, the same is not available to the assessee since it is a co-operative bank. He also took note of the amendment made under the Finance Act, 2020 wherein it is stated that co-operative bank is required to deduct tax at source on payment of interest to co-operative society after 01.04.2020. Ld. AO also took note of the factual position by considering that customer of the assessee are co-operative housing societies registered under the state and are not in the business of banking. The uncontroverted fact is that payment of interest by the assessee being a co-operative bank is to its customers who are co- operative housing societies registered under the state. 6. Based on the above observations and after taking into account the submissions made by the assessee, ld. AO computed the TDS liability along with interest thereon by holding the assessee as assessee in default and passed the impugned order u/s.201 of the Act. Aggrieved, assessee went in appeal before the....
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....ociety. In order to carry on the business of the banking, it has been granted a banking licence from RBI and thus, is referred to as a co-operative bank. It is also a fact on record that assessee has made payment of interest to its customers who are co-operative housing societies on which tax deduction at source has not been done or if done, it is at lower rate than prescribed. 7.3 To deal with the issue in hand, it is worthwhile to refer to the provisions contained in section 194A which is reproduce below: "Interest other than "Interest on securities". 72194A. 73(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying 74to a resident any income 74 by way of interest other than income 75[by way of interest on securities], shall, at the time of credit of such income to the account of the payee 76or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force : 77[Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed 78[one crore ....
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....ome credited or paid by a branch of the banking company or the co-operative society or the public company, as the case may be :] 89[Provided further that the amount referred to in the first proviso shall be computed with reference to the income credited or paid by the banking company or the co-operative society or the public company, as the case may be, where such banking company or the co-operative society or the public company has adopted core banking solutions:] 90[Provided also that in case of payee being a senior citizen, the provisions of sub-clause (a), sub-clause (b), and sub-clause (c) shall have effect as if for the words " 91[fifty] thousand rupees", the words " 91a[one lakh] rupees" had been substituted. Explanation.- 92[***]] (ii) 93[***] (iii) to such income credited or paid to- (a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or (b) any financial corporation established by or under a Central, State or Provincial Act, or (c) the Life Insurance Corporation of India established under the Life In....
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.... 1974);] 5[(ix) to such income credited by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal; (ixa) to such income paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income paid during the financial year does not exceed fifty thousand rupees;] 6[(x) to such income which is paid or payable by an infrastructure capital company or infrastructure capital fund or 7[infrastructure debt fund or] a public sector company 8[or scheduled bank] in relation to a zero coupon bond issued on or after the 1st day of June, 2005 by such company or fund or public sector company 8[or scheduled bank];] 9[(xi) to any income by way of interest referred to in clause (23FC) of section 10:] 10[Provided that a co-operative society referred to in clause (v) or clause (viia) shall be liable to deduct income-tax in accordance with the provisions of sub-section (1), if- (a) the total sales, gross receipts or turnover of the co-operative society exceeds fifty crore rupees during the financial year immediately preceding the fi....
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....compared with the first part. Thus, when the payment of interest is from a co-operative society to any other co-operative society, there is no requirement of deduction of tax at source. 8. In view of this it was thus submitted that assessee is a co- operative society duly registered under co-operative societies Act, holding banking licence issued by RBI for the conduct of its banking business. It has paid interest to other co-operative societies and no deduction of tax at source has been done in view of the provisions contained in clause (v) of Section 194A(3). 8.1. Reference is also made to clause 42 of the Explanatory Memorandum to Finance Bill, 2015 by which the amendment was introduced under the Act. While explaining the amendment, in clause 42, it is stated that "The existing exemption provided u/s.194A(3)(v) of the Act from deduction of tax from interest paid by a co-operative society to another co-operative society shall continue to apply to the co-operative bank and, therefore, a co-operative bank shall not be required to deduct tax from the payment of interest on time deposit to the depositor being a co-operative society." 8.2. From the reading of the Memorandum of Fina....