TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1161
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....ch 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 of 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. The appellant craves leave to add, alter, omit or substitute any of the grounds at the time of hearing of the appeal." 3. Briefly stated facts of the case are that the assessee is a cooperative society registered under the Multi-State Cooperative Societies Act,2002 and was engaged in carrying business of banking. The Assessing Officer (TDS), Mumbai conducted TDS survey at various branches of the assessee including the branch in present appeal to verify applicability of the TDS provisions. During the course of the verification, the assessing officer noticed that the assessee had not deducted tax on 'interest....
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.... Primary Co-operative Bank and therefore they are to be considered at par with commercial bank as the RBI regulates and supervises the banking function of UCBs under the provision of Banking Regulation Act, 1949. Thus, Abhyudaya Co-Operative Bank Limited is at par with the commercial banks and not eligible to claim any benefit under section 80P of the Act and consequently it also cannot avail the benefit under section 194A(3)(i) and section 194A(3)(v) of the Act. 5.1.43 The Appellant also does not get any exemption under section 194A(3)(iii)(a) of the Income tax Act, 1961 as the said section provides exemption from TDS deduction only if income is credited or paid to any banking company to which the Banking Regulation Act, 1949 applies or any cooperative society carrying on the business of banking including a cooperative land mortgage bank. In the instant case, the Appellant has made interest payment to Cooperative Societies which are either Housing Cooperative Societies or such Cooperative Societies which are not in the business of banking. These Societies are neither banking companies to which the Banking Regulation Act applies nor are they cooperative societies engaged in the b....
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....o adverse interference is drawn. The Appeal filed on this ground is dismissed." 5. We have head rival submission of the parties and perused the relevant material on record. Ld. counsel for the assessee brought our attention to the provision of sec. 194A(3)(v) for ready reference said provision is reproduce as under: "Section 194A(1) in The Income Tax Act, 1961 (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or 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 :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[one crore rupees in case of business or fifty lakh rupees in case of profession] during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under th....
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....financial year immediately preceding the financial year in which the interest referred to in sub-section (1) is credited or paid; and (b) the amount of interest, or the aggregate of the amounts of such interest, credited or paid, or is likely to be credited or paid, during the financial year is more than fifty thousand rupees in case of payee being a senior citizen and forty thousand rupees in any other case.] Explanation 1.-For the purposes of clauses (i), (vii) and (viia), "time deposits" means deposits (including recurring deposits) repayable on the expiry of fixed periods. [Explanation 2.-For the purposes of this sub-section, "senior citizen" means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.]" 6. Upon a plain and harmonious reading of the provisions contained in Section 194A(3)(v) of the Act, it is evident that the said clause is bifurcated into two distinct limbs. The first limb carves out an exemption from the obligation of tax deduction at source in respect of interest income credited or paid by a co-operative society, other than a co-operative bank, to its members. This provision, in categori....