TaxTMI 
TaxTMI 
2021 (12) TMI 1552
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....o 1249/Bang/2017 dated 03.11.2017 on similar issue. 3. The appellant craves leave to add, alter, amend and delete any of the grounds of appeal.." 2. The facts are that the assessee is a Co-operative Bank carrying on the business of banking, providing credit facilities to its members. The AO carried out spot verification on the premises on 19/02/2013 to verify the applicability of the provisions of TDS and compliances. Upon verification of details/information gathered during the time of verification and submissions made during the course of proceedings u/s 201(1) & 201(1A) of the Act, it was found that the assessee had not effected TDS on the interest payments exceeding Rs.10,000/- as required u/s 194A of the Act as declarations vide Form No.15H/15G were not submitted as per the provisions of Sec. 197A(1A) of the Act. The AO opined that, the interest payments made by the assessee does not qualify for exemption u/s 194A(3)(v) of the Act as the assessee is doing the business of Banking. The AO after considering the submissions of the assessee proceeded to declare the assessee as an assessee in default and passed order u/s. 201(1) & 201(1A) of the Act. 3. The CIT(Appeals....
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....of ITAT in the case of Bagalkot District Central Co-op. Bank v. CIT [2014] 48 taxmann.com 117 (Bangalore - Trib.) held that Co-operative Societies carrying on banking business while paying interest to members on time deposit and deposits other than time deposits need not deduct tax at source u/s 194A of the Act by virtue of exemption granted u/s 194A(3)(v) of the Act. The learned DR relied on the stand taken by the revenue in the grounds of appeal filed before the Tribunal. 13. We have considered the rival submissions. This Tribunal in the case of Bagalkot District Central Co operative Bank (supra) dealt with identical issue and identical stand taken by the revenue and the Assessee in the case of co-operative society engaged in banking business and have upheld identical order of CIT(A). The relevant observations of the Tribunal in this regard were as follows: "15. We have given a very careful consideration to the rival submissions. We are of the view that the submissions made by the learned counsel for the Assessee deserves 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-ope....
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.... are also of the view that the decision of the Hon'ble Kerala High Court in the case of Moolamattom Electricity Board Employees Co-op Bank Ltd. (supra) supports the plea of the Assessee before us. The petitioners in that case were primary credit societies registered under the Kerala Co operative Societies Act. In view of the specific provisions of Sec. 194A(3)(viia) of the Act, they claimed that they need not deduct tax at source on interest paid. It was submitted by the petitioner that sub-s.194A(3)(v) deals with such income credited or paid by a co-operative society to a member whereas sub.s (3)(viia)(a) provides a total exemption to deposits with the primary credit society. The Hon'ble Kerala High Court accepted their plea and in their judgment have observed that Sec. 194A(3)(i) exemption limit of Rs. 10,000/- to interest paid on time deposits with co-operative societies engaged in carrying on in business of banking is allowed but that does not mean that all co-operative societies who have credited or paid exceeding Rs. 10,000/- are liable to deduct tax at source. The Court held that co-operative society engaged in carrying on business of banking and primary credit socie....
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.... shall receive interest only on deposits other than time deposits made on or after 1st July, 1995 without TDS under section 194A. 3. A question has also been raised as to whether normal members, associate members and sympathiser members are also covered by the exemptions under section 194A(3)(v). It is hereby clarified that the exemption is available only to such members who have joined in application for the registration of the co-operative society and those who are admitted to membership after registration in accordance with the bye-laws and rules. A member eligible for exemption under section 194A(3)(v) must have subscribed to and fully paid for at least one share of the co-operative bank, must be entitled to participate and vote in the General Body Meetings and/or Special General Body Meetings of the co-operative bank and must be entitled to receive share from the profits of the co-operative bank. [F.No. 275/106/2000-IT(B)] (2002) 177 CTR (St) 1" 18. It can be seen from para 2 of the Circular referred to above that the CBDT has very clearly laid down that co-operative societies carrying on banking business when it pays interest on deposits by its memb....
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....ion on this issue is that co-operative societies carrying on banking business when it pays interest to its members on deposits need not deduct tax at source in view of the provisions of sec. 194A(3)(v) of the Act. 21. For the reasons given above, we hold that the Assessee which is a co-operative society carrying on banking business when it pays interest income to a member both on time deposits and on deposits other than the deposits with such co-operative society need not deduct tax at source Under Section 194A by virtue of the exemption granted vide Clause (V) of Sub-Section (3) of the said section" 14. In our view the above decision rendered by the co-ordinate bench is squarely applicable to the facts of the present case. In facts the CIT(A) in cancelling the order of the AO has placed reliance on the aforesaid decision. Respectfully following the decision of the co-ordinate bench referred to above, we uphold the order of the CIT(A).' 3. The aforesaid shows that the Tribunal was bound by its earlier decision in case of Bagalkot District Central Co-op. Bank v. Jt. CIT [2014] 48 taxmann.com 117 (Bang.). When we further enquired from the learned counse....