Income Tax Appellate Tribunal - Chandigarh
Ito (Tds)-2, Chandigarh vs The Sas Nagar Central Co-Operative Bank ... on 23 November, 2017
1
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH'B', CHANDIGARH
BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER
AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER
ITA No.647/Chd/2016
(Assessment Year : 2012-13)
ITO (TDS)-2 Vs. The SAS Nagar Central Co-op Bank Ltd.
Chandigarh VPO Parol, The Kharar, Mohali
PAN: PTLT11900A
(Appellant) (Respondent)
Assessee by : None
Departm ent by : Shri. Manjit Singh
Date of hearing : 26.09.2017
Date of Pronouncement : 23/11/2017
O R D E R
PER Dr.B.R.R.KUMAR, A.M. :
This appeal has been filed by the Revenue against the order of Commissioner of Income Tax (Appeals)-2, Chandigarh, dated 01/03/2016.
2. The Revenue has raised the following grounds of appeal:
"1. The LD. CIT(A) erred in law and facts by considering the appellant is co- operative society and not liable to deduct TDS in accordance to section 194A(3)(v) of the Income Tax Act, 1961.
2. The Ld. CIT(A) erred in law and facts by ignoring the fact that though appellant is co-operative society but engaged in the business of banking and therefore not exempt u/s 194A(3)(v) and thus the Ld. CIT(A) is erred in deleting the demand created by the AO u/s 201(1)/201(1A) of the Income Tax Act ,1961 raised on account of non deduction of TDS on amount of interest paid on deposits."
3. Brief facts of the case are that the assessee is a Central Cooperative Bank and has paid interest to member societies which are also cooperative societies but has not deducted tax on the payment of interest under section 194A(i) of the Income Tax Act 1961. The details of the interest payments are as under:
i. The Mullanpur G Das CASS - Rs. 90,46,095/-2
ii. The Parol MPCS - Rs. 42,452/-
The ITO(TDS) has charged interest as well as 10% as the TDS to be deducted on these amounts under section 194A(i).
4. Before the CIT(A) the assessee submitted that the assessee was not liable to deduct TDS as the amounts are being paid to the members of the cooperative society and section 194A(iii)(v) exempts such payments from deduction of the tax.
5. In this background the provisions of the section are examined which are as under:
194A. Interest other than "Interest on securities".- (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 the monetary limits specified under clause (a) or clause (b) of section 44AB 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 this section.
Explanation.--For the purposes of this section, where any income by way of interest as aforesaid is credited to any account, whether called "Interest payable account" or "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.
(2) [Omitted by the Finance Act, 1992, w.e.f. 1-6-1992.] (3) The provisions of sub-section (1) shall not apply--
(i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, does not exceed--
(a) ten thousand rupees, where the payer is a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act);
(b) ten thousand rupees, where the payer is a co-operative society engaged in carrying on the business of banking;
(c) ten thousand rupees, on any deposit with post office under any scheme framed by the Central Government and notified by it in this behalf; and
(d) five thousand rupees in any other case:
Provided that in respect of the income credited or paid in respect of--
(a) time deposits with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or
(b) time deposits with a co-operative society engaged in carrying on the business of banking;
(c) deposits with a public company which is formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes and which is eligible for deduction under clause (viii) of sub-section (1) of section 36 , the aforesaid amount shall be computed with reference to the income credited or paid by a branch of the 3 banking company or the co-operative society or the public company, as the case may be;
(ii)
(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 Insurance Corporation Act, 1956 (31 of 1956), or
(d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or
(e) any company or co-operative society carrying on the business of insurance, or
(f) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette;
(iv) to such income credited or paid by a firm to a partner of the firm;
(v) to such income credited or paid by a co-operative society ( other than a co-operative bank) to a member thereof or to such income credited or paid by a co-operative society to assessment year other co-operative society;
Explanation- For the purposes of this clause, "co-operative bank" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949(10 of 1949);
(vi) to such income credited or paid in respect of deposits under any scheme framed by the Central Government and notified by it in this behalf in the Official Gazette;
(vii) to such income credited or paid in respect of deposits (other than time deposits made on or after the 1st day of July, 1995) with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
(viia) to such income credited or paid in respect of,--
(a) deposits with a primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank;
(b) deposits (other than time deposits made on or after the 1st day of July, 1995) with a co-operative society, other than a co-operative society or bank referred to in sub-clause (a), engaged in carrying on the business of banking;
(viii) to such income credited or paid by the Central Government under any provision of this Act or the Indian Income-tax Act, 1922 (11 of 1922), or the Estate Duty Act, 1953 (34 of 1953), or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), or the Interest-tax Act, 1974 (45 of 1974);
(ix) to such income credited or 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 credited or paid during the financial year does not exceed fifty thousand rupees;
(x) to such income which is paid or payable by an infrastructure capital company or infrastructure capital fund or a public sector company 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 or scheduled bank.
Explanation 1.--For the purposes of clauses (i), (vii) and (viia), "time deposits" means deposits (excluding recurring deposits) repayable on the expiry of fixed periods.
Explanation 2.--
(4) The person responsible for making the payment referred to in sub-section (1) may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the 4 financial year.
Explanation.--[Omitted by the Finance Act, 1992, w.e.f. 1-6-1992.] Further the Provisions relating to direct taxes of the Finance Bill 2015 has been examined pertaining to Rationalisation of provisions relating to deduction of tax on interest (other than interest on securities) wherein it is clearly mentioned as under:
However, the existing exemption provided under section 194A(3)(viia)(a) of the Act to primary agricultural credit society or a primary credit society or a co- operative land mortgage bank or a co-operative land development bank from deduction of tax in respect of interest paid on deposit shall continue to apply. Therefore, these co-operative credit societies/banks referred to in said clause (viia)(a) would not be required to deduct tax on interest payment to depositors even after the proposed amendment.
Further, the existing exemption provided under section 194A(3)(v) of the Act from deduction of tax from interest paid by a cooperative 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 a depositor, being a co-operative society.
6. Thus keeping in view the factual matrix that the assessees action of payment of interest without deduction of TDS to the members who are also cooperative societies is in consonance with the provisions of section 194A(3)(v) read with the memorandum of Finance Bill 2015, under the head of Rationalisation of provisions relating to deduction of tax on interest (other than interest on securities) and hence we desist from interfereing in the order of the Ld. CIT(A).
7. The appeal of the Revenue stands dismissed.
Order pronounced in the open court.
Sd/- Sd/- (DIVA SINGH) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 23/11/2017 AG Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR