Kerala High Court
The Champakara Service Co-Operative ... vs The Additional Commissioner Of Income ... on 18 October, 2019
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR
FRIDAY, THE 18TH DAY OF OCTOBER 2019 / 26TH ASWINA, 1941
WP(C).No.9541 OF 2019(P)
PETITIONER:
THE CHAMPAKARA SERVICE CO-OPERATIVE BANK LIMITED
NO.3511
KARUKACHAL P.O, KOTTAYAM DISTRICT, REPRESENTED BY ITS
SECRETARY.
BY ADV. SRI.O.D.SIVADAS
RESPONDENTS:
1 THE ADDITIONAL COMMISSIONER OF INCOME TAX (TDS).
THIRUVANANTHAPURAM, PIN-678001.
2 THE GENERAL MANAGER,
KOTTAYAM DISTRICT CO-OPERATIVE BANK LTD, DISTRICT CO-
OPERATIVE BANK BUILDING, KOTTAYAM, PIN-686001.
3 THE REGISTRAR OF CO-OPERATIVE SOCIETIES,
DEPARTMENT OF CO-OPERATIVE SOCIETIES.
DEPARTMENT OF OPERATION, JAWAHAR SAHAKARANA BHAVAN,
DPI JUNCTION, THYCAUD P.O, THIRUVANANTHAPURAM-PIN-
695014.
R1 BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT
R2 BY SRI.ATHUL SHAJI, SC, KOTTAYAM DISTRICT
CO.OPERATIVE BANK LTD.
OTHER PRESENT:
GP MM JASMINE, SC CHRISTOPHER ABRAHAM
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
18.10.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).No.9541 OF 2019
2
JUDGMENT
The petitioner is a Primary Agricultural Credit Society registered under the provision of the Kerala Co-operative Societies Act. In the writ petition, the petitioner is aggrieved by Exts.P1 and P2 communications received from the General Manager, Kottayam District Co-operative Bank, intimating them, based on the advice received from the Income Tax Department, that the interest payable to them on the Fixed Deposits maintained with the Bank is not exempt from the procedure for tax deduction at source (TDS) and that tax would be deducted at source and remitted to the Government on such interest payments. It is the case of the petitioner that the interest income accruing to it is from the deposits made by the petitioner with the Kottayam District Co-operative Bank and hence, as per the provisions of Section 194A(3)(v), the provisions of sub section (1) thereof, which contemplate a deduction of tax at source would not apply in cases where the income is paid by a Co-operative Society to any other Co- operative Society. It is the case of the petitioner that the payment of interest from the Kottayam District Co-operative Bank to the petitioner has to be viewed as a payment of income by a Co-operative Society to another Co- operative Society and hence the provisions of Section 194A (3)(v) would apply to exclude the receipts of interest income by the petitioner from the requirement of tax deduction at source.
Through a statement filed by the learned Standing Counsel appearing on behalf of the 1st respondent, it is conceded that the petitioner would get WP(C).No.9541 OF 2019 3 the benefit of the exemption provided under Section 194A(3)(v) of the Income Tax Act. Taking note of the statement, I allow the writ petition by declaring that there will be no requirement of deducting tax at source in the case of payment of interest from the District Co-operative Bank Kottayam to the petitioner.
SD/-
A.K.JAYASANKARAN NAMBIAR JUDGE SJ WP(C).No.9541 OF 2019 4 APPENDIX PETITIONER'S/S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE LETTER NO.AS/562-A/2018-19 DATED 14.01.2019 ISSUED BY THE 2ND RESPONDENT PROPOSING TO LEVY TDS FROM DEPOSITS WITH TRANSLATION.
EXHIBIT P2 THE COPY OF THE CIRCULAR NO.40/2018-19 DATED 14.02.2019 ISSUED BY THE 2ND RESPONDENT WITH TRANSLATION.
EXHIBIT P3 THE COPY OF THE PROCEEDING DATED 6.03.2019 ISSUED BY THE 1ST RESPONDENT.