ABHYUDAYA CO - OPERATIVE BANK LTD, LALBAUG BRANCH,MUMBAI V. INCOME TAX OFFICER (TDS) TDS WARD 1(1)(1), MUMBAI

MA 170/MUM/2025

AI Insights

The case involves multiple Miscellaneous Applications (MAs) filed by various branches of the Abhyudaya Co-operative Bank Ltd. against the Income Tax Officer (TDS), challenging the common order dated 30.06.2025. The primary issue was the incorrect application of a proviso to section 194A(3) of the Income-tax Act, 1961, which stipulated a turnover threshold of 50 crores for exemption from TDS on interest payments between co-operative societies. This proviso was introduced by the Finance Act, 2020, effective from 01.04.2020, and was not applicable to the assessment years prior to its enactment. The Tribunal acknowledged the mistake and rectified the order, ensuring that the exemption applied to the relevant assessment years without the turnover condition.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 835762 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 07-07-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHARAD VAZE
• Keywords: TDS
• Section: 201(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) MA No. 167/MUM/2025 (Arising out of ITA No. 1806/MUM/2025) Assessment Year: 2016-17 Abhyudaya Co-operative Bank Ltd. Dahisar Branch, Mumbai Shop No.14 & 15, D Wing, Northern Heights, Bldg 1, Shanti Ngr, Dongri, S V Rd, Dahisar E- 400 068 Vs. Income Tax Officer (TDS) TDS Ward 1(1)(1), Mumbai Room No. 413, 4th Floor, Cumballa Hill, MTNL Tele Building, Pedder Road, Cumballa Hill, Mumbai- 400 026 PAN NO. AAAAA 0300 L Appellant Respondent & MA No. 168/MUM/2025 (Arising out of ITA No. 1807/MUM/2025) Assessment Year: 2016-17 Abhyudaya Co-operative Bank Ltd. Marve Link Branch, Mumbai Shop No.109, S-22, Rajiv Gandhi Commercial Complex, Ekta Nagar, Charkop, Marve Link Road, Kandivali West, Mumbai- 400 067 Vs. Income Tax Officer (TDS) TDS Ward 1(1)(1), Mumbai Room No. 413, 4th Floor, Cumballa Hill, MTNL Tele Building, Pedder Road, Cumballa Hill, Mumbai- 400 026 PAN NO. AAAAA 0300 L & MA No. 169/MUM/2025 (Arising out of ITA No. 1808/MUM/2025) Assessment Year: 2016-17 Printed from counselvise.com PAN NO. AAAAA 0300 L (Arising out of Assessment Year: 2016 Abhyudaya Co-operative Bank Ltd. Lalbaug Branch, Mumbai Ground Floor, Jaihind Cinema, Next to Voltas Sagar, Dr. B.A.Road, Chinchpokli East, Mumbai PAN NO. AAAAA 0300 L (Arising out of Assessment Abhyudaya Co-operative Bank Ltd. Ganeshnagar Branch, Mumbai Shop No.2 to 5, Abhilasha Apartment, Bhandup West, Mumbai PAN NO. AAAAA 0300 L (Arising out of Assessment Year: 2016 Abhyudaya Co-operative Bank Ltd. Bhiwandi Branch, Mumbai Gopal Nagar, Bhiwandi Kalyan Road, Bhiwandi, Thane- Abhyudaya Co M.A. Nos. 167 to 172/MUM/2025 PAN NO. AAAAA 0300 L & MA No. 170/MUM/2025 (Arising out of ITA No. 1809/MUM/2025 Assessment Year: 2016-17 operative Bank Ltd. Lalbaug Branch, Mumbai Ground Floor, Jaihind Cinema, Next to Voltas Sagar, Dr. B.A.Road, Chinchpokli East, Mumbai- 400033 Vs. Income Tax Officer (TDS) TDS Ward 1(1)(1), Mumbai Room No. 413, 4 Cumballa Hill, MTNL Tele Building, Pedder Road, Cumballa Hill, Mumbai- 400 026 PAN NO. AAAAA 0300 L & MA No. 171/MUM/2025 (Arising out of ITA No. 1810/MUM/2025 Assessment Year: 2016-17 operative Bank Ltd. Ganeshnagar Branch, Mumbai Shop No.2 to 5, Abhilasha Apartment, Bhandup West, Mumbai- 400 078 Vs. Income Tax Officer (TDS) TDS Ward 1(1)(1), Mumbai Room No. 413, 4 Cumballa Hill, MTNL Tele Building, Pedder Road, Cumballa Hill, Mumbai- 400 026 PAN NO. AAAAA 0300 L & MA No. 172/MUM/2025 (Arising out of ITA No. 1811/MUM/2025 Assessment Year: 2016-17 operative Bank Mumbai Gopal Nagar, Bhiwandi Kalyan - 421302 Vs. Income Tax Officer (TDS) TDS Ward 1(1)(1), Mumbai Room No. 413, 4th Floor, Cumballa Hill, MTNL Tele Building, Pedder Road, Cumballa Hill, Mumbai- 400 026 Abhyudaya Co-operative Bank Ltd 2 M.A. Nos. 167 to 172/MUM/2025 ITA No. 1809/MUM/2025) Income Tax Officer (TDS) TDS Ward 1(1)(1), Mumbai Room No. 413, 4th Floor, Cumballa Hill, MTNL Tele Building, Pedder Road, Cumballa Hill, 400 026 /MUM/2025) Income Tax Officer (TDS) TDS Ward 1(1)(1), Mumbai Room No. 413, 4th Floor, Cumballa Hill, MTNL Tele Building, Pedder Road, Cumballa Hill, 400 026 /MUM/2025) TDS Ward 1(1)(1), Mumbai Floor, Cumballa Hill, MTNL Tele Building, Pedder Road, Printed from counselvise.com Abhyudaya Co-operative Bank Ltd. Dharavi Branch, Mumbai Shop No.2A, Ground Floor, Western India Tanner IESC, Dharavi Main Road, Dharavi, Mumbai PAN NO. AAAAA 0300 L Assessee by Revenue by Date of Hearing Date of pronouncement PER OM PRAKASH KANT, AM These Miscellaneous Applications have been filed by the assessees seeking rectification/recall of the common order of the Tribunal dated 30.06.2025 1811/Mum/2025 for assessment year different branches. Since identical, they were heard together and are being disposed of by this consolidated order for the sake of convenience. 2. The common grievance raised by the assessees is that, while adjudicating the appeals, th exemption from deduction of tax at source on interest paid by one co-operative society to another co Abhyudaya Co M.A. Nos. 167 to 172/MUM/2025 operative Bank Ltd. Dharavi Branch, Mumbai Shop No.2A, Ground Floor, Western India Tanner IESC, Dharavi Main Road, Dharavi, Mumbai- 400017 Vs. Income Tax Officer (TDS) TDS Ward 1(1)(1), Mumbai Room No. 413, 4 Cumballa Hill, MTNL Tele Building, Pedder Road, Cumballa Hill, Mumbai- 400 026 PAN NO. AAAAA 0300 L Assessee by : Mr. Sharad Vaze, CA by : Mr. Krishna Kumar, Sr. DR Date of Hearing : 12/12/2025 Date of pronouncement : 09/02/2026 ORDER PER OM PRAKASH KANT, AM These Miscellaneous Applications have been filed by the assessees seeking rectification/recall of the common order of the 30.06.2025 passed in ITA Nos. 1806 to for assessment year 2016–17 pertaining to Since the issue involved in all the applications is identical, they were heard together and are being disposed of by this consolidated order for the sake of convenience. The common grievance raised by the assessees is that, while adjudicating the appeals, the Tribunal proceeded on the footing that exemption from deduction of tax at source on interest paid by one operative society to another co-operative society under section Abhyudaya Co-operative Bank Ltd 3 M.A. Nos. 167 to 172/MUM/2025 Income Tax Officer (TDS) TDS Ward 1(1)(1), Mumbai Room No. 413, 4th Floor, Cumballa Hill, MTNL Tele Building, Pedder Road, 026 Mr. Krishna Kumar, Sr. DR These Miscellaneous Applications have been filed by the assessees seeking rectification/recall of the common order of the ITA Nos. 1806 to 17 pertaining to the issue involved in all the applications is identical, they were heard together and are being disposed of by this The common grievance raised by the assessees is that, while e Tribunal proceeded on the footing that exemption from deduction of tax at source on interest paid by one operative society under section Printed from counselvise.com 194A(3)(v) of the Income sub-section (3) of section 194A prescribing a turnover threshold of ₹50 crores. It is contended that the said proviso was inserted by the Finance Act, 2020 with effect from appeals before the Tribunal pertain to assessment years prior to its insertion. According to the assessees, application of the said proviso to earlier assessment years constitutes a mistake apparent from the record, amenable to rectification under section 3. We have heard the rival submissions and carefully perused the material available on record. The assessees before us are co operative societies. The Assessing Officers had treated the assessees as assessees in default under sections Act in respect of interest payments made to other co societies. While deciding the appeal, the Tribunal held that under the second limb of section deduction of tax at source is availab one co-operative society to another co the same subject to the proviso to sub namely that aggregate gross receipt note more than Rs. 50 crores 4. On verification of the statutory provisions, it is evident that the second limb of section of tax at source in respect of interest paid or credited by a co operative society to another co Abhyudaya Co M.A. Nos. 167 to 172/MUM/2025 of the Income-tax Act, 1961 was subject to the proviso to section (3) of section 194A prescribing a turnover threshold of 50 crores. It is contended that the said proviso was inserted by the Finance Act, 2020 with effect from 01.04.2020 appeals before the Tribunal pertain to assessment years prior to its insertion. According to the assessees, application of the said proviso to earlier assessment years constitutes a mistake apparent from the record, amenable to rectification under section 254(2) We have heard the rival submissions and carefully perused the material available on record. The assessees before us are co operative societies. The Assessing Officers had treated the assessees as assessees in default under sections 201(1) and Act in respect of interest payments made to other co societies. While deciding the appeal, the Tribunal held that under the second limb of section 194A(3)(v) of the Act, exemption from deduction of tax at source is available in respect of interest paid by operative society to another co-operative society, but made the same subject to the proviso to sub-section (3) of section 194A, namely that aggregate gross receipt of payer cooperative society is 50 crores. On verification of the statutory provisions, it is evident that the second limb of section 194A(3)(v) grants exemption from deduction of tax at source in respect of interest paid or credited by a co operative society to another co-operative society. The proviso to Abhyudaya Co-operative Bank Ltd 4 M.A. Nos. 167 to 172/MUM/2025 tax Act, 1961 was subject to the proviso to section (3) of section 194A prescribing a turnover threshold of 50 crores. It is contended that the said proviso was inserted by the 01.04.2020, whereas the appeals before the Tribunal pertain to assessment years prior to its insertion. According to the assessees, application of the said proviso to earlier assessment years constitutes a mistake apparent from the 254(2) of the Act. We have heard the rival submissions and carefully perused the material available on record. The assessees before us are co- operative societies. The Assessing Officers had treated the assessees and 201(1A) of the Act in respect of interest payments made to other co-operative societies. While deciding the appeal, the Tribunal held that under of the Act, exemption from le in respect of interest paid by operative society, but made section (3) of section 194A, of payer cooperative society is On verification of the statutory provisions, it is evident that the grants exemption from deduction of tax at source in respect of interest paid or credited by a co- operative society. The proviso to Printed from counselvise.com section 194A(3), prescribing the turnover threshold of was introduced by the Fin 01.04.2020 and is prospective in operation. assessment years prior to application. The reference to, and reliance upon, the said proviso while adjudicating the app constitutes a patent and obvious error apparent from the record. Such an error squarely falls within the limited scope of rectification contemplated under section 5. Accordingly, paragraphs dated 30.06.2025 are rectified and shall read as under: “6.1 However, the second limb of the provision deals with exemption from TDS in cases where interest income is credited or paid by a co Notably, this part of the provision does not contain any exclusion for co-operative banks. Accordingly, where a co payment or credits interest to another co transaction is exempt from th source. 6.2 Turning to the facts of the present case, it emerges that the assessee is a co interest to other co co-operative societies under the Act, therefore, the assessee is not liable for deduction of tax at source on the interest payments made to the other societies . 6.3 In view thereof, Ground No. 1 raised in the appeal by the assessee stands allowed. 6. Except to the e and conclusions recorded in the original order shall remain unaltered. Abhyudaya Co M.A. Nos. 167 to 172/MUM/2025 section 194A(3), prescribing the turnover threshold of was introduced by the Finance Act, 2020 with effect from and is prospective in operation. Therefore, in respect of assessment years prior to 01.04.2020, the said proviso has no application. The reference to, and reliance upon, the said proviso while adjudicating the appeals relating to earlier assessment years constitutes a patent and obvious error apparent from the record. Such an error squarely falls within the limited scope of rectification contemplated under section 254(2) of the Act. Accordingly, paragraphs 6.1 to 6.4 of the Tribunal’s order dated 30.06.2025 are rectified and shall read as under: However, the second limb of the provision deals with exemption from TDS in cases where interest income is credited or paid by a co-operative society to any other co-operative society. Notably, this part of the provision does not contain any exclusion for operative banks. Accordingly, where a co-operative society makes payment or credits interest to another co-operative society, such transaction is exempt from the requirement of tax deduction at Turning to the facts of the present case, it emerges that the assessee is a co-operative society which has effected payment of interest to other co-operative housing societies, who also qualify as societies under the Act, therefore, the assessee is not liable for deduction of tax at source on the interest payments made to the other societies . In view thereof, Ground No. 1 raised in the appeal by the assessee stands allowed.” Except to the extent indicated above, the remaining findings and conclusions recorded in the original order shall remain Abhyudaya Co-operative Bank Ltd 5 M.A. Nos. 167 to 172/MUM/2025 section 194A(3), prescribing the turnover threshold of ₹50 crores, ance Act, 2020 with effect from Therefore, in respect of , the said proviso has no application. The reference to, and reliance upon, the said proviso eals relating to earlier assessment years constitutes a patent and obvious error apparent from the record. Such an error squarely falls within the limited scope of rectification of the Tribunal’s order dated 30.06.2025 are rectified and shall read as under: However, the second limb of the provision deals with exemption from TDS in cases where interest income is credited or operative society. Notably, this part of the provision does not contain any exclusion for operative society makes operative society, such e requirement of tax deduction at Turning to the facts of the present case, it emerges that the operative society which has effected payment of operative housing societies, who also qualify as societies under the Act, therefore, the assessee is not liable for deduction of tax at source on the interest payments made to In view thereof, Ground No. 1 raised in the appeal by the xtent indicated above, the remaining findings and conclusions recorded in the original order shall remain Printed from counselvise.com 7. In the result, all the Miscellaneous Applications filed by the assessees are allowed Order pronounced in the open Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated:09/02/2026 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Abhyudaya Co M.A. Nos. 167 to 172/MUM/2025 In the result, all the Miscellaneous Applications filed by the allowed in the above terms. Order pronounced in the open Court on 09/02 Sd/- Sd/ (KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Abhyudaya Co-operative Bank Ltd 6 M.A. Nos. 167 to 172/MUM/2025 In the result, all the Miscellaneous Applications filed by the 02/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "