The Hubli Urban Co-Bank Ltd., Hubli V. ITO, Hubli

CO 25/BANG/2015

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0333 (ITAT-BANGALORE)
• Duration Of Justice: 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 11-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: G V DESAI CA ITA NOS TO BANG; C O NOS TO B ANG

Judgement Text

ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B', BANGALORE BEFORE SHRI. N. V. VASUDEVAN, JUDICIAL MEMBER AND SHRI. JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A NO.1191 TO 1194/BANG/2014 (ASSESSMENT YEAR : 2009-10 TO 2012-13) THE INCOME TAX OFFICER (TDS) 3 RD FLOOR, CR BLDG.ANNEXE, NAVANAGAR, HUBLI-580 025 .. APPELLANT VS. THE HUBLI URBAN CO-OPERATIVE BANK LTD. GF, URBAN BANK BUILDING, 1 SIR SIDDAPPA KAMBLI ROAD, HUBLI 580 020 .. RESPONDENT PAN : AAAAH0120P C.O.NOS. 25 TO 28/BANG/2015 IN I.T.A NO.1191 TO 1194/BANG/2014 (ASSESSMENT YEAR : 2009-10 TO 2012-13) THE HUBLI URBAN CO-OPERATIVE BANK LTD. GF, URBAN BANK BUILDING, 1 SIR SIDDAPPA KAMBLI ROAD, HUBLI 580 020 .. CROSS-OBJECTOR PAN : AAAAH0120P VS. THE INCOME TAX OFFICER (TDS) 3 RD FLOOR, CR BLDG.ANNEXE, NAVANAGAR, HUBLI-580 025 .. RESPONDENT ASSESSEE BY : SHRI. G.V.DESAI, CA ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 2 REVENUE BY : DR.P.K.SRIHARI, ADDL.CIT HEARD ON : 19.03.2015 PRONOUNCED ON : 20.03.2015 O R D E R PER BENCH: ITA NOS. 1191 TO 1194/BANG/2014 ARE APPEALS BY THE REVENUE AGAINST COMMON ORDER DATED 9.6.2014 OF CIT(A), HUBLI, RELAT ING TO THE ASSESSMENT YEAR 2009-10 TO 2012-13. THE ASSESSEE HAS FILED CROSS-O BJECTION AGAINST THE VERY SAME ORDER OF THE CIT(A). THE CROSS-OBJECTION IS P URELY SUPPORTIVE. 02. ASSESSEE IS A CO-OPERATIVE BANK CARRYING ON THE BUSINESS OF BANKING. THE APPEALS AND CROSS-OBJECTIONS ARISE OUT OF PROCE EDINGS INITIATED U/S.201(1) AND 201(1A) OF THE INCOME TAX ACT, 1961 (ACT). IN THE COURSE OF PROCEEDINGS U/S.201(1) & 201(1A) OF THE ACT, THE AO NOTICED THA T THE ASSESSEE HAD PAID INTEREST ON DEPOSITS FROM MEMBERS AND PAYMENT TO E ACH OF THE DEPOSITORS EXCEEDED A SUM OF RS.10,000/- FOR THE VARIOUS ASSES SMENT YEARS AS PER THE FOLLOWING DETAILS: PARTICULARS FY FY 2011-12 FY 2010-11 FY 2009-10 FY 2008-09 DEFAULT U/S.194-A: TDS NOT MADE ON INTEREST ABOVE RS.10,000/- RS.1,60,70,633 RS.1,49,33,436 RS.1,54,55,579 RS2,08,49,807 ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 3 THE AO WAS OF THE VIEW THAT AS PER THE PROVISIONS O F SEC.194A(1) OF THE ACT, THE ASSESSEE WHO IS RESPONSIBLE FOR PAYING TO A RES IDENT ANY INCOME BY WAY OF INTEREST OTHER THAN INCOME BY WAY OF INTEREST ON SE CURITIES, OUGHT TO HAVE 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, DEDUCTED INCOME-TAX THEREON A T THE RATES IN FORCE. ADMITTEDLY THE ASSESSEE DID NOT DEDUCT TAX AT SOURC E ON THE PAYMENT OF INTEREST ON THE DEPOSITS TO MEMBERS. THE AO ACCORDINGLY INI TIATED PROCEEDINGS AGAINST THE ASSESSEE FOR TREATING THE ASSESSEE AS AN ASSESS EE IN DEFAULT U/S.201(1) OF THE ACT FOR TAXES NOT DEDUCTED AT SOURCE AND ALSO P ROCEEDINGS FOR LEVY OF INTEREST ON TAXES NOT DEDUCTED U/S.201(1A) OF THE A CT. 03. THE RELEVANT PROVISIONS OF SEC.194A OF THE AC T, IN SO FAR AS IT IS MATERIAL TO THE PRESENT CASE, READS AS FOLLOWS: SEC.194A: INTEREST OTHER THAN 'INTEREST ON SECURIT IES'. (1) ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INC OME BY WAY OF INTEREST OTHER THAN INCOME BY WAY OF INTEREST ON SE CURITIES, 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 : (2) .. (3) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APP LY (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 ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 4 CREDITED OR PAID DURING THE FINANCIAL YEAR BY THE P ERSON 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 BANKI NG COMPANY TO WHICH THE BANKING REGULATION ACT, 1949 (10 OF 1949) APPLIES (INCLUDING ANY BANK OR BANKING INSTITUTION, REFERRED TO IN SEC TION 51 OF THAT ACT); (B) TEN THOUSAND RUPEES, WHERE THE PAYER IS A CO-OP ERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING; (C) TEN THOUSAND RUPEES, ON ANY DEPOSIT WITH POST O FFICE UNDER ANY SCHEME FRAMED BY THE CENTRAL GOVERNMENT AND NOTIFIE D BY IT IN THIS BEHALF; AND (D) FIVE THOUSAND RUPEES IN ANY OTHER CASE: .. (II) TO (IV).. (V) TO SUCH INCOME CREDITED OR PAID BY A CO-OPERATI VE SOCIETY TO A MEMBER THEREOF OR TO ANY OTHER CO-OPERATIVE SOCIETY ; (VI) & (VII).. (VIIA) TO SUCH INCOME CREDITED OR PAID IN RESPECT OF, (A) DEPOSITS WITH A PRIMARY AGRICULTURAL CREDIT SOC IETY 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 A FTER 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), ENGA GED IN CARRYING ON THE BUSINESS OF BANKING; 05. THE STAND OF THE ASSESSEE IN THE PROCEEDINGS U/ S.201(1) & 201(1A) OF THE ACT WAS THAT IT WAS A CO-OPERATIVE SOCIETY CARRYING ON THE BUSINESS OF BANKING AND NOT A CO-OPERATIVE BANK. IN THIS REGARD THE AS SESSEE DREW ATTENTION OF THE DEFINITION OF CO-OPERATIVE SOCIETY AS GIVEN IN SEC. 2(19) OF THE ACT WHICH READS THUS: SEC.2 (19): 'CO-OPERATIVE SOCIETY' MEANS A CO-OP ERATIVE SOCIETY REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT, 19 12 (2 OF 1912), OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY STATE FOR THE REGISTRATION OF CO-OPERATIVE SOCIETIES ; ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 5 06. THE ASSESSEE DREW ATTENTION OF THE AO TO THE SE C.194A(3)(V) OF THE ACT AND SUBMITTED THAT CO-OPERATIVE SOCIETIES HAVE NO O BLIGATION TO DEDUCT TAX AT SOURCE ON INTEREST PAID TO MEMBERS. THE ASSESSEE TH US TOOK A STAND THAT THE ENTIRE SUM SOUGHT TO BE DISALLOWED WAS PAYMENT OF I NTEREST TO MEMBERS AND THEREFORE THERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE IN VIEW OF THE PROVISIONS OF SEC.194A(3)(V) OF THE ACT. THE ASSES SEE ALSO DREW ATTENTION OF THE AO TO THE DECISION OF THE HONBLE BOMBAY HIGH C OURT IN THE CASE OF THE JALGAON DISTRICT CENTRAL CO-OPERATIVE BANK LTD. VS. UNION OF INDIA 265 ITR 423 (BOM). IN THE AFORESAID CASE CO-OPERATIVE SOCI ETIES CHALLENGED CIRCULAR NO.9 OF 2002 DATED 11 TH SEPT. 2002 ISSUED BY THE CBDT IN THE CONTEXT OF OBLIGATION TO DEDUCT TAX AT SOURCE BY CO-OPERATIVE SOCIETIES. AS WE HAVE ALREADY SEEN THAT SEC. 194A OF THE IT ACT, 1961, DEALS WITH INTEREST OTHER THAN INTEREST ON SECURITIES. SUB-S. (1) OF S. 194A MANDATES DEDUC TION OF INCOME : TAX AT SOURCE IN RESPECT OF THE INCOME BY WAY OF INTEREST WHEREAS SUB-S. (3) OF S. 194A ENGRAFTS AN EXCEPTION TO THE APPLICABILITY OF THE P ROVISIONS OF SUB-S. (1). SEC. 194A(3)(V) GRANTS AN EXEMPTION FROM TDS TO SUCH INC OME CREDITED OR PAID BY THE CO-OPERATIVE SOCIETY TO A MEMBER THEREOF OR TO ANY OTHER CO-OPERATIVE SOCIETY. THE WORD 'MEMBER' USED IN SEC.194A(3)(V) O F THE ACT ACCORDING TO THE PETITIONER WAS WITHOUT ANY WORDS OF LIMITATION. TH E PETITIONERS CONTENDED THAT THE EXPRESSION 'MEMBER' IS DEFINED IN S. 2(19) OF T HE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960. THE SAID DEFINITION OF 'MEMBER ' INCLUDES NOMINAL, ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 6 ASSOCIATE OR SYMPATHISER MEMBER ALSO. UNDER CIRCUL AR NO. 9 OF 2002, ISSUED BY THE CBDT, IT IS AN ACCEPTED FACT THAT THE PROVISION S OF TDS ARE NOT ENFORCEABLE IN RESPECT OF INTEREST PAID BY THE CO-OPERATIVE SOC IETY/BANK TO ITS MEMBERS OR CO- OPERATIVE SOCIETIES. BUT THE CIRCULAR MANDATED THAT TDS HAS TO BE DEDUCTED FROM THE INTEREST PAID TO MEMBERS WHO HAVE JOINED I N APPLICATION FOR THE REGISTRATION OF CO-OPERATIVE SOCIETY AND THOSE WHO ARE ADMITTED TO THE MEMBERSHIP AFTER REGISTRATION IN ACCORDANCE WITH TH E BYE-LAWS AND RULES. THE MEMBERS ELIGIBLE FOR EXEMPTION UNDER S. 194A(3)(V) MUST HAVE SUBSCRIBED TO AND FULLY PAID FOR AT LEAST ONE SHARE OF THE CO-OPE RATIVE BANK, MUST BE ENTITLED TO PARTICIPATE AND VOTE IN GENERAL BODY MEETING OR SPE CIAL GENERAL BODY MEETING OF THE CO-OPERATIVE BANK AND MUST BE ENTITLED TO RECEI VE SHARE FROM THE PROFITS OF THE CO-OPERATIVE BANK. ACTING UPON THE AFORESAID CI RCULAR THE AO HELD THAT PROVISIONS OF SEC.194A(3)(V) OF THE ACT ARE APPLICA BLE ONLY WHEN THE PAYMENT OF INTEREST IS MADE BY A CO-OPERATIVE SOCIETY TO SU CH MEMBERS WHO HOLD SHARES AND HAVE A RIGHT TO VOTE IN GENERAL BODY AND ENTITL ED TO SHARE OF PROFITS OF THE CO-OPERATIVE SOCIETY. ACCORDINGLY PAYMENT OF INTERE ST BY A CO-OPERATIVE SOCIETY TO A MEMBER WHO IS A NOMINAL MEMBER OR SYMPATHISER MEMBER WERE HELD BY THE AO TO BE SUBJECT TO DEDUCTION OF TAX AT SOURCE, IF SUCH PAYMENT TO EACH MEMBER EXCEEDED RS.10,000 IN A YEAR. ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 7 07. ACCORDING TO THE PETITIONERS BEFORE THE HONBLE BOMBAY HIGH COURT, WHO WERE CO-OPERATIVE SOCIETIES, THE CBDT CANNOT IS SUE A CIRCULAR WHICH IS CONTRARY TO THE PROVISIONS OF S. 194A(3)(V) OF THE IT ACT, 1961. THE CIRCULAR ISSUED BY THE CBDT DEPRIVES THE EXEMPTION GRANTED B Y THE CENTRAL ENACTMENT AND, THEREFORE, THE SAID CIRCULAR IS BAD IN LAW AND LIABLE TO BE QUASHED AND SET ASIDE. THE PETITIONER HAS CHALLENGED THE CIRCULAR I SSUED BY CBDT. THE CBDT HAS ISSUED THE CIRCULAR BY VIRTUE OF S. 119 OF THE IT ACT, 1961. THE PETITIONER HAS FOUND FAULT WITH THE AUTHORITY OF CBDT. THE POWER W HICH HAS BEEN ASSUMED BY CBDT, DOES NOT IN FACT SPRING FROM S. 119 OF THE IT ACT, 1961. NO DOUBT, S. 119 OF THE ACT EMPOWERS THE CBDT TO ISSUE INSTRUCTIONS TO THE SUBORDINATE AUTHORITIES FOR PROPER ADMINISTRATION OF THE ACT. H AVING BEEN AGGRIEVED BY THE IMPUGNED CIRCULAR CO-OPERATIVE SOCIETIES FILED WR IT PETITION UNDER ART. 226 R/W ART. 227 OF THE CONSTITUTION OF INDIA AND THEREBY C HALLENGED THE VALIDITY OF THE IMPUGNED CIRCULAR AND THE COMPETENCY OF CBDT TO ISS UE A CIRCULAR CONTRARY TO THE PROVISIONS OF SEC.194A(3)(V) OF THE ACT. THE H ONBLE BOMBAY HIGH COURT HELD THAT SEC. 194A(3)(V) GRANTS AN EXEMPTION FROM TDS TO INCOME CREDITED OR PAID BY THE CO-OPERATIVE SOCIETY TO A MEMBER THEREO F OR TO ANY OTHER CO- OPERATIVE SOCIETY. CLAUSE (V) OF SUB-S. (3) OF S. 1 94A IS VERY LUCID AND CLEAR IN ITS TERMS WHICH SUGGESTS THAT THE PROVISIONS RELATI NG TO TDS ARE INAPPLICABLE TO THE INCOME CREDITED OR PAID BY THE CO-OPERATIVE SOC IETY TO THE MEMBER THEREOF. THE WORD 'MEMBER' USED IN THIS PROVISION IS WITHOUT ANY WORDS OF LIMITATION. ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 8 THE EXPRESSION 'MEMBER' IS NOT DEFINED IN THE IT AC T, 1961. A CO-OPERATIVE SOCIETY HAS TO BE ESTABLISHED UNDER THE PROVISIONS OF LAW MADE BY THE STATE LEGISLATURE. THE DEFINITION OF EXPRESSION 'MEMBER' IS GIVEN UNDER S. 2(19) OF THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960. AS PE R THE DEFINITION, 'MEMBER' MEANS A PERSON JOINING AN APPLICATION FOR REGISTRAT ION OF A CO-OPERATIVE SOCIETY, WHICH IS SUBSEQUENTLY REGISTERED OR A PERSON DULY A DMITTED TO MEMBERSHIP OF A SOCIETY AFTER REGISTRATION AND INCLUDES A NOMINAL, ASSOCIATE OR SYMPATHIZER MEMBER. THERE IS NO DISTINCTION BETWEEN DULY REGIST ERED MEMBER AND NOMINAL, ASSOCIATE AND SYMPATHIZER MEMBER. THE IMPUGNED CIRC ULAR ISSUED BY CBDT, WHICH IS IN THE FORM OF CLARIFICATION WITH REGARD T O RIGHTS AND PRIVILEGES OF A DULY REGISTERED MEMBER AND NOMINAL MEMBER IS OUTSID E THE SCOPE OF S. 119. NO DOUBT, S. 119 GENERATES SOME POWER IN CBDT. BUT THE POWER SO GENERATED BY VIRTUE OF S. 119 IS REQUIRED TO BE UTILIZED IN A PR ESCRIBED MANNER. CBDT IS EMPOWERED TO ISSUE ONLY ADMINISTRATIVE INSTRUCTIONS TO THE SUBORDINATE AUTHORITIES FOR THE PURPOSE OF PROPER ADMINISTRATIO N AND ENFORCEMENT OF THE PROVISIONS OF THE IT ACT, 1961. UNDER THE GARB OF S . 119 CBDT HAS CROSSED ITS AUTHORITY. WHAT IS NOT CONTEMPLATED IN EXEMPTION CL AUSE UNDER S. 194A(3)(V), CANNOT BE IMPORTED TO DEPRIVE THE EXEMPTION GRANTED TO CO-OPERATIVE SOCIETY BY ISSUING THE IMPUGNED CIRCULAR. BY IMPUGNED CIRCULAR , THE CO-OPERATIVE SOCIETY CANNOT BE DEPRIVED OF ITS RIGHT OF EXEMPTION GIVEN UNDER IT ACT, 1961. THE CBDT HAS OVERSTEPPED ITS AUTHORITY AND HAS ISSUED T HE IMPUGNED CIRCULAR ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 9 DIRECTLY IN CONFLICT WITH THE PROVISIONS CONTAINED IN S. 194A(3)(V). SEC. 119 DOES NOT AT ALL SUPPORT THE ACTION OF CBDT. CBDT HA S NO AUTHORITY TO MAKE A CRACK IN THE EXEMPTION CLAUSE CONTAINED IN S. 194A( 3)(V), BY ISSUING THE IMPUGNED CIRCULAR. THE CBDT CANNOT USURP THE POWERS OF PARLIAMENT BY VIRTUE OF S. 119. THE CBDT, UNDER THE GARB OF S. 119, CANN OT EXERCISE WIDER POWERS THAN THE POWERS BESTOWED ON IT. THE CBDT HAS NO POW ER TO INTRODUCE A SUBSTANTIAL CHANGE OR ALTERATION IN THE PROVISIONS OF THE IT ACT, 1961, BY IMPORTING THE IDEAS UNKNOWN TO THE IT ACT, 1961. TH E IMPUGNED CIRCULAR, THEREFORE, DOES NOT STAND TO THE LEGAL TEST. THE IM PUGNED CIRCULAR NO. 9 OF 2002, DT. 11TH SEPT., 2002 WAS ACCORDINGLY QUASHED AND SE T ASIDE. 08. THE ASSESSEE THUS SUBMITTED THAT THERE WAS NO OBLIGATION ON ITS PART TO DETECT TAX AT SOURCE ON THE AFORESAID SUMS WHICH WA S INTEREST PAID TO ITS MEMBERS. 09. THE AO HOWEVER DID NOT ACCEPT THE PLEA OF THE A SSESSEE FOR THE FOLLOWING REASONS: 1. UNDER THE ACT DIFFERENT BENEFITS ARE GIVEN TO DIFF ERENT CO-OPERATIVE SOCIETIES DEPENDING UPON THE NATURE OF A PARTICULAR CO-OPERATIVE SOCIETY. ACCORDING TO THE AO, SEC.194A(3)(V) OF THE ACT WAS A GENERAL PROVISION GRANTING BENEFIT TO ALL CO-OPERATIVE SOCI ETIES. BUT SEC.194A(3)(I)(B) OF THE ACT SPECIFICALLY PROVIDES THAT A CO-OPERATIVE SOCIETY CARRYING ON THE BUSINESS OF BANKING, IF IT PAYS INTEREST ON DEPOSITS EXCEEDING RS.10,000 THEN IT HAS TO DEDUCT TAX AT SOURCE. HE ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 10 HELD THAT SPECIFIC PROVISIONS WILL OVERRIDE GENERAL PROVISIONS AND THEREFORE THE ASSESSEE BEING A CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING HAD TO DEDUCT TAX AT SOURCE ON PAYMENT OF INTEREST IN EXCESS OF RS.10,000/-. 2. THE AO PLACED STRONG RELIANCE ON THE SINGLE MEMBER DECISION OF THE ITAT IN THE CASE OF BHAGANI NIVEDITA SAH BANK LTD. VS. ACIT 87 ITD 569 (PUNE) WHEREIN IT WAS HELD THAT FROM PERUSAL OF S. 194A THAT WHEREVER THE TERM CO-OPERATIVE SOCIETY' IS USED IN TENDING THEREBY TO INCLUDE A CO-OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING, IT IS SO SPECIFICALLY MENTIONED. IN OTHER WORDS, WHEREVER THE PROVISION APPLIES TO A CO-OPERATIVE BANK, THERE IS SPECIFIC MENTION TO THAT EFFECT. IN ALL OTHER PLACES, IT CAN BE INFERRE D THAT THE TERM 'CO- OPERATIVE SOCIETY' DOES NOT INCLUDE CO-OPERATIVE BA NKS. THIS KIND OF PRESUMPTION IS REQUIRED TO BE MADE BECAUSE, AS DEMO NSTRATED BY THE AO, THERE ARISES A CONFLICT BETWEEN TWO PROVISIONS VIZ., CL. (V) AND CL. (VIIA), IF SUCH INTERPRETATION IS NOT ADOPTED. THE CO-OPERATIVE SOCIETY AS MENTIONED IN CL. (V) IS A GENERAL SPECIES, WHEREAS THE OTHER FIVE CATEGORIES OF CO-OPERATIVE SOCIETIES WHICH ARE SPEC IFICALLY REFERRED TO IN OTHER PROVISIONS ARE SPECIFIC CO-OPERATIVE SOCIETIE S, MEANING THEREBY, THEY ARE SPECIFIC SPECIES. IT IS A SETTLED PRINCIPL E OF INTERPRETATION THAT WHEN A CONFLICT OCCURS BETWEEN A SPECIFIC PROVISION OF THE LAW VIS-A-VIS THE GENERAL PROVISION OF THE LAW, THEN, PRECEDENCE WILL HAVE TO BE GIVEN TO THE SPECIFIC PROVISION OF THE LAW. THEREFORE, IN VIEW OF THE ABOVE IT BECOMES NECESSARY THAT THE TERM CO-OPERATIVE SOCIET Y IN CL. (V) BE INTERPRETED AS CO-OPERATIVE SOCIETY OTHER THAN CO-O PERATIVE BANK. THE TRIBUNAL DREW SUPPORT FOR ITS CONCLUSION AS ABOVE F ROM THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF MOOLAM ATTOM ELECTRICITY BOARD EMPLOYEES' CO-OPERATIVE BANK LTD. VS. ITO 23 8 ITR 630 (KER). 3. IN THE CASE OF MOOLAMATTOM ELECTRICITY BOARD EMPLOY EES CO- OPERATIVE BANK LTD. (SUPRA), THE PETITIONERS WERE P RIMARY CREDIT SOCIETIES REGISTERED UNDER THE KERALA CO-OPERATIVE SOCIETIES ACT AND THEY CHALLENGED THE APPLICABILITY OF SEC.194A OF TH E ACT ON THE INTEREST PAID BY IT ON DEPOSITS RECEIVED BY THEM IN VIEW OF THE SPECIFIC PROVISIONS OF SEC.194A(3(VIIA) OF THE ACT. IT WAS SUBMITTED BY THE PETITIONER THAT SUB-S.194A(3)(V) DEALS WITH SUCH IN COME CREDITED OR PAID ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 11 BY A CO-OPERATIVE SOCIETY TO A MEMBER WHEREAS SUB-S . (3)(VIIA)(A) PROVIDES A TOTAL EXEMPTION TO DEPOSITS WITH THE PRI MARY CREDIT SOCIETY. PETITIONERS ARE PRIMARY CREDIT SOCIETIES AND, THERE FORE, THERE IS EXEMPTION TOWARDS DEDUCTION IN RESPECT OF INCOME CR EDITED OR PAID FOR THE DEPOSITS. THEIR CLAIM OF EXEMPTION IS REINFORCE D AND MADE CLEAR BY A READING OF SUB-S. (3)(VIIA)(B) WHEREIN DEPOSITS W ITH THE PRIMARY CREDIT SOCIETY REFERRED IN SUB-CL. (A) ENGAGED IN CARRYING ON THE BUSINESS ACTIVITY ARE EXEMPTED. THE HONBLE KERALA HIGH COU RT ACCEPTED THEIR PLEA AND IN THEIR JUDGMENT HAVE OBSERVED THAT SEC.1 94A (3)(I) EXEMPTION LIMIT OF RS. 10,000 TO INTEREST PAID ON T IME DEPOSITS WITH CO- OPERATIVE SOCIETIES ENGAGED IN CARRYING ON BUSINESS OF BANKING IS ALLOWED BUT THAT DOES NOT MEAN THAT ALL CO-OPERATIV E 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 SOCIETIES ST AND ON DIFFERENT FOOTING AND BELONG TO DIFFERENT CLASS. 4. IN PARA-37 OF ITS JUDGMENT THE PUNE ITAT IN THE CAS E OF BHAGANI NIVEDITA SAH BANK LTD. (SUPRA) THE LEARNED SINGLE M EMBER HAS OBSERVED THAT IT IS AMPLY CLEAR AS PER HON'BLE HIG H COURT OF KERALA IN THE CASE OF MOOLAMATTOMS CASE (SUPRA)THAT THE EXEM PTION UNDER S. 194A(3)(VIIA)(B) IS AVAILABLE TO PRIMARY CREDIT CO- OPERATIVE SOCIETY AND SAID SOCIETY CANNOT BE CLASSIFIED OR EQUATED WITH T HE CO-OPERATIVE SOCIETY ENGAGED IN THE BANKING BUSINESS TO WHICH PR OVISIONS OF DEDUCTION OF TAX AT SOURCE ARE APPLICABLE. 5. THE AO ALSO DISTINGUISHED THE DECISION RENDERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JALAGON DISTRICT C ENTRAL CO- OPERATIVE BANK (SUPRA) AS A CASE IN WHICH THE QUEST ION WAS ONLY WITH REGARD TO THE QUESTION WHETHER MEMBER REFERRED TO IN SEC.194A(3)(V) OF THE ACT CAN BE CONFINED TO REGULAR MEMBER AND NOT TO A NOMINAL MEMBER AND THEREFORE NOT RELEVANT FOR THE PURPOSE O F DECIDING THE ISSUE UNDER CONSIDERATION IN ASSESSEES CASE. 10. FOR THE ABOVE REASONS, THE AO HELD THAT THE ASS ESSEE WAS UNDER AN OBLIGATION TO DEDUCT TAX AT SOURCE ON INTEREST PAID U/S.194A(1) OF THE ACT AND ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 12 SINCE THE ASSESSEE FAILED TO SO DEDUCT TAX AT SOURC E, THE ASSESSEE WAS LIABLE TO BE TREATED AS AN ASSESSEE IN DEFAULT U/S.201(1) OF THE ACT AND WAS ALSO LIABLE TO PAY INTEREST ON TAX NOT DEDUCTED AT SOURCE U/S.201( 1A) OF THE ACT. 11. ON APPEAL BY THE ASSESSEE THE CIT(A) CANCELLED THE ORDER OF THE AO HOLDING THAT CO-OPERATIVE SOCIETIES CARRYING ON BAN KING 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. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE HAS PREFERRED THE PRESENT APPEALS BEFOR E THE TRIBUNAL. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE TIM E OF HEARING OF THE APPEAL, IT WAS BROUGHT TO OUR NOTICE BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE BANGALORE BENCH OF ITAT IN THE CASE OF BAGALKOT DISTRICT CENTRAL CO-OP BANK, VS. JCIT (2014) 48 TAXMANN.COM 117 (BANGALORE -TRIB) HELD THAT CO- OPERATIVE SOCIETIES CARRYING ON BANKING BUSINESS WH ILE PAYING INTEREST TO MEMBERS ON TIME DEPOSITS AND DEPOSITS OTHER THAN TI ME DEPOSITS NEED NOT DEDUCT TAX AT SOURCE U/S.194-A OF THE ACT BY VIRTUE OF EXE MPTION GRANTED U/S.194A(3)(V) OF THE ACT. THE LEARNED DR RELIED O N THE STAND TAKEN BY THE REVENUE IN THE GROUNDS OF APPEAL FILED BEFORE THE T RIBUNAL. ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 13 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THI S 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 AS SESSEE IN THE CASE OF CO- OPERATIVE SOCIETY ENGAGED IN BANKING BUSINESS AND H AVE UPHELD IDENTICAL ORDER OF CIT(A). THE RELEVANT OBSERVATIONS OF THE TRIBUN AL 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 SUBMISSIO NS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE DESERVES TO BE ACC EPTED. 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-OPERATI VE SOCIETY CARRYING ON THE BUSINESS OF BANKING, WHERE THE INCOME IN THE FORM OF INTEREST WHICH IS PAID BY SUCH SOCIETY IS IN EXCESS OF TEN T HOUSAND RUPEES. SEC.194A(3)(V) OF THE ACT PROVIDES THAT TAX NEED NO T BE DEDUCTED AT SOURCE WHERE THE INCOME IN THE FORM OF INTEREST IS CREDITED OR PAID BY A CO-OPERATIVE SOCIETY TO A MEMBER THEREOF OR TO ANY OTHER CO-OPERATIVE SOCIETY. THIS PROVISION THEREFORE APPLIES TO ALL C O-OPERATIVE SOCIETIES INCLUDING CO-OPERATIVE SOCIETY ENGAGED IN THE BUSIN ESS OF BANKING. IT IS NOT POSSIBLE TO EXCLUDE CO-OPERATIVE SOCIETY ENGAGE D IN THE BUSINESS OF BANKING FROM THE PROVISIONS OF SEC.194A(3)(V) OF TH E ACT ON THE GROUND THAT THE SAME IS COVERED BY THE PROVISIONS OF SEC.1 94A(3)(I)(B) OF THE ACT. SEC.194A(3)(V) OF THE ACT REFERS TO PAYMENT B Y A CO-OPERATIVE SOCIETY TO A MEMBER AND PAYMENT BY A CO-OPERATIVE S OCIETY TO NON- MEMBER WOULD CONTINUE TO BE GOVERNED BY THE PROVISI ONS OF SEC.194A(3)(I)(B) OF THE ACT. SIMILARLY U/S.194A(3 )(VIIA)(B) INTEREST ON DEPOSITS OTHER THAN TIME DEPOSITS EVEN IF THE PAYME NT IS MADE TO A NON- MEMBER BY A CO-OPERATIVE SOCIETY, THE CO-OPERATIVE SOCIETY NEED NOT DEDUCT TAX AT SOURCE. THUS THIS SECTION CARVES OUT ANOTHER EXCEPTION TO SEC.194A(3)(I)(B) OF THE ACT. WE DO NOT THINK THAT ANY OF THE ABOVE PROVISIONS CAN BE CALLED A GENERAL PROVISION AND OT HER PROVISIONS CALLED SPECIFIC PROVISIONS. EACH PROVISION OVER-LAP AND I F READ IN THE MANNER AS INDICATED ABOVE, THERE IS PERFECT HARMONY TO THE VA RIOUS PROVISIONS. WE DO NOT AGREE WITH THE VIEW EXPRESSED BY THE PUNE IT AT SMC IN THE CASE OF BHAGANI NIVEDITA SAHAKARI BANK LTD. (SUPRA) WHEN IT SAYS THAT CO- ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 14 OPERATIVE SOCIETY AS MENTIONED IN CL. (V) IS A GENE RAL SPECIES, WHEREAS THE OTHER FIVE CATEGORIES OF CO-OPERATIVE SOCIETIES WHI CH ARE SPECIFICALLY REFERRED TO IN OTHER PROVISIONS ARE SPECIFIC CO-OPE RATIVE SOCIETIES. THE FURTHER CONCLUSION IN THE SAID DECISION THAT THE TE RM CO-OPERATIVE SOCIETY IN CL. (V) OF S. 194A(3) HAS TO BE INTERPRETED AS C O-OPERATIVE SOCIETY OTHER THAN CO-OPERATIVE BANK, IS AGAIN UNSUSTAINABLE. TH E LAW IS WELL SETTLED THAT BY A PROCESS OF INTERPRETATION ONE CANNOT ADD ON WORDS THAT ARE NOT FOUND IN THE TEXT OF THE STATUTE. SUCH A COURSE IS PERMITTED ONLY WHEN THERE IS CAUSUS OMISUS. WE DO NOT THINK THAT THE PROVISIONS OF SEC.194A(3)(V) SUFFERS FROM ANY CAUSUS OMISUS AS HA S BEEN INTERPRETED BY THE ITAT PUNE BENCH SMC. 16. WE ARE ALSO OF THE VIEW THAT THE DECISION OF TH E HONBLE KERALA HIGH COURT IN THE CASE OF MOOLAMATTOM ELECTRICITY B OARD EMPLOYEES CO- OP BANK LTD. (SUPRA) SUPPORTS THE PLEA OF THE ASSES SEE BEFORE US. THE PETITIONERS IN THAT CASE WERE PRIMARY CREDIT SOCIET IES 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 P ETITIONER THAT SUB- S.194A(3)(V) DEALS WITH SUCH INCOME CREDITED OR PAI D BY A CO-OPERATIVE SOCIETY TO A MEMBER WHEREAS SUB-S. (3)(VIIA)(A) PRO VIDES A TOTAL EXEMPTION TO DEPOSITS WITH THE PRIMARY CREDIT SOCIE TY. THE HONBLE 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 E NGAGED IN CARRYING ON BUSINESS OF BANKING IS ALLOWED BUT THAT DOES NOT ME AN THAT ALL CO- OPERATIVE SOCIETIES WHO HAVE CREDITED OR PAID EXCEE DING RS. 10,000 ARE LIABLE TO DEDUCT TAX AT SOURCE. THE COURT HELD THA T CO-OPERATIVE SOCIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING AND PRIM ARY CREDIT SOCIETIES STAND ON DIFFERENT FOOTING AND BELONG TO DIFFERENT CLASS. THAT DOES NOT MEAN THAT SEC.194A(3)(V) OF THE ACT IS APPLICABLE O NLY TO CO-OPERATIVE SOCIETIES OTHER THAN CO-OPERATIVE SOCIETIES CARRYIN G ON THE BUSINESS OF BANKING AS OBSERVED IN PARA-37 OF ITS JUDGMENT THE PUNE ITAT IN THE CASE OF BHAGANI NIVEDITA SAH BANK LTD. (SUPRA). IN FACT IN PARA-2 OF CIRCULAR NO.9 DATED 11.9.2002, THE CBDT HAS VERY CLEARLY LAI D DOWN THAT CO- OPERATIVE SOCIETIES CARRYING ON BANKING BUSINESS WH EN IT PAYS INTEREST ON DEPOSITS BY ITS MEMBERS NEED NOT DEDUCT TAX AT SOUR CE IN VIEW OF THE PROVISIONS OF SEC.194A(3)(V) OF THE ACT. 17. WE ALSO FIND THAT THE CBDT IN CIRCULAR NO.9 DAT ED 11.9.2002 CLARIFIED CERTAIN ASPECTS WHICH ARE RELEVANT TO THE PRESENT CASE. THE SAME READS THUS: ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 15 CIRCULAR NO.9 OF 2002 SUB : TAX DEDUCTION AT SOURCE UNDER SECTION 194A O F THE INCOME-TAX ACT, 1961 APPLICABILITY OF THE PROVISIO NS IN RESPECT OF INCOME PAID OR CREDITED TO A MEMBER OF CO-OPERAT IVE BANK REG. 11/09/2002 TDS 194A UNDER SECTION 194A OF THE INCOME-TAX ACT, 1961, TAX IS DEDUCTIBLE AT SOURCE FROM ANY PAYMENT OF INCOME BY WAY OF INTE REST OTHER THAN INCOME BY WAY OF INTEREST ON SECURITIES. CLAUS E (V) OF SUB- SECTION (3) OF SECTION 194A EXEMPTS SUCH INCOME CRE DITED OR PAID BY A CO-OPERATIVE SOCIETY TO A MEMBER THEREOF FROM THE REQUIREMENT OF TDS. ON THE OTHER HAND, CLAUSE (VIIA ) OF SUB- SECTION (3) OF SECTION 194A EXEMPTS FROM THE REQUIR EMENT OF TDS SUCH INCOME CREDITED OR PAID IN RESPECT OF DEPOSITS (OTHER THAN TIME-DEPOSITS MADE ON OR AFTER 1ST JULY, 1995) WITH A CO-OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANK ING. 2. REPRESENTATIONS HAVE BEEN RECEIVED IN THE BOARD SE EKING CLARIFICATION AS TO WHETHER A MEMBER OF A CO-OPERAT IVE BANK MAY RECEIVE WITHOUT TDS INTEREST ON TIME DEPOSIT MADE W ITH THE CO- OPERATIVE BANK ON OR AFTER 1ST JULY, 1995. THE BOAR D HAS CONSIDERED THE MATTER AND IT IS CLARIFIED THAT A ME MBER OF A CO- OPERATIVE BANK SHALL RECEIVE INTEREST ON BOTH TIME DEPOSITS AND DEPOSITS OTHER THAN TIME DEPOSITS WITH SUCH CO-OPER ATIVE BANK WITHOUT TDS UNDER SECTION 194A BY VIRTUE OF THE EXE MPTION GRANTED VIDE CLAUSE (V) OF SUB-SECTION (3) OF THE S AID SECTION. THE PROVISIONS OF CLAUSE (VIIA) OF THE SAID SUB-SECTION ARE APPLICABLE ONLY IN CASE OF A NON-MEMBER DEPOSITOR OF THE CO-OP ERATIVE BANK, WHO SHALL RECEIVE INTEREST ONLY ON DEPOSITS OTHER T HAN TIME DEPOSITS MADE ON OR AFTER 1ST JULY, 1995 WITHOUT TDS UNDER S ECTION 194A. 3. A QUESTION HAS ALSO BEEN RAISED AS TO WHETHER NORM AL MEMBERS, ASSOCIATE MEMBERS AND SYMPATHIZER MEMBERS ARE ALSO COVERED BY THE EXEMPTION UNDER SECTION 194A(3)(V). IT IS HEREB Y CLARIFIED THAT THE EXEMPTION IS AVAILABLE ONLY TO SUCH MEMBERS WHO HAVE JOINED IN APPLICATION FOR THE REGISTRATION OF THE CO-OPERA TIVE SOCIETY AND THOSE WHO ARE ADMITTED TO MEMBERSHIP AFTER REGISTRA TION IN ACCORDANCE WITH THE BYE-LAWS AND RULES. A MEMBER EL IGIBLE FOR EXEMPTION UNDER SECTION 194A(3)(V) MUST HAVE SUBSCR IBED TO AND FULLY PAID FOR AT LEAST ONE SHARE OF THE CO-OPERATI VE BANK, MUST BE ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 16 ENTITLED TO PARTICIPATE AND VOTE IN THE GENERAL BOD Y MEETINGS AND/OR SPECIAL GENERAL BODY MEETINGS OF THE CO-OPER ATIVE BANK AND MUST BE ENTITLED TO RECEIVE SHARE FROM THE PROF ITS 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 REFE RRED TO ABOVE THAT THE CBDT HAS VERY CLEARLY LAID DOWN THAT CO-OPERATIVE S OCIETIES CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST ON DEPOSITS BY ITS MEMBERS NEED NOT DEDUCT TAX AT SOURCE. THE ABOVE INTERPRETATION OF THE PROVISIONS BY THE CBDT WHICH IS IN FAVOUR OF THE ASSESSEE, IN OUR VIEW IS BINDING ON THE TAX AUTHORITIES. 19. IN THE CASE DECIDED BY ITAT PANAJI BENCH IN ITA NO.85/PN/2013 FOR AY 09-10 IN THE CASE OF THE BAILHONGAL URBAN CO -OP BANK LTD. VS. JCIT ORDER DATED 28.8.2013, THE TRIBUNAL PROCEEDED ON THE FOOTING THAT THE AFORESAID CIRCULAR HAS BEEN QUASHED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF THE JALGAON DISTRICT CENTRAL CO-OPER ATIVE BANK LTD. VS. UNION OF INDIA 265 ITR 423 (BOM) AND THEREFORE CHOS E TO FOLLOW THE DECISION RENDERED BY PUNE ITAT SMC IN THE CASE OF B HAGANI NIVEDITA SAHAKARI BANK LTD. (SUPRA). IN OUR VIEW THE HONBL E BOMBAY HIGH COURT IN THE CASE OF JALGAON DISTRICT CENTRAL CO-OP ERATIVE BANK LTD.S CASE WAS DEALING WITH A CASE OF CHALLENGE TO PARA-3 OF CBDT CIRCULAR NO.9 DATED 11.9.2002 WHICH TRIED TO INTERPRET THE W ORD MEMBER AS GIVEN IN SEC.194A(3)(V) OF THE ACT. IT IS ONLY THA T PART OF THE CIRCULAR THAT HAD BEEN QUASHED BY THE HONBLE BOMBAY HIGH CO URT AND THE OTHER PARAGRAPHS OF THE CIRCULAR HAD NO CONNECTION WITH T HE ISSUE BEFORE THE HONBLE BOMBAY HIGH COURT. HOW COULD IT BE SAID TH AT THE ENTIRE CIRCULAR HAS BEEN QUASHED BY THE HONBLE BOMBAY HIGH COURT? IN OUR VIEW PARA- 2 OF THE CIRCULAR STILL HOLDS GOOD AND THE CONCLUSI ON OF THE ITAT PUNE BENCH IN THE CASE OF THE BAILHONGAL URBAN CO-OP BAN K LTD.(SUPRA) ARE NOT FACTUALLY CORRECT. CONSEQUENTLY, THE CONCLUSIO NS DRAWN IN THE AFORESAID DECISION ALSO CONTRARY TO FACTS AND HENCE CANNOT BE CONSIDERED AS PRECEDENT. 20. THE LEARNED COUNSEL FOR THE ASSESSEE HAS BROUGH T TO OUR NOTICE THAT THE ITAT VISHAKAPATNAM BENCH IN THE CASE OF THE VIS AKHAPATNAM CO- OPERATIVE BANK ITA NO.5 AND 19 OF 2011 ORDER DATED 29.8.2011 HAS HELD THAT CO-OPERATIVE SOCIETIES CARRYING ON BANKING BUS INESS WHEN IT PAYS INTEREST TO ITS MEMBERS ON DEPOSITS IT NEED NOT DED UCT TAX AT SOURCE IN VIEW OF THE PROVISIONS OF SEC.194A(3)(V) OF THE ACT . SIMILAR VIEW HAS ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 17 ALSO BEEN EXPRESSED BY THE PUNE BENCH OF THE ITAT I N THE CASE OF OZER MERCHANT CO-OPERATIVE BANK ITA NO.1588/PN/2012 ORDE R DATED 30.10.2013. WE MAY ADD THAT IN BOTH THESE DECISION S THE DISCUSSION DID NOT TURN ON THE INTERPRETATION OF SEC.194A(3)(I)(B) OF THE ACT VIS-A-VIS SEC.194A(3)(V) OF THE ACT. IT IS THUS CLEAR THAT TH E PREPONDERANCE OF JUDICIAL OPINION ON THIS ISSUE IS THAT CO-OPERATIVE SOCIETIES CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST TO ITS MEMBE RS 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 A SSESSEE WHICH IS A CO-OPERATIVE SOCIETY CARRYING ON BANKING BUSINESS W HEN IT PAYS INTEREST INCOME TO A MEMBER BOTH ON TIME DEPOSITS AND ON DEP OSITS OTHER THAN TIME DEPOSITS WITH SUCH CO-OPERATIVE SOCIETY NEED N OT DEDUCT TAX AT SOURCE UNDER SECTION 194A BY VIRTUE OF THE EXEMPTIO N 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 CAS E. IN FACT THE CIT(A) IN CANCELLING THE ORDER OF THE AO HAS PLACED RELIANCE ON THE AFORESAID DECISION. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH REFERRED TO ABOVE, WE UPHOLD THE ORDER OF THE CIT(A). 15. AS FAR AS THE CROSS-OBJECTIONS FILED BY THE AS SESSEE ARE CONCERNED, THEY ARE PURELY SUPPORTIVE IN NATURE EXCEPT THAT IN GROUND N O.6 IT HAS BEEN POINTED OUT THAT IN FINANCE ACT, 2015 PROVISIONS OF SEC.194A(3( V) OF THE ACT HAVE BEEN MADE NOT APPLICABLE TO CO-OPERATIVE BANKS BUT THE S AID AMENDMENT IS ONLY PROSPECTIVE FROM 1-6-2015. ACCORDING TO THE ASSESS EE THE AFORESAID AMENDMENT IS A RECOGNITION OF THE EXISTING POSITION OF LAW AS INTERPRETED BY THE ITA NOS.1191 TO 1194/BANG/2014 & C.O.NOS.25 TO 28/B ANG/2015 18 VARIOUS BENCHES OF THE TRIBUNAL IN FAVOUR OF CO-OPE RATIVE BANKS. WE ARE OF THE VIEW SINCE THE C.O.S ARE ONLY SUPPORTIVE THEY ARE N OT MAINTAINABLE AND ARE THEREFORE DISMISSED AS NOT MAINTAINABLE. 16. IN THE RESULT, THE APPEALS OF THE REVENUE AS W ELL AS THE CROSS-OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MARCH, 2015. SD/- SD/- (JASON P BOAZ) (N. V. VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 20 TH MARCH, 2015. DSM COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.