M/s APSRTC Employees Thrift & Credit Society Limited, Hyderabad V. Commissioner of Income Tax (TDS), Hyderabad

ITA 1070/HYD/2014

• Counselvise Citation: 107022514 RSA 2014
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-04-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 29-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Keywords: Non-deduction of tax
• Section: 133A; 201(1); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 1070 /HYD/2014 ASSESSMENT YEAR: 2011-12 M/S APSRTC EMPLOYEES THRIF & CREDIT SOCIETY LTD., HYDERABAD. PAN AAATA3057F VS. COMMISSIONER OF INCOME-TAX OFFICER TDC), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A. SRINIVAS REVENUE BY : SMT. G. APARNA RAO DATE OF HEARING 15-04-2015 DATE OF PRONOUNCEMENT 29-04-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 30/03/2014 PASSED BY LD. CIT (TDS), HYDERABAD U/S 263 OF THE ACT, FOR THE AY 2011-12. 2. BRIEFLY THE FACTS ARE, ASSESSEE A SOCIETY IS REG ISTERED UNDER THE AP STATE COOPERATIVE SOCIETIES ACT, 1964. FOR V ERIFYING ASSESSEES COMPLIANCE TO TDS PROVISIONS, A SURVEY U /S 133A OF THE ACT WAS CONDUCTED ON THE ASSESSEE ON 03/11/2011. IN COURSE OF SURVEY, IT WAS FOUND THAT THE SOCIETY WAS PAYING IN TEREST ON DEPOSITS KEPT WITH IT TO DIFFERENT CATEGORIES OF MEMBERS SUC H AS REGULAR MEMBERS, ASSOCIATE MEMBERS AND NOMINAL MEMBERS. HOW EVER, WHILE MAKING SUCH INTEREST PAYMENTS, ASSESSEE SOCI ETY HAS NOT DEDUCTED TAX AT SOURCE. WHEN ASSESSEE WAS CALLED UP ON TO EXPLAIN THE REASON FOR NOT DEDUCTING TAX ON INTEREST PAYMEN TS, IT WAS SUBMITTED BY ASSESSEE ON THE PRINCIPLE OF MUTUALITY , TDS PROVISIONS ON INTEREST PAYMENTS TO MEMBERS WOULD NOT APPLY IN VIEW OF ITA NO.1070/HYD/2014 M/S. APS RTC EMPLOYEES THRIFT & CREDIT SOCIETY LTD . 2 PROVISION CONTAINED U/S 194A(3)(V) OF THE ACT. AO A FTER EXAMINING THE SUBMISSIONS OF ASSESSEE, FOUND THAT DURING THE RELEVANT YEAR, ASSESSEE HAD 851 REGULAR MEMBERS, 4880 ASSOCIATE ME MBERS AND 47 NOMINAL MEMBERS. HE FURTHER NOTICED THAT WHILE A SSESSEE PAYS INTEREST @ 10% ON THE DEPOSITS RECEIVED FROM REGULA R MEMBERS, IT PAYS 9.5% INTEREST ON THE DEPOSITS RECEIVED FROM AS SOCIATE MEMBERS AND 10% INTEREST ON THE DEPOSITS RECEIVED F ROM NOMINAL MEMBERS. ON GOING THROUGH THE BYE-LAWS OF THE SOCIE TY, AO ALSO FOUND DIFFERENCE IN RIGHTS AND PRIVILEGES BETWEEN R EGULAR MEMBERS ON ONE SIDE AND ASSOCIATE/NOMINAL MEMBERS ON THE OT HER. HE, THEREFORE, OPINED THAT EXEMPTION AS CONTEMPLATED U/ S 194A(3)(V) WOULD APPLY ONLY TO A REGULAR MEMBER AND NOT ASSOCI ATE/NOMINAL MEMBERS. THOUGH, ASSESSEE OBJECTED TO SUCH PROPOSIT ION OF THE AO AND CONTENDED THAT AS THE PROVISION CONTAINED U/S 1 94A(3)(V) ONLY SPEAKS OF MEMBER WITHOUT ANY DIFFERENTIATION, AO CA NNOT MAKE A DIFFERENCE BETWEEN REGULAR MEMBER AND ASSOCIATE/NOM INAL MEMBER WHILE GRANTING EXEMPTION U/S 194A(3)(V) OF THE ACT. ASSESSEE IN SUPPORT OF SUCH CONTENTION, RELIED UPON A DECISION OF THE HONBLE BOMBAY HIGH COURT IN CASE OF JALGAON DISTRICT COOPE RATIVE SOCIETY BANK VS. UNION OF INDIA (265 ITR 423). AO, HOWEVER, DID NOT FIND MERIT IN THE CONTENTIONS OF ASSESSEE. HE OBSERVED THAT MEMBER AS ENVISAGED U/S 194A(3)(V) ONLY REFERS TO A REGULAR M EMBER AND NOT ALL THE MEMBERS OF THE SOCIETY. AS FAR AS CBDT CIR CULAR NO. 9 IS CONCERNED, AO HELD THAT THOUGH IT MAY BE A FACT THA T THE SAID CIRCULAR HAS BEEN QUASHED BY THE HONBLE BOMBAY HIG H COURT, BUT, SINCE THE BOARD HAS NOT WITHDRAWN OR REPEALED THE S AID CIRCULAR, IT IS BINDING ON BOTH ASSESSEE AND REVENUE. HOLDING AS AFORESAID, AO PROCEEDED TO COMPUTE DEMAND U/S 201(1) AND 201(1A), AS UNDER: MEMBER FY 2010-11 INTEREST PAID TAX U/S 201(1) INTEREST U/S 201(1A) ASSOCIATE MEMBER 14,89,26,397 1,48,92,640 35,74,233 NOMINAL MEMBER 14,80,706 1,48,070 35,536 TOTAL 15,04,07,103 1,50,40,710 36,09,769 ITA NO.1070/HYD/2014 M/S. APS RTC EMPLOYEES THRIFT & CREDIT SOCIETY LTD . 3 THUS, AO PASSED THE ORDER ACCORDINGLY ON 30/03/2013 RAISING HE TOTAL DEMAND OF RS. 1,86,50,479. BEING AGGRIEVED OF THE ASSESSMENT ORDER SO PASSED, ASSESSEE PREFERRED APPE AL BEFORE LD. CIT(A). 3. BEFORE THE LD. CIT(A) ASSESSEE REITERATED WHAT W AS STATED BEFORE AO. LD. CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF ASSESSEE AND FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN CASE OF JAGAON DISTRICT COOPERATIVE SOCIET Y LTD.,(SUPRA) HELD AS UNDER: 7.1 THE HONBLE MUMBAI HIGH COURT HAD CLEARLY STATE D THAT THE RIGHTS AND PRIVILEGES OF MEMBERS HAVE GOT NOTHI NG TO DO WITH THE EXEMPTION GRANTED TO MEMBERS U/S 194A(3)(V ) OF THE ACT. THEREAFTER, THE HONBLE COURT HAS QUASHED THE CIRCULAR NO. 9 OF 2002 DATED 11/09/2002. SINCE THE SLP FILED BY THE DEPARTMENT HAS NOT BEEN ADMITTED AND THE HONBLE SU PREME COURT HAS DISPOSED THE SLP (12601-12602 OF 2004) ON 07/07/2004, THE ORDER OF THE MUMBAI HIGH COURT IN T HE CASE OF JALGAON DISTRICT COOPERATIVE BANK LTD. VS. UNION OF INDIA STANDS GOOD AS ON DATE AS PRECEDENT ON THIS ISSUE T HAT NO TDS IS TO BE DEDUCTED ON INTEREST PAYMENTS MADE BY COOPERATIVE SOCIETY TO ITS ASSOCIATE/NOMINAL MEMBER S AND THEY ARE ENTITLED TO THE BENEFIT OF SECTION 194A(3) (V) OF THE ACT. 4. WHEN THE MATTER STOOD LIKE THIS, LD. CIT (TDS) I N EXERCISE OF POWER CONFERRED U/S 263 OF THE ACT, CALLED FOR THE RECORDS OF ASSESSEE AND AFTER EXAMINING THE SAME, WAS OF THE V IEW THAT THE ORDER PASSED BY AO U/S 201 AND 201(1A) IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. ACCORDINGL Y, HE ISSUED A SHOW CAUSE NOTICE TO ASSESSEE ON 14/03/2014 PROPOSI NG TO REVISE THE ASSESSMENT ORDER ON THE FOLLOWING REASONS: 1) WHY THE SOCIETY SHOULD NOT BE TREATED AS COOPERA TIVE BANK AND WHICH IS IN THE BUSINESS OF BANKING AND WHICH I S LIABLE TO DEDUCT TAX U/S 194A(3) OF THE IT ACT. 2) THE AO HAS DIFFERENTIATED BETWEEN REGULAR MEMBER AND NOMINAL AND ASSOCIATE MEMBER. BUT THE IT ACT DOES N OT DIFFERENTIATE BETWEEN ANY CATEGORIES OF MEMBER. THE DIFFERENTIATION BETWEEN THE MEMBER HAS RESULTED IN THE NON- COMPLIANCE TO THE TDS PROVISION RESULTING IN THE LO SS OF REVENUE. ITA NO.1070/HYD/2014 M/S. APS RTC EMPLOYEES THRIFT & CREDIT SOCIETY LTD . 4 5. IN RESPONSE TO THE SHOW CAUSE NOTICE, ASSESSEE S UBMITTED ITS REPLY OBJECTING TO THE INITIATION OF PROCEEDING U/S 263 OF THE ACT BY STATING THAT ASSESSMENT ORDER CANNOT BE REVISED AS THE ISSUE ON WHICH SECTION 263 IS INVOKED HAS ALREADY MERGED WIT H THE ORDER PASSED BY LD. CIT(A). FURTHER, IT WAS SUBMITTED BY ASSESSEE THAT THE ASSESSMENT ORDER PASSED CANNOT BE CONSIDERED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE AS MERE NON-DEDUCTION OF TAX AT SOURCE DOES NOT RESULT IN ANY LOSS OF REVENU E SINCE TAX CAN BE RECOVERED FROM THE DEDUCTEE. FURTHER, ASSESSEE SUBM ITTED THAT OBSERVATION OF LD. CIT THAT ASSESSEE SHOULD BE TREA TED AS COOPERATIVE BANK WOULD NOT MAKE ANY DIFFERENCE AS A O HAS ALREADY RAISED THE DEMAND OF RS. 1,86,50,479. SINCE THE RAT E OF TAX DOES NOT CHANGE INTER-SE BETWEEN COOPERATIVE BANK AND CO OPERATIVE SOCIETY, THERE IS NOTHING PREJUDICIAL OR ERRONEOUS IN THE ORDER OF AO. IT WAS ALSO SUBMITTED THAT REGULAR AO FROM THE INCE PTION HAS COMPLETED ASSESSMENT BY ACCEPTING ASSESSEE AS A COO PERATIVE SOCIETY, HENCE, CIT (TDS) EXERCISING POWER U/S 192 TO 197 CANNOT CHANGE THE STATUS OF ASSESSEE. FINALLY, IT WAS SUB MITTED BY ASSESSEE THAT AT THE TIME OF ASSESSMENT AO HAS GONE IN DEPTH INTO THE ISSUE BY EXAMINING THE BYE-LAWS AND DIFFERENT C ATEGORIES OF MEMBERS OF SOCIETY. AFTER FULLY GOING INTO THE FACT S AND MATERIALS ON RECORD AND APPLYING HIS MIND, AO TOOK A CONSCIOUS V IEW THAT THE PROVISIONS OF SECTION 194A(3)(V) WOULD APPLY TO RE GULAR MEMBERS AND NOT TO ASSOCIATE/NOMINAL MEMBERS. THEREFORE, WH EN AO HAS EXAMINED THE ISSUE AND APPLIED HIS MIND AND COME TO A CONCLUSION AFTER INTERPRETING THE STATUTORY PROVISION AS WELL AS KEEPING IN VIEW THE DECISIONS PLACED BEFORE HIM, THE VIEW TAKEN BY HIM CANNOT BE CONSIDERED TO BE ERRONEOUS ONLY BECAUSE LD. CIT DOE S NOT AGREE WITH SUCH VIEW. 6. LD. CIT AFTER CONSIDERING THE SUBMISSIONS OF ASS ESSEE, HOWEVER, WAS NOT CONVINCED WITH THE SAME. HE WAS OF THE VIEW THAT AO WENT WRONG IN DIFFERENTIATING BETWEEN THE REGULA R MEMBER ON THE ONE HAND AND ASSOCIATE/NOMINAL MEMBER ON THE OTHER. HE OBSERVED THAT SECTION 194A OF THE ACT APPLIES TO INTEREST PA ID TO ALL THE ITA NO.1070/HYD/2014 M/S. APS RTC EMPLOYEES THRIFT & CREDIT SOCIETY LTD . 5 MEMBERS IRRESPECTIVE OF THEIR STATUS. FURTHER, LD. CIT NEGATING ASSESSEES CLAIM THAT EXEMPTION PROVIDED U/S 194A( 3)(V) APPLIES TO ASSESSEE, OBSERVED THAT SINCE ASSESSEE IS INVOLVED IN BANKING BUSINESS, PROVISIONS CONTAINED U/S 194A(3)(VIIA) WO ULD APPLY RATHER THAN SECTION 194A(3)(V) OF THE ACT. AS FAR AS ASSE SSEES CONTENTION THAT JURISDICTION INVOKED U/S 263 WILL NOT LIE AS T HE ASSESSMENT ORDER HAS ALREADY MERGED WITH THE ORDER OF LD. CIT(A), LD . CIT OBSERVED THAT THE SUBJECT MATTER OF APPEAL BEFORE LD. CIT(A) WAS LIMITED TO THE DEMAND RAISED U/S 201(1) & (1A) FOR NON-DEDUCTION O F TAX ON INTEREST PAID TO ASSOCIATE/NOMINAL MEMBERS. LD. CIT OBSERVED THAT AO SHOULD NOT HAVE MADE DIFFERENCE BETWEEN REGULAR AND ASSOCIATE/NOMINAL MEMBERS FOR THE PURPOSE OF EXEMPT ING ASSESSEE FROM THE LIABILITY TO DEDUCT TDS IN RESPECT OF INTE REST PAID TO REGULAR MEMBERS. HE HELD THAT AS AO TREATED THE REGULAR ME MBERS AS A DIFFERENT CATEGORY THEREBY DIFFERENTIATING THEM FRO M ASSOCIATE/NOMINAL MEMBERS, THE ORDER PASSED BY HIM IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. THUS, LD. CIT SET ASIDE THE ORDER PASSED BY AO AND DIRECTED HIM TO REDO THE ASSESSMENT BY COMPUTING CORRECT LIABILITY U/S 201(1) AND 201(1A). IN OTHER WORDS, HE DIRECTED AO TO RECOMPUTE THE LIABILITY U/S 201(1 ) AND 201(1A) IN SO FAR AS INTEREST PAYMENTS MADE TO REGULAR MEMBER S. 7. LD. AR SUBMITTED BEFORE US, THE ISSUE OF LIABILI TY TO DEDUCT TAX AT SOURCE ON THE MEMBERS OF ASSESSEE SOCIETY STOOD CONCLUDED IN THE ORDER PASSED BY LD. CIT(A) WHILE DECIDING ASSES SEES APPEAL AGAINST THE ASSESSMENT ORDER. HE SUBMITTED, LD. CIT (A) HAVING GIVEN CATEGORICAL FINDING THAT NO DIFFERENTIATION CAN BE MADE BETWEEN THE DIFFERENT CATEGORIES OF MEMBERS OF A COOPERATIVE SO CIETY IN SO FAR AS APPLICABILITY OF SECTION 194A(3)(V) IS CONCERNED, ASSESSMENT ORDER GOT MERGED WITH THE ORDER OF THE LD. CIT(A), HENCE, LD. CIT COULD NOT HAVE INVOKED HIS POWER U/S263 OF THE ACT TO REVISE THE ASSESSMENT ORDER. IN THIS CONTEXT, HE RELIED UPON THE FOLLOWIN G DECISIONS: 1. PARMINDER SINGH VS. ACIT, 151 TTJ 633 (AMRITSAR ) 2. K SERA SERA PRODUCTIONS VS. CIT, 54 SOT 157 (URO ) MUMBAI. 3. SONAL GARMENTS VS. JCIT, 95 ITD 366 (MUMBAI) ITA NO.1070/HYD/2014 M/S. APS RTC EMPLOYEES THRIFT & CREDIT SOCIETY LTD . 6 LD. AR FURTHER SUBMITTED, EVEN OTHERWISE, ALSO, AO AFTER EXAMINING THE ENTIRE FACTS AND MATERIALS ON RECORD, VIS--VIS BYE-LAWS OF THE SOCIETY AND KEEPING IN VIEW RELEVANT STATUTORY PROV ISIONS HAS COME TO A CONSCIOUS DECISION THAT EXEMPTION PROVISIONS O F SECTION U/S 194A(3)(V) WOULD APPLY TO REGULAR MEMBERS AND NOT ASSOCIATE/NOMINAL MEMBERS. THEREFORE, AO HAVING TAK EN A VIEW AFTER PROPER APPLICATION OF MIND, ASSESSMENT ORDER CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF RE VENUE ONLY BECAUSE LD. CIT DOES NOT AGREE WITH SUCH VIEW. FURT HER, CHALLENGING THE OBSERVATION THAT ASSESSEE SHOULD BE TREATED AS A BANKING COMPANY AND NOT COOPERATIVE SOCIETY, LD. AR SUBMITT ED, ASSESSEES STATUS HAVING ALREADY BEEN ACCEPTED AS A COOPERATIV E SOCIETY BY THE REGULAR, AO WHO COMPLETED ASSESSMENT U/S 143(3), TH E TDS OFFICER CANNOT CHANGE THE STATUS OF THE ASSESSEE TO A BANKI NG COMPANY. LD. AR REFERRING TO THE DECISION OF THE HONBLE BOM BAY HIGH COURT IN CASE OF JALGAON DISTRICT COOPERATIVE SOCIETY (SU PRA), SUBMITTED THAT THE ISSUE IN DISPUTE STANDS SQUARELY COVERED B Y THE SAID DECISION AS THE COURT AFTER EXAMINING THE PROVISION S OF SECTION 194A(3)(V) HAS CLEARLY HELD THAT NO DIFFERENTIATION BETWEEN MEMBERS CAN BE MADE WHILE APPLYING THE SAID EXEMPTION PROVI SIONS. THUS, IT WAS SUBMITTED BY LD. AR, ORDER PASSED U/S 263 DESER VES TO BE QUASHED/SET ASIDE. 8. LD. DR, ON THE OTHER HAND, SUPPORTING THE ORDER OF LD. CIT SUBMITTED BEFORE US, THE ORDER PASSED BY AO IS ERRO NEOUS AND PREJUDICIAL SINCE HE FAILED TO BRING TO TAX THE INT EREST PAYMENT MADE TO REGULAR MEMBERS WITHOUT DEDUCTION OF TAX AT SOUR CE. LD. DR SUBMITTED, WHEN THE PROVISION OF THE ACT DOES NOT P ROVIDE FOR DIFFERENTIATION BETWEEN MEMBERS OF A COOPERATIVE SO CIETY, AO CANNOT DO SO WHILE APPLYING TDS PROVISIONS. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO CAREFU LLY APPLIED OUR MIND TO THE DECISIONS RELIED UPON. . THE CONTENTION OF LD. AR IS TWO FOLD. FIRSTLY, HE HAS CHALLENGED THE JURISDICTION OF THE LD. CIT IN ITA NO.1070/HYD/2014 M/S. APS RTC EMPLOYEES THRIFT & CREDIT SOCIETY LTD . 7 INVOKING SECTION 263 ON THE DOCTRINE OF MERGER. AS CAN BE SEEN FROM THE FACTS ON RECORD, IN COURSE OF ASSESSMENT P ROCEEDING, ASSESSEE DEFENDED ITSELF BY CONTENDING THAT TAX WAS NOT DEDUCTIBLE AT SOURCE ON INTEREST PAYMENT TO ANY MEMBER AS PROV ISION CONTAINED U/S 194A(3)(V) EMPLOYS THE TERM MEMBER, THEREFORE , NO DIFFERENTIATION CAN BE MADE BETWEEN THE MEMBERS WHI LE APPLYING THE SAID PROVISION. THOUGH, AO DID NOT ACCEPT THIS CONTENTION AND HELD THAT EXEMPTION APPLIES ONLY IN CASE OF REGULAR MEMBERS, HOWEVER, LD. CIT(A) ACCEPTED ASSESSEES CLAIM THA T EXEMPTION PROVISION AS CONTEMPLATED U/S 194A(3)(V) WOULD APPL Y NOT ONLY TO REGULAR MEMBERS BUT ALSO TO OTHER MEMBERS LIKE ASSO CIATE/NOMINAL MEMBERS. WHILE DOING SO, LD. CIT(A) HAS FOLLOWED TH E DECISION OF THE HONBLE BOMBAY HIGH COURT IN CASE OF JALGAON DI STRICT COOPERATIVE SOCIETY (SUPRA). ON CAREFUL ANALYSIS OF THE SAID DECISION, IT IS VERY MUCH CLEAR THAT HONBLE BOMBA Y HIGH COURT WHILE QUASHING THE CBDT CIRCULAR NO. 09 OF 2002 DT. 11/09/2002 IN NO UNCERTAIN TERMS HELD THAT EXEMPTION GRANTED TO A COOPERATIVE SOCIETY U/S 194A(3)(V) CANNOT BE TAKEN AWAY BY CREA TING A DISTINCTION BETWEEN DIFFERENT CATEGORIES OF MEMBERS . IT IS FURTHER EVIDENT, SLP FILED BY THE DEPARTMENT AGAINST THE AF ORESAID JUDGMENT OF THE HONBLE BOMBAY HIGH COURT WAS ALSO DISMISSED BY THE HONBLE SUPREME COURT. THUS, AS PER THE DECISION O F THE HONBLE BOMBAY HIGH COURT AS AFORESAID, WHICH WAS ALSO FOLL OWED BY LD. CIT(A), NO DIFFERENTIATION CAN BE MADE BETWEEN THE MEMBERS OF A COOPERATIVE SOCIETY WHILE APPLYING THE EXEMPTION PR OVISION OF SECTION 194A(3)(V) OF THE ACT. IN FACT, LD. CIT HIM SELF WHILE ISSUING NOTICE U/S 263 AS WELL AS IN MORE THAN ONE PLACE IN THE IMPUGNED ORDER HAS HELD THE ASSESSMENT ORDER PASSED TO BE ER RONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE ON THE REAS ONING THAT NO DIFFERENTIATION BETWEEN MEMBERS CAN BE MADE WHILE A PPLYING TDS PROVISION U/S 194A(3). THUS, APPLYING THE SAME LOG IC, IT IS TO BE HELD THAT LD. CIT(A)S ORDER HOLDING THAT INTEREST PAYMENT TO ASSOCIATE/NOMINAL MEMBERS IS EXEMPT FROM DEDUCTION OF TAX AT SOURCE IN VIEW OF SECTION 194A(3)(V) WOULD ALSO IMP LIEDLY APPLY TO THE REGULAR MEMBERS AS SHE CAME TO SUCH CONCLUSION ON THE ITA NO.1070/HYD/2014 M/S. APS RTC EMPLOYEES THRIFT & CREDIT SOCIETY LTD . 8 PRINCIPLE THAT NO DIFFERENTIATION CAN BE MADE BETWE EN MEMBERS OF THE COOPERATIVE SOCIETY. THAT BEING THE CASE, ORDER PASSED BY LD. CIT(A) ALSO COVERS THE ISSUE OF APPLICATION OF SECT ION 194A(3)(V) TO REGULAR MEMBERS ALSO. EXPLANATION C TO SECTION 2 63(1) CLEARLY SPELLS OUT THAT LD. CIT CAN EXERCISE HIS POWER U/S 263 TO AN ISSUE WHICH IS NOT CONTESTED AND DECIDED IN APPEAL PROCEE DING. THEREFORE, AS IN THE PRESENT CASE, THE ISSUE IN DISPUTE IS CLE ARLY THE SUBJECT MATTER OF APPEAL BEFORE LD. CIT(A) AND A DECISION H AS ALREADY BEEN RENDERED BY LD. CIT(A) MUCH PRIOR TO THE EXERCISE O F POWER U/S 263 OF THE ACT, IN OUR VIEW, ASSESSMENT ORDER HAS MERGE D WITH THE ORDER OF LD. CIT(A), HENCE, COULD NOT HAVE BEEN REVISED B Y INVOKING THE PROVISIONS OF SECTION 263. THEREFORE, THE EXERCISE OF POWER U/S 263 IS INVALID. 10. EVEN OTHER WISE ALSO, WE FIND MERIT IN THE SECO ND CONTENTION OF LD. AR THAT AO HAVING EXAMINED THE ISSUE IN DEPT H AND TAKEN A CONSCIOUS DECISION THAT REGULAR MEMBERS ARE COVERED U/S 194A(3)(V) OF THE ACT, LD. CIT COULD NOT HAVE INVOKED THE PROV ISIONS OF SECTION 263 TO REVISE THE ASSESSMENT ORDER. AS STATED HEREI NABOVE, ASSESSEE CLAIMED BEFORE AO THAT INTEREST PAYMENTS T O MEMBERS OF THE COOPERATIVE SOCIETY ARE EXEMPT FROM DEDUCTION A T SOURCE BY VIRTUE OF SECTION 194A(3)(V) OF THE ACT. AO, HOWEV ER, AFTER EXAMINING BYE-LAWS AND PRIVILEGES AND STATUS OF DIF FERENT CATEGORIES OF MEMBERS CAME TO A CONCLUSION THAT ONLY REGULAR M EMBERS ARE EXEMPTED U/S 194A(3)(V) OF THE ACT. THEREFORE, SINC E THE AO AFTER EXAMINING THE FACTS AND MATERIALS ON RECORD VIS--V IS STATUTORY PROVISIONS TOOK A CONSCIOUS DECISION THAT TDS PROVI SIONS WOULD NOT APPLY TO THE INTEREST PAYMENTS TO REGULAR MEMBERS I N VIEW OF THE PROVISIONS OF SECTION 194A(3)(V) AND WHEN SUCH DEC ISION IS ALSO ONE OF THE POSSIBLE VIEW, CONSIDERING THE RATIO LAI D DOWN BY THE HONBLE BOMBAY HIGH COURT IN CASE OF JALGAON DISTRI CT COOPERATIVE SOCIETY (SUPRA), ASSESSMENT ORDER CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE ONLY BE CAUSE SUCH VIEW IS NOT ACCEPTABLE TO LD. CIT. IN THE AFORESAID VIEW OF THE MATTER, WE HAVE NO HESITATION IN HOLDING THAT POWER EXERCISED U/S 263 OF THE ITA NO.1070/HYD/2014 M/S. APS RTC EMPLOYEES THRIFT & CREDIT SOCIETY LTD . 9 ACT IN THE PRESENT CASE FOR REVISING THE ASSESSMENT ORDER IS INVALID AND NOT IN ACCORDANCE WITH LAW. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER OF LD. CIT AND RESTORE THE ORDER PAS SED BY AO. 11. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2015 SD/- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 29 TH APRIL, 2015 KV COPY TO:- 1) M/S APSRTC EMPLOYEES THRIFT & CREDIT SOCIETY LT D., SATYANARAYANA REDDY MARG., AZAMBAD, HYDERABA D 500 020 2) CIT (TDS), HYDERABAD 3) ACIT, CIRCLE 14(1), HYDERABAD 4) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.