M/s the Raddi Sahakara Bank Niyamitha, Dharwad V. Income Tax Officer, Hubli

ITA 368/BANG/2015

• Counselvise Citation: 36821114 RSA 2015
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 13-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR JT
• Assessee Lawyers: MRS SHEETAL BORKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ , ACCOUNTANT MEMBER SP NOS.51 & 52/BANG/2015 AND ITA NOS.368 & 369/BANG/2015 ASSESSMENT YEARS : 2010-11 & 2011-12 M/S THE RADDI SAHAKARA BANK NIYAMITHA, HEAD OFFICE, BANK ROAD, DHARWAD 580 001. PAN: AAAAT 3297K VS. THE INCOME TAX OFFICER, TDS WARD, HUBLI. APPELLANT RESPONDENT APPELLANT BY : MRS. SHEETAL BORKAR, ADVOCATE RESPONDENT BY : SHRI P. DHIVAHAR, JT. CIT(DR) DATE OF HEARING : 02.07.2015 DATE OF PRONOUNCEMENT : 10.07.2015 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THE APPEALS IN ITA NOS.368 & 369/BANG/2015 ARE FI LED BY THE ASSESSEE AGAINST THE COMMON ORDER DATED 10.2.2015 O F THE CIT(APPEALS), HUBLI RELATING TO ASSESSMENT YEARS 2010-11 & 2011-1 2. ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 2 OF 17 2. THESE APPEALS ARISE OUT OF ORDERS PASSED BY THE AO U/S.201(1) & 201(1A) OF THE INCOME TAX ACT, 1961 (THE ACT). T HE MAIN GRIEVANCE PROJECTED BY THE ASSESSEE IN THESE APPEALS IS AGAIN ST THE CONCLUSION OF THE REVENUE AUTHORITIES THAT THE THERE WAS AN OBLIGATIO N ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE ON PAYMENTS MADE T O MEMBERS ON TIME AND OTHER DEPOSITS WHERE THE PAYMENT EXCEEDED RS.10 ,000 PER ANNUM IN THE CASE OF EACH OF SUCH DEPOSITOR U/S.194A OF THE ACT. 3. THE ASSESSEE IS A CO-OPERATIVE BANK CARRYING ON THE BUSINESS OF BANKING. IN THE COURSE OF PROCEEDINGS U/S.201(1) & 201(1A) OF THE ACT, THE AO NOTICED THAT THE ASSESSEE HAD PAID INTEREST ON DEPOSITS FROM MEMBERS AND PAYMENT TO EACH OF THE DEPOSITORS EXCEEDED A SU M OF RS.10,000/- FOR BOTH THE ASSESSMENT YEARS. 4. THE AO WAS OF THE VIEW THAT AS PER THE PROVISION S OF SEC.194A(1) OF THE ACT, THE ASSESSEE WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF INTEREST OTHER THAN INCOME BY WAY OF INTEREST ON SECURITIES, 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 C ASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCTED INCOME-TAX THEREON AT THE RATES IN FORCE. ADMITTED LY THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE ON THE PAYMENT OF INTEREST ON THE DEPOSITS TO MEMBERS. THE AO ACCORDINGLY INITIATED PROCEEDINGS AGAINST THE ASSESSEE FOR TREATING THE ASSESSEE AS AN ASSESSEE IN DEFAULT U/S.201(1) OF THE ACT ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 3 OF 17 FOR TAXES NOT DEDUCTED AT SOURCE AND ALSO PROCEEDIN GS FOR LEVY OF INTEREST ON TAXES NOT DEDUCTED U/S.201(1A) OF THE ACT. 5. THE RELEVANT PROVISIONS OF SEC.194A OF THE ACT, 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 INCOME BY WAY OF INTEREST OTHER THAN INCOME BY WAY OF INTERES T 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 : (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 CREDITED OR PAID DURING THE FINANCIAL YEAR BY THE PERSON REFERRED TO IN SUB-SECTION (1) TO THE ACCOUN T 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, REFERRE D TO IN SECTION 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: .. ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 4 OF 17 (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 O F, (A) DEPOSITS WITH A PRIMARY AGRICULTURAL CREDIT SOC IETY OR A PRIMARY CREDIT SOCIETY OR A CO-OPERATIVE LAND MORTG AGE 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 T HAN A CO- OPERATIVE SOCIETY OR BANK REFERRED TO IN SUB-CLAUSE (A), ENGAGED IN CARRYING ON THE BUSINESS OF BANKING; 6. 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 C ARRYING ON THE BUSINESS OF BANKING AND NOT A CO-OPERATIVE BANK. IN THIS REGAR D THE ASSESSEE 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 SOCIETIE S ; 7. THE ASSESSEE DREW ATTENTION OF THE ASSESSING OFF ICER TO THE SEC.194A(3)(V) OF THE ACT AND SUBMITTED THAT CO-OPE RATIVE SOCIETIES HAVE NO OBLIGATION TO DEDUCT TAX AT SOURCE ON INTEREST P AID TO MEMBERS. THE ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 5 OF 17 ASSESSEE THUS TOOK A STAND THAT THE ENTIRE SUM SOUG HT TO BE DISALLOWED WAS PAYMENT OF INTEREST TO MEMBERS AND THEREFORE TH ERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE IN VIEW OF THE PROVISIONS O F SEC.194A(3)(V) OF THE ACT. THE ASSESSEE ALSO DREW ATTENTION OF THE AO TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT 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 SOCIETIES CHALLENGED CIRCULAR NO. 9 OF 2002 DATED 11 TH SEPT. 2002 ISSUED BY THE CBDT IN THE CONTEXT OF OBL IGATION TO DEDUCT TAX AT SOURCE BY CO-OPERATIVE SOCIETIES. AS WE HAVE ALREA DY SEEN THAT SEC. 194A OF THE IT ACT, 1961, DEALS WITH INTEREST OTHER THAN INTEREST ON SECURITIES. SUB-S. (1) OF S. 194A MANDATES DEDUCTION OF INCOME : TAX AT SOURCE IN RESPECT OF THE INCOME BY WAY OF INTEREST WHEREAS SU B-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 SUC H INCOME CREDITED OR PAID BY THE CO-OPERATIVE SOCIETY TO A MEMBER THEREO F OR TO ANY OTHER CO- OPERATIVE SOCIETY. THE WORD 'MEMBER' USED IN SEC.19 4A(3)(V) OF THE ACT ACCORDING TO THE PETITIONER WAS WITHOUT ANY WORDS O F LIMITATION. THE PETITIONERS CONTENDED THAT THE EXPRESSION 'MEMBER' IS DEFINED IN S. 2(19) OF THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960. T HE SAID DEFINITION OF 'MEMBER' INCLUDES NOMINAL, ASSOCIATE OR SYMPATHISER MEMBER ALSO. UNDER CIRCULAR NO. 9 OF 2002, ISSUED BY THE CBDT, IT IS A N ACCEPTED FACT THAT THE PROVISIONS OF TDS ARE NOT ENFORCEABLE IN RESPECT OF INTEREST PAID BY THE CO- OPERATIVE SOCIETY/BANK TO ITS MEMBERS OR CO-OPERATI VE SOCIETIES. BUT THE ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 6 OF 17 CIRCULAR MANDATED THAT TDS HAS TO BE DEDUCTED FROM THE INTEREST PAID TO MEMBERS WHO HAVE JOINED IN APPLICATION FOR THE REGI STRATION OF CO-OPERATIVE SOCIETY AND THOSE WHO ARE ADMITTED TO THE MEMBERSHI P AFTER REGISTRATION IN ACCORDANCE WITH THE 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-OPERATIVE BANK, MUST BE E NTITLED TO PARTICIPATE AND VOTE IN GENERAL BODY MEETING OR SPECIAL GENERAL BOD Y MEETING OF THE CO- OPERATIVE BANK AND MUST BE ENTITLED TO RECEIVE SHAR E FROM THE PROFITS OF THE CO-OPERATIVE BANK. ACTING UPON THE AFORESAID CIRCUL AR 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 SOCIE TY TO SUCH MEMBERS WHO HOLD SHARES AND HAVE A RIGHT TO VOTE IN GENERAL BODY AND ENTITLED TO SHARE OF PROFITS OF THE CO-OPERATIVE SOCIETY. ACCOR DINGLY PAYMENT OF INTEREST BY A CO-OPERATIVE SOCIETY TO A MEMBER WHO IS A NOMI NAL MEMBER OR SYMPATHISER MEMBER WERE HELD BY THE AO TO BE SUBJEC T TO DEDUCTION OF TAX AT SOURCE, IF SUCH PAYMENT TO EACH MEMBER EXCEEDED RS.10,000 IN A YEAR. 8. 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 CHALLENGE D THE CIRCULAR ISSUED BY CBDT. THE CBDT HAS ISSUED THE CIRCULAR BY VIRTUE OF S. 119 OF THE IT ACT, ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 7 OF 17 1961. THE PETITIONER HAS FOUND FAULT WITH THE AUTHO RITY OF CBDT. THE POWER WHICH HAS BEEN ASSUMED BY CBDT, DOES NOT IN FACT SP RING FROM S. 119 OF THE IT ACT, 1961. NO DOUBT, S. 119 OF THE ACT EMPOW ERS THE CBDT TO ISSUE INSTRUCTIONS TO THE SUBORDINATE AUTHORITIES FOR PRO PER ADMINISTRATION OF THE ACT. HAVING BEEN AGGRIEVED BY THE IMPUGNED CIRCULAR CO-OPERATIVE SOCIETIES FILED WRIT PETITION UNDER ART. 226 R/W ART. 227 OF THE CONSTITUTION OF INDIA AND THEREBY CHALLENGED THE VALIDITY OF THE IMPUGNED CIR CULAR AND THE COMPETENCY OF CBDT TO ISSUE A CIRCULAR CONTRARY TO THE PROVISIONS OF SEC.194A(3)(V) OF THE ACT. THE HONBLE BOMBAY HIGH COURT HELD THAT SEC. 194A(3)(V) GRANTS AN EXEMPTION FROM TDS TO INCOME C REDITED OR PAID BY THE CO-OPERATIVE SOCIETY TO A MEMBER THEREOF OR TO ANY OTHER CO-OPERATIVE SOCIETY. CLAUSE (V) OF SUB-S. (3) OF S. 194A IS VER Y LUCID AND CLEAR IN ITS TERMS WHICH SUGGESTS THAT THE PROVISIONS RELATING T O 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 I S WITHOUT ANY WORDS OF LIMITATION. THE EXPRESSION 'MEMBER' IS NOT DEFINED IN THE IT ACT, 1961. A CO-OPERATIVE SOCIETY HAS TO BE ESTABLISHED UNDER TH E PROVISIONS OF LAW MADE BY THE STATE LEGISLATURE. THE DEFINITION OF EX PRESSION 'MEMBER' IS GIVEN UNDER S. 2(19) OF THE MAHARASHTRA CO-OPERATIV E SOCIETIES ACT, 1960. AS PER THE DEFINITION, 'MEMBER' MEANS A PERSON JOIN ING AN APPLICATION FOR REGISTRATION OF A CO-OPERATIVE SOCIETY, WHICH IS SU BSEQUENTLY REGISTERED OR A PERSON DULY ADMITTED TO MEMBERSHIP OF A SOCIETY AFT ER REGISTRATION AND INCLUDES A NOMINAL, ASSOCIATE OR SYMPATHIZER MEMBER . THERE IS NO ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 8 OF 17 DISTINCTION BETWEEN DULY REGISTERED MEMBER AND NOMI NAL, ASSOCIATE AND SYMPATHIZER MEMBER. THE IMPUGNED CIRCULAR ISSUED BY CBDT, WHICH IS IN THE FORM OF CLARIFICATION WITH REGARD TO RIGHTS AND PRIVILEGES OF A DULY REGISTERED MEMBER AND NOMINAL MEMBER IS OUTSIDE 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 PRESCRIBED MANNER. CBDT IS EMPOWERED TO ISSUE ONLY ADMINISTRATIVE INSTRUCTI ONS 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 EXEMPTIO N CLAUSE UNDER S. 194A(3)(V), CANNOT BE IMPORTED TO DEPRIVE THE EXEMP TION 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 AU THORITY AND HAS ISSUED THE IMPUGNED CIRCULAR DIRECTLY IN CONFLICT W ITH THE PROVISIONS CONTAINED IN S. 194A(3)(V). SEC. 119 DOES NOT AT AL L SUPPORT THE ACTION OF CBDT. CBDT HAS 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, CANNOT EXERCISE WIDER POW ERS THAN THE POWERS BESTOWED ON IT. THE CBDT HAS NO POWER 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. THE IMPUGNED CIRCULAR, THEREFORE, DOES NOT ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 9 OF 17 STAND TO THE LEGAL TEST. THE IMPUGNED CIRCULAR NO. 9 OF 2002, DT. 11TH SEPT., 2002 WAS ACCORDINGLY QUASHED AND SET ASIDE. 9. THE ASSESSEE THUS SUBMITTED THAT THERE WAS NO OB LIGATION ON ITS PART TO DEDUCT TAX AT SOURCE ON THE AFORESAID SUMS WHICH WAS INTEREST PAID TO ITS MEMBERS. 10. 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 DI FFERENT CO-OPERATIVE SOCIETIES DEPENDING UPON THE NATURE OF A PARTICULAR CO-OPERATIVE SOCIETY. ACCORDING TO THE AO, SEC.194A(3)(V) OF TH E ACT WAS A GENERAL PROVISION GRANTING BENEFIT TO ALL CO-OPERAT IVE SOCIETIES. 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 HELD THAT SPECIFIC PROVISIONS WILL OVERRIDE GENE RAL 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 MEMB ER 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 OTH ER WORDS, WHEREVER THE PROVISION APPLIES TO A CO-OPERATIVE BANK, THERE IS SPECIFIC MENTION TO THAT EFFECT. IN ALL OTHER PLACES, IT CAN BE INFERRED THAT THE TERM 'CO-OPERATIVE SOCIETY' DOES NOT INCLUDE CO-OPE RATIVE BANKS. THIS KIND OF PRESUMPTION IS REQUIRED TO BE MADE BECAUSE, AS DEMONSTRATED BY THE AO, THERE ARISES A CONFLICT BET WEEN TWO PROVISIONS VIZ., CL. (V) AND CL. (VIIA), IF SUCH IN TERPRETATION IS NOT ADOPTED. THE CO-OPERATIVE SOCIETY AS MENTIONED IN C L. (V) IS A GENERAL SPECIES, WHEREAS THE OTHER FIVE CATEGORIES OF CO-OPERATIVE SOCIETIES WHICH ARE SPECIFICALLY REFERRED TO IN OTH ER PROVISIONS ARE SPECIFIC CO-OPERATIVE SOCIETIES, MEANING THEREBY, T HEY ARE SPECIFIC SPECIES. IT IS A SETTLED PRINCIPLE OF INTERPRETATIO N THAT WHEN A CONFLICT ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 10 OF 17 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 O F 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 ABO VE FROM THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CA SE OF MOOLAMATTOM ELECTRICITY BOARD EMPLOYEES' CO-OPERATI VE BANK LTD. VS. ITO 238 ITR 630 (KER). 3. IN THE CASE OF MOOLAMATTOM ELECTRICITY BOARD EM PLOYEES 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 INCOME CREDITED OR PAID BY A CO-OPERATIVE SOCIETY TO A MEM BER WHEREAS SUB- S. (3)(VIIA)(A) PROVIDES A TOTAL EXEMPTION TO DEPOS ITS WITH THE PRIMARY CREDIT SOCIETY. PETITIONERS ARE PRIMARY CREDIT SOCI ETIES AND, THEREFORE, THERE IS EXEMPTION TOWARDS DEDUCTION IN RESPECT OF INCOME CREDITED OR PAID FOR THE DEPOSITS. THEIR CLAIM OF EXEMPTION IS REINFORCED AND MADE CLEAR BY A READING OF SUB-S. (3)(VIIA)(B) WHER EIN DEPOSITS WITH THE PRIMARY CREDIT SOCIETY REFERRED IN SUB-CL. (A) ENGAGED IN CARRYING ON THE BUSINESS ACTIVITY ARE EXEMPTED. THE HONBLE KERALA HIGH COURT ACCEPTED THEIR PLEA AND IN THEIR JUDGMENT HAV E OBSERVED THAT SEC.194A (3)(I) EXEMPTION LIMIT OF RS. 10,000 TO IN TEREST PAID ON TIME DEPOSITS WITH CO-OPERATIVE SOCIETIES ENGAGED IN CAR RYING ON BUSINESS OF BANKING IS ALLOWED BUT THAT DOES NOT MEAN THAT A LL CO-OPERATIVE SOCIETIES WHO HAVE CREDITED OR PAID EXCEEDING RS. 1 0,000 ARE LIABLE TO DEDUCT TAX AT SOURCE. THE COURT HELD THAT CO-OP ERATIVE SOCIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING AND PRIM ARY CREDIT SOCIETIES STAND ON DIFFERENT FOOTING AND BELONG TO DIFFERENT CLASS. 4. IN PARA-37 OF ITS JUDGMENT THE PUNE ITAT IN THE CASE 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 E XEMPTION UNDER S. 194A(3)(VIIA)(B) IS AVAILABLE TO PRIMARY CREDIT CO-OPERATIVE SOCIETY AND SAID SOCIETY CANNOT BE CLASSIFIED OR EQUATED WI TH THE CO- OPERATIVE SOCIETY ENGAGED IN THE BANKING BUSINESS T O WHICH PROVISIONS OF DEDUCTION OF TAX AT SOURCE ARE APPLIC ABLE. 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 ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 11 OF 17 WITH REGARD TO THE QUESTION WHETHER MEMBER REFERR ED TO IN SEC.194A(3)(V) OF THE ACT CAN BE CONFINED TO REGUL AR MEMBER AND NOT TO A NOMINAL MEMBER AND THEREFORE NOT RELEVANT FOR THE PURPOSE OF DECIDING THE ISSUE UNDER CONSIDERATION IN ASSESS EES CASE. 11. 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 SINCE THE ASSESSEE FAILED TO SO DEDUCT TAX AT S OURCE, 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. 12. ON APPEAL BY THE ASSESSEE THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE CI T(A), THE REVENUE HAS PREFERRED THE PRESENT APPEALS BEFORE THE TRIBUNAL. 13. 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 CA SE OF BAGALKOT DISTRICT CENTRAL CO-OP BANK, VS. JCIT (2014) 48 TAX MANN.COM 117 (BANGALORE-TRIB) HELD THAT CO-OPERATIVE SOCIETIES CARRYING ON BANKI NG BUSINESS WHILE PAYING INTEREST TO MEMBERS ON TIME D EPOSITS AND DEPOSITS OTHER THAN TIME DEPOSITS NEED NOT DEDUCT TAX AT SOU RCE U/S.194-A OF THE ACT BY VIRTUE OF EXEMPTION GRANTED U/S.194A(3)(V) OF TH E ACT. THE LEARNED DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 12 OF 17 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THIS TRIBUNAL IN THE CASE OF BAGALKOT DISTRICT CENTRAL CO-OPERATIVE BANK (SUPRA) DEALT WITH IDENTICAL ISSUE AND IDENTICAL STAND TAKEN BY THE RE VENUE AND THE ASSESSEE IN THE CASE OF CO-OPERATIVE SOCIETY ENGAGED IN BANK ING BUSINESS AND HAVE UPHELD IDENTICAL ORDER OF CIT(A). THE RELEVANT OBS ERVATIONS OF THE TRIBUNAL 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 ACCEPTED. AS RIGHTLY CONTENDED BY HIM SEC.194A(3)(I)(B) OF THE A CT IS A PROVISION WHICH MANDATES DEDUCTION OF TAX AT SOURCE BY A CO- OPERATIVE SOCIETY CARRYING ON THE BUSINESS OF BANKI NG, WHERE THE INCOME IN THE FORM OF INTEREST WHICH IS PAID BY SUC H SOCIETY IS IN EXCESS OF TEN THOUSAND RUPEES. SEC.194A(3)(V) OF T HE ACT PROVIDES THAT TAX NEED NOT BE DEDUCTED AT SOURCE WH ERE THE INCOME IN THE FORM OF INTEREST IS CREDITED OR PAID BY A CO- OPERATIVE SOCIETY TO A MEMBER THEREOF OR TO ANY OTH ER CO- OPERATIVE SOCIETY. THIS PROVISION THEREFORE APPLIE S TO ALL CO- OPERATIVE SOCIETIES INCLUDING CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING. IT IS NOT POSSIBLE TO EXCLUDE CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING FROM THE PROVISIONS OF SEC.194A(3)(V) OF THE ACT ON THE GROUND THAT THE SA ME IS COVERED BY THE PROVISIONS OF SEC.194A(3)(I)(B) OF THE ACT. SEC.194A(3)(V) OF THE ACT REFERS TO PAYMENT BY 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 PRO VISIONS 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 PAYMENT IS MADE TO A NON-MEMBER BY A CO-OPERATIVE SOCIETY, THE CO- OPERATIVE SOCIETY NEED NOT DEDUCT TAX AT SOURCE. T HUS THIS SECTION CARVES OUT ANOTHER EXCEPTION TO SEC.194A(3)(I)(B) O F THE ACT. WE DO NOT THINK THAT ANY OF THE ABOVE PROVISIONS CAN B E CALLED A GENERAL PROVISION AND OTHER PROVISIONS CALLED SPECI FIC PROVISIONS. EACH PROVISION OVER-LAP AND IF READ IN THE MANNER A S INDICATED ABOVE, THERE IS PERFECT HARMONY TO THE VARIOUS PROV ISIONS. WE DO NOT AGREE WITH THE VIEW EXPRESSED BY THE PUNE ITAT SMC IN THE ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 13 OF 17 CASE OF BHAGANI NIVEDITA SAHAKARI BANK LTD. (SUPRA) WHEN IT SAYS THAT CO-OPERATIVE SOCIETY AS MENTIONED IN CL. (V) I S A GENERAL SPECIES, WHEREAS THE OTHER FIVE CATEGORIES OF CO-OP ERATIVE SOCIETIES WHICH ARE SPECIFICALLY REFERRED TO IN OTH ER PROVISIONS ARE SPECIFIC CO-OPERATIVE SOCIETIES. THE FURTHER CONCL USION IN THE SAID DECISION THAT THE TERM CO-OPERATIVE SOCIETY IN CL . (V) OF S. 194A(3) HAS TO BE INTERPRETED AS CO-OPERATIVE SOCIE TY OTHER THAN CO-OPERATIVE BANK, IS AGAIN UNSUSTAINABLE. THE 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 C OURSE IS PERMITTED ONLY WHEN THERE IS CAUSUS OMISUS. WE DO NOT THIN K THAT THE PROVISIONS OF SEC.194A(3)(V) SUFFERS FROM ANY CAUSU S OMISUS AS HAS 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 ELECTR ICITY BOARD EMPLOYEES CO-OP BANK LTD. (SUPRA) SUPPORTS THE PLEA OF THE ASSESSEE BEFORE US. THE PETITIONERS IN THAT CASE WERE PRIMARY CREDIT SOCIETIES REGISTERED UNDER THE KERALA CO-OPE RATIVE SOCIETIES ACT. IN VIEW OF THE SPECIFIC PROVISIONS OF SEC.19 4A(3(VIIA) OF THE ACT, THEY CLAIMED THAT THEY NEED NOT DEDUCT TAX AT SOURCE ON INTEREST PAID. IT WAS SUBMITTED BY THE PETITIONER 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)(VI IA)(A) PROVIDES A TOTAL EXEMPTION TO DEPOSITS WITH THE PRI MARY CREDIT SOCIETY. THE HONBLE KERALA HIGH COURT ACCEPTED THE IR PLEA AND IN THEIR JUDGMENT HAVE OBSERVED THAT SEC.194A (3)(I ) EXEMPTION LIMIT OF RS. 10,000 TO INTEREST PAID ON TIME DEPOSI TS 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 LIAB LE TO DEDUCT TAX AT SOURCE. THE COURT HELD THAT CO-OPERATIVE SO CIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING AND PRIMARY CRED IT SOCIETIES STAND ON DIFFERENT FOOTING AND BELONG TO DIFFERENT CLASS. THAT DOES NOT MEAN THAT SEC.194A(3)(V) OF THE ACT IS APPLICAB LE ONLY TO CO- OPERATIVE SOCIETIES OTHER THAN CO-OPERATIVE SOCIETI ES CARRYING ON THE BUSINESS OF BANKING AS OBSERVED IN PARA-37 OF I TS JUDGMENT THE PUNE ITAT IN THE CASE OF BHAGANI NIVEDITA SAH B ANK LTD. (SUPRA). IN FACT IN PARA-2 OF CIRCULAR NO.9 DATED 11.9.2002, THE CBDT HAS VERY CLEARLY LAID DOWN THAT CO-OPERATIVE S OCIETIES CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST ON DEPOSITS BY ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 14 OF 17 ITS MEMBERS NEED NOT DEDUCT TAX AT SOURCE IN VIEW O F 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 RELEV ANT TO THE PRESENT CASE. THE SAME READS THUS: CIRCULAR NO.9 OF 2002 SUB : TAX DEDUCTION AT SOURCE UNDER SECTION 194A OF THE INCOME-TAX ACT, 1961 APPLICABILITY OF THE PROVISIONS IN RESPECT OF INCOME PAID OR CREDITED TO A MEMBER OF CO-OPERATIVE BANKREG. 11/09/2002 TDS 194A UNDER SECTION 194A OF THE INCOME-TAX ACT, 1961, TAX IS DEDUCTIBLE AT SOURCE FROM ANY PAYMENT OF INC OME BY WAY OF INTEREST OTHER THAN INCOME BY WAY OF INTE REST ON SECURITIES. CLAUSE (V) OF SUB-SECTION (3) OF SEC TION 194A EXEMPTS SUCH INCOME CREDITED OR PAID BY A CO-OPERAT IVE SOCIETY TO A MEMBER THEREOF FROM THE REQUIREMENT OF TDS. ON THE OTHER HAND, CLAUSE (VIIA) OF SUB-SECTIO N (3) OF SECTION 194A EXEMPTS FROM THE REQUIREMENT OF TDS SU CH INCOME CREDITED OR PAID IN RESPECT OF DEPOSITS (OTH ER THAN TIME-DEPOSITS MADE ON OR AFTER 1ST JULY, 1995) WITH A CO- OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINE SS OF BANKING. 2. REPRESENTATIONS HAVE BEEN RECEIVED IN THE BOARD SEEKING CLARIFICATION AS TO WHETHER A MEMBER OF A C O- OPERATIVE BANK MAY RECEIVE WITHOUT TDS INTEREST ON TIME DEPOSIT MADE WITH THE CO-OPERATIVE BANK ON OR AFTER 1ST JULY, 1995. THE BOARD HAS CONSIDERED THE MATTER AND IT IS CLARIFIED THAT A MEMBER OF A CO-OPERATIVE BANK SHAL L RECEIVE INTEREST ON BOTH TIME DEPOSITS AND DEPOSITS OTHER THAN TIME DEPOSITS WITH SUCH CO-OPERATIVE BANK WITH OUT TDS UNDER SECTION 194A BY VIRTUE OF THE EXEMPTION GRANTED VIDE CLAUSE (V) OF SUB-SECTION (3) OF THE S AID SECTION. THE PROVISIONS OF CLAUSE (VIIA) OF THE SAI D SUB- SECTION ARE APPLICABLE ONLY IN CASE OF A NON-MEMBER DEPOSITOR OF THE CO-OPERATIVE BANK, WHO SHALL RECEI VE INTEREST ONLY ON DEPOSITS OTHER THAN TIME DEPOSITS MADE ON OR AFTER 1ST JULY, 1995 WITHOUT TDS UNDER SECTIO N 194A. ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 15 OF 17 3. A QUESTION HAS ALSO BEEN RAISED AS TO WHETHER NORMAL MEMBERS, ASSOCIATE MEMBERS AND SYMPATHIZER MEMBERS ARE ALSO COVERED BY THE EXEMPTION UNDER SECTION 194A(3)(V). IT IS HEREBY CLARIFIED THAT THE EXEMPTION IS AVAILABLE ONLY TO SUCH MEMBERS WHO HAV E JOINED IN APPLICATION FOR THE REGISTRATION OF THE C O- OPERATIVE SOCIETY AND THOSE WHO ARE ADMITTED TO MEMBERSHIP AFTER REGISTRATION IN ACCORDANCE WITH TH E BYE-LAWS AND RULES. A MEMBER ELIGIBLE FOR EXEMPTION UNDER SECTION 194A(3)(V) MUST HAVE SUBSCRIBED TO AN D FULLY PAID FOR AT LEAST ONE SHARE OF THE CO-OPERATI VE BANK, MUST BE ENTITLED TO PARTICIPATE AND VOTE IN THE GEN ERAL BODY MEETINGS AND/OR SPECIAL GENERAL BODY MEETINGS OF THE CO-OPERATIVE BANK AND MUST BE ENTITLED TO RECEI VE SHARE FROM THE PROFITS 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-OP ERATIVE SOCIETIES CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST ON DEPOSITS BY ITS MEMBERS NEED NOT DEDUCT TAX AT SOUR CE. THE ABOVE INTERPRETATION OF THE PROVISIONS BY THE CBDT WHICH IS IN FAVOUR OF THE ASSESSEE, IN OUR VIEW IS BINDING ON T HE 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 BAILH ONGAL URABAN CO-OP BANK LTD. VS. JCIT ORDER DATED 28.8.20 13, THE TRIBUNAL PROCEEDED ON THE FOOTING THAT THE AFORESAI D CIRCULAR HAS BEEN QUASHED BY THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF THE JALGAON DISTRICT CENTRAL CO-OPERATIVE BANK LTD. VS. UNION OF INDIA 265 ITR 423 (BOM) AND THEREFORE CHOSE TO F OLLOW THE DECISION RENDERED BY PUNE ITAT SMC IN THE CASE OF B HAGANI NIVEDITA SAHAKARI BANK LTD. (SUPRA). IN OUR VIEW T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF JALGAON DISTRICT C ENTRAL CO- OPERATIVE BANK LTD.S CASE WAS DEALING WITH A CASE OF CHALLENGE TO PARA-3 OF CBDT CIRCULAR NO.9 DATED 11.9.2002 WHI CH TRIED TO INTERPRET THE WORD MEMBER AS GIVEN IN SEC.194A(3) (V) OF THE ACT. IT IS ONLY THAT PART OF THE CIRCULAR THAT HAD BEEN QUASHED BY THE HONBLE BOMBAY HIGH COURT AND THE OTHER PARAGRA PHS OF THE ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 16 OF 17 CIRCULAR HAD NO CONNECTION WITH THE ISSUE BEFORE TH E HONBLE BOMBAY HIGH COURT. HOW COULD IT BE SAID THAT THE E NTIRE CIRCULAR HAS BEEN QUASHED BY THE HONBLE BOMBAY HIGH COURT? IN OUR VIEW PARA-2 OF THE CIRCULAR STILL HOLDS GOOD AND TH E CONCLUSION OF THE ITAT PUNE BENCH IN THE CASE OF THE BAILHONGAL U RABAN CO- OP BANK LTD.(SUPRA) ARE NOT FACTUALLY CORRECT. CON SEQUENTLY, THE CONCLUSIONS DRAWN IN THE AFORESAID DECISION ALSO CO NTRARY 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 CAS E OF THE VISAKHAPATNAM CO-OPERATIVE BANK ITA NO.5 AND 19 OF 2011 ORDER DATED 29.8.2011 HAS HELD THAT CO-OPERATIVE SO CIETIES CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST TO ITS MEMBERS ON DEPOSITS IT NEED NOT DEDUCT TAX AT SOURCE IN VIE W OF THE PROVISIONS OF SEC.194A(3)(V) OF THE ACT. SIMILAR V IEW HAS ALSO BEEN EXPRESSED BY THE PUNE BENCH OF THE ITAT IN THE CASE OF OZER MERCHANT CO-OPERATIVE BANK ITA NO.1588/PN/2012 ORDER DATED 30.10.2013. WE MAY ADD THAT IN BOTH THESE DE CISIONS THE DISCUSSION DID NOT TURN ON THE INTERPRETATION OF SE C.194A(3)(I)(B) OF THE ACT VIS-A-VIS SEC.194A(3)(V) OF THE ACT. IT IS THUS CLEAR THAT THE PREPONDERANCE OF JUDICIAL OPINION ON THIS ISSUE IS THAT CO- OPERATIVE SOCIETIES CARRYING ON BANKING BUSINESS WH EN 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. 21. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT THE A SSESSEE WHICH IS A CO-OPERATIVE SOCIETY CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST INCOME TO A MEMBER BOTH ON TI ME DEPOSITS AND ON DEPOSITS OTHER THAN TIME DEPOSITS WITH SUCH CO-OPERATIVE SOCIETY NEED NOT DEDUCT TAX AT SOURCE UNDER SECTION 194A BY VIRTUE OF THE EXEMPTION GRANTED VIDE CLAUSE (V) OF SUB-SECTION (3) OF THE SAID SECTION. 15. IN OUR VIEW, THE ABOVE DECISION RENDERED BY THE CO-ORDINATE BENCH IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CAS E. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH REFERRED TO A BOVE, WE SET ASIDE THE ITA NOS.368 & 369/BANG/2015 & SP NOS.51 & 52/BANG/2015 PAGE 17 OF 17 ORDERS OF THE LOWER AUTHORITIES AND HOLD THAT TO TH E EXTENT INTEREST IS PAID TO MEMBERS OF THE SOCIETY THERE IS NO OBLIGATION TO DE DUCT TAX AT SOURCE. 16. IN VIEW OF THE APPEALS BEING ALLOWED, THE STAY PETITIONS DO NOT REQUIRE ANY CONSIDERATION AND THEY ARE DISMISSED AS INFRUCTUOUS. 17. IN THE RESULT, THE APPEALS BY THE ASSESSEE ARE ALLOWED, WHILE THE STAY PETITIONS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF JULY , 2015 . SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 10 TH JULY , 2015 . /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR/ SENIOR PRIVATE SECRETARY ITAT, BANGALORE.