MAHAYOGI VEMANA SOUHARDA PATTINA SAHAKARI SANGHA,BENGALURU V. INCOME TAX OFFICER, WARD-2(2), BANGALORE

ITA 829/BANG/2025

AI Insights

The case involves M/s Mahayogi Vemana Souharda Pattina Sahakari Sangha, a society registered under the Karnataka Souharda Society Act, which appealed against the order of the CIT(A) confirming a demand raised by the Assessing Officer for non-deduction of TDS on interest payments to its members under section 194A of the Income Tax Act. The primary legal contention was whether the society was liable to deduct TDS on such payments, given its registration under a specific state act and the associated tax benefits under section 80P. The Tribunal's decision was influenced by a precedent from the Karnataka High Court, which supported the society's position.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705524 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: Swabhimani Souharda Credit Co-operative Ltd. vs. State, Government of India Ministry of Finance Vs. Karnataka State Souharda Federal Co-operative Ltd.
• Laws Referred To: Karnataka Souharda Sahakari Act, Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRAMANIAN S
• Assessee Lawyers: SUNAINA BHATIA
• Keywords: Set aside; TDS
• Section: 201(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No. 829/Bang/2025 Assessment Year: 2018-19 M/s Mahayogi Vemana Souharda Pattina Sahakari Sangha, No.784, Vemana Soudha, 8th ‘A’ Cross, Lions Seva Bhavan Road, Yelahanka New Town, Bengaluru – 560 064. PAN – AABAM 7788 B Vs. The Income Tax Officer, TDS Ward - 2(2), Bangalore. . APPELLANT RESPONDENT Assessee by : Ms. Sunaina Bhatia, Advocate Revenue by : Shri Subramanian S, JCIT (DR) Date of hearing : 18.06.2025 Date of Pronouncement : 02.07.2025 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order passed by the ld. Addl/JCIT(A), Thiruvanantpuram dated 11/02/2025 in DIN No. ITBA/APL/S/250/2024-25/1073127657(1) for the assessment year 2018- 19. 2. The only issue raised by the assessee is that the ld. CIT(A) erred in treating the assessee as ‘assessee in default’ on account of non ITA No.829/Bang/2025 Page 2 of 4 . deduction of TDS on the payment of interest to members u/s 201(1) and 201(1A) of the Act. 2.1 The AO during the asst. proceedings found that the assessee is registered under Karnataka Souharda Sahakari Act and, therefore, it is liable for deduction of TDS on the payment made to the members u/s 194A of the Act. It was also observed by the AO that the judgment of Hon’ble High Court of Karnataka in the case of Swabhimani Souharda Credit Co-operative Ltd. bearing No. 48414/2018 dated 16-01-2020, has not reached to its finality as the revenue has preferred an appeal to the Hon’ble Supreme Court. Thus, the AO raised a demand u/s 201(1) along with the interest u/s 201(1A) of the Act amounting to Rs. 38,42,770/- on account of non-deduction of TDS u/s 194A of the Act. On appeal, the ld.CIT(A) confirmed the order of the AO. 3. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 4. The ld. AR before us submitted that the assessee is registered under Karnataka Souharda Society Act which is also eligible for deduction u/s 80P of the Act in view of the judgment cited above. Therefore, the assessee is not liable to deduct TDS under section 194A of the Act. 5. On the other hand, the ld. DR could not controvert the argument advanced by the ld. AR of the assessee. ITA No.829/Bang/2025 Page 3 of 4 . 6. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that society registered under Karnataka Souharda Society Act are at par with the societies registered under Karnataka co-operative society’s Act 1959 by virtue of judgment of Hon’ble Karnataka High Court in the case of Government of India Ministry of Finanace Vs. Karnataka State Souharda Federal Co-operative Ltd. reported in 134 taxmann.com 170. The relevant extract is reproduced as under: 33. The provisions of section 80P offers tax deduction in respect of income of Co-operative Societies which is enacted with a laudable object of promoting Co-operating moment. Such benefit cannot be denied to the so called Co-operatives under the Souharda Act merely on hyper technicalities. The interpretation given by the Revenue to section 2(19) of the Act is untenable. A harmonious reading of the said provisions would indicate that Co-operative Society registered under the Co-operative Societies Act, 1959 alone is not the Cooperative Society for the purposes of the Income-tax Act, as the phrase 'or' employed with the following words 'under any other law for the time being in force in any State for the registration of Co-operative Society' if read, Co-operative Societies registered under the Souharda Act which is a State enactment would certainly be construed as Co-operative Society coming within the ambit of section 2(19). 34. Thus, for the reasons aforesaid, we find no jurisdictional error in the order passed by the learned Single Judge in extending the benefit of section 80P to the entities registered under the Souharda Act. 7. From the above judgment, there is no ambiguity that the assessee in the present case is a society and eligible for deduction u/s 80P of the Act therefore, the assessee cannot be treated as assessee in default on account of non-deduction of TDS on the payment of interest u/s 194A of the Act. Accordingly, we set aside the finding of the ld. CIT(A) and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed. ITA No.829/Bang/2025 Page 4 of 4 . 8. In the result, the appeal of the assessee is allowed. Order pronounced in court on 2nd day of July, 2025 Sd/- Sd/- (KESHAV DUBEY) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 2nd July, 2025 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore "