THE MANJOOR SERVICE CO-OPERATIVE BANK LTD.NO.K.73 V. THE ADDITIONAL COMMISSIONER OF INCOME TAX (IDS)

WP(C)/11801/2019

AI Insights

The case involves multiple petitioners, all Primary Agricultural Credit Societies, who challenged the decision of the Kottayam District Co-operative Bank to deduct tax at source on interest payments from fixed deposits. The petitioners argued that under Section 194A(3)(v) of the Income Tax Act, interest income received from one Co-operative Society to another should be exempt from TDS. The Income Tax Department, represented by the Additional Commissioner of Income Tax (TDS), initially supported the deduction. However, during the proceedings, it was conceded that the petitioners were indeed entitled to the exemption. The court's decision was based on this concession and the clear stipulation of the law.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 754599 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 18-10-2019
• Assessment Year: misc
• Laws Referred To: Kerala Co-operative Societies Act, Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM; ATHUL SHAJI
• Assessee Lawyers: A KUMAR; P J ANILKUMAR; G MINI; P S SREE PRASAD; ABRAHAM JOB; AJAY ANAND
• Keywords: Co-operative Society; Exemption; Interest income; Tax deduction at source
• Section: 194A(3)(v)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 18TH DAY OF OCTOBER 2019 / 26TH ASWINA, 1941 WP(C).No.11801 OF 2019(A) PETITIONERS: 1 THE MANJOOR SERVICE CO-OPERATIVE BANK LTD.NO.K.73 KURUPPANTHARA MANJOOR P.O.KOTTAYAM, REP. BY ITS SECRETARY MR. GEORGE PHILIP. 2 THE VAIKOM PALLIPRETHUSSERY SERVICE CO-OPERATIVE BANK LTD NO 923, PALLIPRETHUSSERY P.O.VAIKOM, REP. BY IT SECRETARY MR. N.K. SEBASTIAN. 3 THE THALAPPALAM SERVICE CO-OPERATIVE BANK LTD NO 3937, PLASSANAL, REP. BY ITS SECRETARY MRS. JESSY THOMAS. 4 THE NALUNNAKKAL SERVICE CO-OPERATIVE BANK LTD, NO 296, NALUNNAKKAL- 686 538, REP. BY ITS SECRETARY MR. SHAJI JOSEPH. 5 ITHITHANAM SERVICE CO-OPERATIVE BANK LTD, NO 476, MALAKUNNAM P.O.REP. BY ITS SECRETARY MR. KURIAN POTHEN. BY ADVS. SRI.A.KUMAR SRI.P.J.ANILKUMAR SMTG.MINI(1748) SRI.P.S.SREE PRASAD SHRI.ABRAHAM JOB SRI.AJAY V.ANAND RESPONDENTS: 1 THE ADDITIONAL COMMISSIONER OF INCOME TAX (TDS) 3RD FLOOR, AAYAKARBHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 003. 2 THE KOTTAYAM DISTRICT CO-OPERATIVE BANK LTD, DISTRICT CO-OPERATIVE BANK BUILDING, POST BOX NO 140, KOTTAYAM-686 001. WP(C).No.11801 OF 2019 2 R1 BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT R2 BY ADV. SRI.ATHUL SHAJI OTHER PRESENT: SC CHRISTOPHER ABRAHAM SMT. M M JASMINE; GP THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18.10.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.11801 OF 2019 3 JUDGMENT The petitioners are Primary Agricultural Credit Society registered under the provision of the Kerala Co-operative Societies Act. In the writ petition, the petitioners are aggrieved by Ext.P2 communication received from the General Manager, Kottayam District Co-operative Bank, intimating them, based on the advice received from the Income Tax Department, that the interest payable to them on the Fixed Deposits maintained with the Bank is not exempt from the procedure for tax deduction at source (TDS) and that tax would be deducted at source and remitted to the Government on such interest payments. It is the case of the petitioners that the interest income accruing to it is from the deposits made by the petitioners with the Kottayam District Co-operative Bank and hence, as per the provisions of Section 194A(3)(v), the provisions of sub section (1) thereof, which contemplate a deduction of tax at source would not apply in cases where the income is paid by a Co-operative Society to any other Co-operative Society. It is the case of the petitioners that the payment of interest from the Kottayam District Co-operative Bank to the petitioners have to be viewed as a payment of income by a Co-operative Society to another Co-operative Society and hence the provisions of Section 194A (3)(v) would apply to exclude the receipts of interest income by the petitioners from the requirement of tax deduction at source. Through a statement filed by the learned Standing Counsel appearing on behalf of the 1st respondent, it is conceded that the petitioners would get WP(C).No.11801 OF 2019 4 the benefit of the exemption provided under Section 194A(3)(v) of the Income Tax Act. Taking note of the statement, I allow the writ petition by declaring that there will be no requirement of deducting tax at source in the case of payment of interest from the District Co-operative Bank Kottayam to the petitioner. SD/- A.K.JAYASANKARAN NAMBIAR JUDGE SJ WP(C).No.11801 OF 2019 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE COMMUNICATION DATED 31.1.2019 EXHIBIT P2 TRUE COPY OF THE COMMUNICATION DATED 14.2.2019 ISSUED BY THE 2ND RESPONDENT ALONG WITH ITS TRUE ENGLISH TRANSLATION "