Case Law Details
Vasavi Credit Co-Operative Society Ltd. Vs ITO (ITAT Bangalore)
We are concerned with the liability of the assessee for deduction of tax at source u/s 194A of the Act from the interest paid by the assessee. The assessee herein has paid interest to its “associate members” without deduction of tax at source. As per the definition of the term “member” given in sec. 2(f) of the Karnataka Co-operative Societies Act, 1959, “member” includes an associate member. Hence the assessee is able to collect deposit from them and also lend the money to them. Hence, we are of the view that the associate members should be construed as “members” only for the purpose of sec.194A of the Act, since the definition of the term “member” should be construed as given in sec. 2(f) of the Karnataka Co-operative Societies Act, 1959.
In the case of M/s The Government Employees Co-Operative Bank Limited vs. ACIT (ITA No.1485/Bang/2019 dated 31-122020), the co-ordinate bench has expressed the following view:-
“11. We have considered the rival submissions. We find that a sum of Rs. 93,36,928/- is interest paid to Associate Members. The CIT(A) has, however, made a reference to the decision of Hon’ble Supreme Court in the case of Citizens Co-operative Society Ltd., Vs. ACIT in appeal No.10245 of 2017 Dt. 08.08.2017 which was a decision referred in the context of allowing deduction u/s. 80P(2)(a)(i) of the Act.
12. We are of the view that the analogy so drawn by the CIT(A) is erroneous. The provisions of Sec.194A which are in relation to deduction of tax at source cannot be equated with the provisions of Sec. 80P(2)(a)(i) of the Act, which deals with deduction while computing total income. The admitted position is that the sum of Rs.93,36,928/- has been paid to Associate Members and CIT(A) has equated it and named them as nonmembers. In our view this approach is erroneous.”
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