Himachal Mitra Mandal Cooperative Credit Society Limited. Vs ITO (ITAT Mumbai)
ITAT Mumbai held that, in terms of section 194A(3)(v) of the Income Tax Act, co-operative society is not liable to deduction TDS on interest paid or credited on deposits to members before 1st June 2015. Accordingly, order set aside and appeal allowed to that extent.
Facts- The assessee, a Co-operative society paid interest on Time deposits of its Members amounting to Rs.1,58,05,328/-. TDS authority found that no TDS was deducted by it on the interest exceeding Rs 10,000/- paid, thus violating the provisions of section 201(1) and 201(1A) of the Act. He held that the assessee was engaged in money lending activity in the nature of banking and was under obligation to deduct TDS. Before him, it was contented that the assessee was not a bank and the interest paid only to the Member was not liable to TDS as per section 194A(3)(v) of the Act. It was also submitted that as per section 5 clause (CCV) of Banking Regulations Act,1949, it was not a Primary Co-operative Bank as none of the conditions therein were applicable to it. However, the TDS authority rejected the contention and held it as a defaulter.
