Citizen Credit Co-op Bank Ltd. Vs ITO (TDS) (ITAT Mumbai)
TDS on Interest to Co-operative Societies: ITAT Mumbai Holds Co-operative Bank Liable u/s 194A; Specific Provisions Override General Exemption
The Mumbai ITAT (C-Bench) largely dismissed the appeals of Citizen Credit Co-operative Bank Ltd. for AYs 2016-17 to 2019-20, holding that the bank was liable to deduct TDS under Section 194A on interest paid on time/fixed deposits to co-operative housing societies (non-members). The Tribunal ruled that although a co-operative bank is a co-operative society, once it is engaged in the business of banking, the specific provisions of Sections 194A(3)(i)(b) and 194A(3)(viia)(b) governing co-operative banks prevail over the general exemption under Section 194A(3)(v) relating to payments by one co-operative society to another. Applying the principle generalia specialibus non derogant, the ITAT held that the exemption under Section 194A(3)(v) cannot be invoked by a co-operative bank to avoid TDS on interest payments exceeding ₹10,000. CBDT Circulars and Explanatory Memorandum were held not to override the statute. Accordingly, the bank was rightly treated as an assessee-in-default u/s 201(1) with interest u/s 201(1A). However, for limited branches/years, the matter was remanded to the AO to verify relief under the proviso to Section 201(1) where payees had already offered the interest to tax. Appeals were otherwise dismissed, with partial relief only for statistical purposes.
