U.B.S.Bedi, - (1.) THESE are 10 appeals of the assessee co-operative bank pertaining to its various branches directed against the orders passed by the learned CIT(A), Pune relatable to financial years 1997-98 and 1998-99. Since the issue involved is the same and facts are identical, therefore, these are being disposed off by this common order for the sake of convenience.
(2.) In all these cases, the assessee has raised the following common grounds: 1. In the facts and circumstances of the case, the ld. CIT(A) I, Pune, has erred in holding that the income from interest payable/paid to the members of the co-operative bank is liable for TDS if it exceeds the limit stated in Section 194A(3). 2. In the facts and circumstances of the case, the ld. CIT(A)-I, Pune has erred in disallowing assessee's claim that the provision of Section 194A(3)(v) is a specific provision. The distinction between members and non-members is possible under Clause (v) as well as Clause (viia)(b) of Section 194A(3). In the facts and circumstances of the case, the ld. CIT(A)-I, Pune has erred in not giving the benefit of interpretation which is more beneficial to the assessee as laid down by the Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC).
(3.) IN the facts and circumstances of the case, the ld. CIT(A)-I was not justified in overlooking the treatment given by CCIT Mumbai where the benefit of Clause (v) of Section 194A(3) is extended to members' deposit. 3. The facts are that the assessee had credited/paid certain amount by way of interest to the accounts of members/nominal members on their fixed (time) deposits without deduction of tax therefrom for which show cause notice was issued to the assessee and in response thereto it was argued before the Assessing Officer that the bank is not liable to deduct tax on such interest payments to the members/nominal members. The bank is a co-operative society within the meaning of Section 2(19) of the Act. As per the circular No. 72 dated 6-1-1972 issued by the CBDT the Bank need not deduct tax at source from interest payable on fixed (time) deposits with them. The income of a bank is exempt under Section 80P. Therefore, it is not correct to interpret that for the purposes of Section 80P a co-operative bank is a co-operative society whereas for the purposes of Section 194A it is not a co-operative society (sic). Reliance was placed on the decisions reported in Associated Cement Co. Ltd. v. CIJ [1994] 210 ITR 69 (Bom.), CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC), CIT v. Karamchand Thapar & Bros. (P.) Ltd. [1989] 176 ITR 535 : 43 Taxman 45 (SC). After considering but rejecting the submissions of the assessee, the Assessing Officer created a demand under Section 201(1) and charged also interest under Section 201(1A) of the Act. Against this action of the Assessing Officer, the assessee took up the matter in appeal. 4. Before the learned CIT(A) the assessee has reiterated the same arguments as advanced before the Assessing Officer. The learned CIT(A) while considering but partly accepting the submissions of the assessee though upheld the action of the Assessing Officer for creating demand under Section 201(1) as well as charging of interest under Section 201(1A), yet, has directed the Assessing Officer as under : Wherever the tax deduction was required and wherever such payees have actually heen charged to tax or who have actually paid the tax, in such circumstances the amount of tax should not be recovered from the appellant. Similarly, where declarations under form 15H are received by the co-operative bank, the Assessing Officer is directed not to recover tax and interest under Section 201(1A) in such cases. As a corollary also, it follows that interest which is compensatory interest chargeable under Section 201/201(1 A) of the Act should be charged only upto the date of actual payment of tax by the payees and NOT for the period thereafter. The Assessing Officer is directed to recover the amount i.e. tax as well as interest subject to the above mentioned restrictions. It must be said at the end that the income from interest payable or paid to the members of a co-operative bank is liable for the TDS if it exceeds the limit as mentioned under proviso to Sub-clause (I) of Section 194A(3) of the Act. Still aggrieved, the assessee is in further appeal but has challenged the action of ld. CIT(A) to the extent of upholding order of Assessing Officer with reference to creating of demand under Section 201(1) and interest under Section 201(1 A) only.;