Wp(C)/10369/2019 Of Mundela Service Co-Operative Bank Limited v. Additional Commissioner Of Income Tax

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.10369 OF 2019(U) PETITIONER: MUNDELA SERVICE CO-OPERATIVE BANK LIMITEDNO.2433,REPRESENTED BY ITS SECRETARY RAHUL.P.S,AGED 27 YEARS,S/O SARACHANDRA KUMARAN,THIRUVANANTHAPURAM DISTRICT,KERALA,PIN-695543. BY ADV. SMT.MARY BENJEMIN RESPONDENTS: 1ADDITIONAL COMMISSIONER OF INCOME TAX(TDS),DEPARTMENT OF INCOME TAX,AAYAKAR BHAVAN, KOWDIAR,THIRUVANANTHAPURAM-695003. 2THIRUVANANTHAPURAM DISTRICT CO-OPERATIVE BANK,REPRESENTED BY ITS MANAGER,OFFICE OF THE DISTRICT CO OPERATIVE BANK,MAIN BRANCH,NEDUMANGAD,THIRUVANANTHAPURAM-695541. R1 BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENTR2 BY SRI.THOMAS ABRAHAM SC THIRUVANANTHAPURAM DIST. CO.OP BANK OTHER PRESENT: SC CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON18.10.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2 JUDGMENT The petitioner is a Primary Agricultural Credit Society registeredunder the provision of the Kerala Co-operative Societies Act. In the writpetition, the petitioner is aggrieved by Exts.P2 and P3 communicationsreceived from the General Manager, Thiruvananthapuram District Co-operative Bank, intimating them, based on the advice received from theIncome Tax Department, that the interest payable to them on the FixedDeposits maintained with the Bank is not exempt from the procedure for taxdeduction at source (TDS) and that tax would be deducted at source andremitted to the Government on such interest payments. It is the case of thepetitioner that the interest income accruing to it is from the deposits madeby the petitioner with the Thiruvananthapuram District Co-operative Bankand hence, as per the provisions of Section 194A(3)(v), the provisions of subsection (1) thereof, which contemplate a deduction of tax at source wouldnot apply in cases where the income is paid by a Co-operative Society to anyother Co-operative Society. It is the case of the petitioner that the paymentof interest from the Thiruvananthapuram District Co-operative Bank to thepetitioner has to be viewed as a payment of income by a Co-operativeSociety to another Co-operative Society and hence the provisions of Section194A (3)(v) would apply to exclude the receipts of interest income by thepetitioner from the requirement of tax deduction at source. Through a statement filed by the learned Standing Counsel appearingon behalf of the 1[st] respondent, it is conceded that the petitioner would get 3 the benefit of the exemption provided under Section 194A(3)(v) of theIncome Tax Act. Taking note of the statement, I allow the writ petition bydeclaring that there will be no requirement of deducting tax at source in thecase of payment of interest from the District Co-operative BankThiruvananthapuram to the petitioner. SD/- A.K.JAYASANKARAN NAMBIARJUDGE 4 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE CIRCULAR DATED 26.12.2018 OF THE 1ST RESPONDENT. EXHIBIT P2 TRUE COPY OF CIRCULAR DATED NIL ISSUED BY THE MAIN BRANCH OF THE 2ND RESPONDENT WITH ITS ENGLISH TRANSLATION. EXHIBIT P3 TRUE COPY OF THE CIRCULAR DATED NIL ISSUED BY THE MORNING AND EVENING BRANCH OF THE 2ND RESPONDENT WITH ITS ENGLISH TRANSLATION.