Wp(C)/11176/2019 Of The Kadakkavoor Service Co-Operative Bank Ltd v. The Assistant 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, 1941WP(C).No.11176 OF 2019(V) PETITIONER: THE KADAKKAVOOR SERVICE CO-OPERATIVE BANK LTDNO.1063, REPRESENTED BY ITS SECRETARY, KADAKKAVOOR P. O., THIRUVANANTHAPURAM DISTRICT. BY ADVS.SRI.T.R.HARIKUMARSRI.ARJUN RAGHAVAN RESPONDENTS: 1THE ASSISTANT COMMISSIONER OF INCOME TAXOFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, TDS RANGE, IIIRD FLOOR, AAYAKAR BHAVAN, KOWDIAR P. O., THIRUVANANTHAPURAM DISTRICT - 695 003.OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, TDS RANGE, IIIRD FLOOR, AAYAKAR BHAVAN, KOWDIAR P. O., THIRUVANANTHAPURAM DISTRICT - 695 003. OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME 2THE CENTRAL BOARD OF DIRECT TAXESREPRESENTED BY ITS CHAIRPERSON, ROOM NO.143 E, NORTH BLOCK, DEPARTMENT OF REVENUE (CBDT)/ MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NEW DELHI - 110 001REPRESENTED BY ITS CHAIRPERSON, ROOM NO.143 E, NORTH BLOCK, DEPARTMENT OF REVENUE (CBDT)/ MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NEW DELHI - 110 001 3UNION OF INDIAREPRESENTED BY THE SECRETARY TO GOVERNMENT OF INDIA, MINISTRY OF FINANCE, NORTH BLOCK, CABINET SECRETARIAT, RAISANA HILL, NEW DELHI - 110001REPRESENTED BY THE SECRETARY TO GOVERNMENT OF INDIA, MINISTRY OF FINANCE, NORTH BLOCK, CABINET SECRETARIAT, RAISANA HILL, NEW DELHI - 110001 4THE REGISTRAR OF CO-OPERATIVE SOCIETIESTHIRUVANANTHAPURAM - 695 001THIRUVANANTHAPURAM - 695 001 WP(C).No.11176 OF 2019 -2- 5BANK LTD., THE THIRUVANANTHAPURAM DISTRICT CO-OPERATIVE REPRESENTED BY ITS GENERAL MANAGER, HEAD OFFICE, EAST FORT, THIRUVANANTHAPURAM-695023 R1 BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT R5 BY SRI.THOMAS ABRAHAM SC THIRUVANANTHAPURAM DIST. CO.OP BANK OTHER PRESENT: GP MM JASMINE, SC CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON18.10.2019, THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: WP(C).No.11176 OF 2019 JUDGMENT The petitioner is a Primary Agricultural Credit Societyregistered under the provision of the Kerala Co-operative SocietiesAct. In the writ petition, the petitioner is aggrieved by Ext.P2communicationreceivedfromtheGeneralManager,Thiruvananthapuram District Co-operative Bank, intimating them,based on the advice received from the Income Tax Department, thatthe interest payable to them on the Fixed Deposits maintained withthe Bank is not exempt from the procedure for tax deduction at source(TDS) and that tax would be deducted at source and remitted to theGovernment on such interest payments. It is the case of the petitionerthat the interest income accruing to it is from the deposits made bythe petitioner with the Thiruvananthapuram District Co-operativeBank and hence, as per the provisions of Section 194A(3)(v), theprovisions of sub section (1) thereof, which contemplate a deductionof tax at source would not apply in cases where the income is paid bya Co-operative Society to any other Co-operative Society. It is the caseof the petitioner that the payment of interest from theThiruvananthapuram District Co-operative Bank to the petitioner hasto be viewed as a payment of income by a Co-operative Society toanother Co-operative Society and hence the provisions of Section WP(C).No.11176 OF 2019 -4- 194A (3)(v) would apply to exclude the receipts of interest income bythe petitioner from the requirement of tax deduction at source. Through a statement filed by the learned Standing Counselappearing on behalf of the 1[st] respondent, it is conceded that thepetitioner would get the benefit of the exemption provided underSection 194A(3)(v) of the Income Tax Act. Taking note of thestatement, I allow the writ petition by declaring that there will be norequirement of deducting tax at source in the case of payment ofinterest from the District Co-operative Bank Thiruvananthapuram tothe petitioner. SD/- SJ A.K.JAYASANKARAN NAMBIARJUDGE 5 WP(C).No.11176 OF 2019 -4- 194A (3)(v) would apply to exclude the receipts of interest income bythe petitioner from the requirement of tax deduction at source. Through a statement filed by the learned Standing Counselappearing on behalf of the 1[st] respondent, it is conceded that thepetitioner would get the benefit of the exemption provided underSection 194A(3)(v) of the Income Tax Act. Taking note of thestatement, I allow the writ petition by declaring that there will be norequirement of deducting tax at source in the case of payment ofinterest from the District Co-operative Bank Thiruvananthapuram tothe petitioner. SD/- SJ A.K.JAYASANKARAN NAMBIARJUDGE 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1A TRUE COPY OF THE CERTIFICATE DATED 17.03.2018, ISSUED BY THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), CHIRAYINKEEZHU, ATTINGAL EXHIBIT P2A TRUE COPY OF THE CIRCULAR BEARING NO.45/2018-19 DATED 12.02.2019, ISSUED BY THE 5TH RESPONDENT ALONG WITH ENGLISH TRANSLATION EXHIBIT P3 A TRUE COPY OF THE CIRCULAR F NO.ADDL.CIT/TDS/TVM/CO-OP SOCIETY/2018-19 DATED 26.12.2018, ISSUED BY THE 1ST RESPONDENT EXHIBIT P4 A TRUE COPY OF THE INTERIM ORDER IN WP(C) NO.9274/2019 DATED 26.03.2019, ISSUED BY THIS HON'BLE COURT