Wp(C)/11560/2019 Of The Kodur Service Co-Operative Bank Ltd v. The Commissioner Of Income Tax(Tds)

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.11560 OF 2019(T) PETITIONER: THE KODUR SERVICE CO-OPERATIVE BANK LTD.,F 1523, KODUR P.O., MALAPPURAM DISTRICT, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.O.D.SIVADAS RESPONDENTS: 1THE COMMISSIONER OF INCOME TAX(TDS),CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, ERNAKULAM, PIN- 682 018.CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, ERNAKULAM, PIN- 682 018.2THE ADDITIONAL COMMISSIONER OF INCOME TAX (TDS),KOZHIKODE, PIN- 673 001.KOZHIKODE, PIN- 673 001.3THE MALAPPURAM DISTRICT CO-OPERATIVE BANK LTD.,DISTRICT CO-OPERATIVE BANK BUILDING, MALAPPURAM, PIN-676 504.DISTRICT CO-OPERATIVE BANK BUILDING, MALAPPURAM, PIN-676 504. 4THE BRANCH MANAGER,MALAPPURAM DISTRICT CO-OPERATIVE BANK LTD., KADAMPUZHA BUILDING, KADAMPUZHA, MALAPPURAM, PIN- 676553.MALAPPURAM DISTRICT CO-OPERATIVE BANK LTD., KADAMPUZHA BUILDING, KADAMPUZHA, MALAPPURAM, PIN- 676553. 5THE REGISTRAR OF CO-OPERTIVE SOCIETIES,DEPARTMENT OF CO-OPERATION, JAWAHAR SAHAKARANA BHAVAN, DPI JUNCTION, THYCAUD P.O., THIRUVANANTHAPURAM, PIN- 695 014.DEPARTMENT OF CO-OPERATION, JAWAHAR SAHAKARANA BHAVAN, DPI JUNCTION, THYCAUD P.O., THIRUVANANTHAPURAM, PIN- 695 014. R1 BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT 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 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 Ext.P1 communication received fromthe General Manager, Malappuram District Co-operative Bank, intimatingthem, based on the advice received from the Income Tax Department, thatthe interest payable to them on the Fixed Deposits maintained with the Bankis not exempt from the procedure for tax deduction at source (TDS) and thattax would be deducted at source and remitted to the Government on suchinterest payments. It is the case of the petitioner that the interest incomeaccruing to it is from the deposits made by the petitioner with theMalappuram District Co-operative Bank and hence, as per the provisions ofSection 194A(3)(v), the provisions of sub section (1) thereof, whichcontemplate a deduction of tax at source would not apply in cases where theincome is paid by a Co-operative Society to any other Co-operative Society.It is the case of the petitioner that the payment of interest from theMalappuram District Co-operative Bank to the petitioner has to be viewed asa payment of income by a Co-operative Society to another Co-operativeSociety and hence the provisions of Section 194A (3)(v) would apply toexclude the receipts of interest income by the petitioner from therequirement 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 getthe benefit of the exemption provided under Section 194A(3)(v) of the 3 Income 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 Bank Malappuramto the petitioner. SJ SD/- A.K.JAYASANKARAN NAMBIARJUDGE 4 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE LETTER ISSUED BY THE MALAPPURAM DISTRICT CO-OPERATIVE BANK PROPOSING TO LEVY TDS FROM DEPOSITS.