Wp(C)/11580/2019 Of Choondacherry Service Co-Operative Bank Ltd. No. K. 167 v. The Income Tax Commissioner

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.11580 OF 2019(V) PETITIONER: CHOONDACHERRY SERVICE CO-OPERATIVE BANK LTD. NO. K. 167CHOONDANCHERRY P.O., KOTTAYAM-686 579, REPRESENTED BYITS SECRETARY. BY ADVS.SRI.T.MADHUSMT.C.R.SARADAMANI RESPONDENTS: 1THE INCOME TAX COMMISSIONER AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 003. 2THE ADDITIONAL COMMISSIONEER OF INCOME TAX (TDS)THIRD FLOOR, AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 003.THIRD FLOOR, AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 003. 3THE INCOME TAX COMMISSIONER6TH FLOOR, KANDANKULATHI TOWER, M.G.ROAD, KARIKKAMURI, KOCHI-682 011.6TH FLOOR, KANDANKULATHI TOWER, M.G.ROAD, KARIKKAMURI, KOCHI-682 011. 4THE KOTTAYAM DISTRICT CO-OPERATIVE BANK LTD.DISTRICT CO-OPERATIVE BANK BUILDING P.B.NO.140, KOTTAYAM-686 001.DISTRICT CO-OPERATIVE BANK BUILDING P.B.NO.140, KOTTAYAM-686 001. R4 BY SRI.ATHUL SHAJI, SC, KOTTAYAM DISTRICT CO.OPERATIVE BANK LTD. 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: WP(C).No.11580 OF 2019 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.P2 communication received fromthe General Manager, Kottayam District Co-operative Bank, intimating them,based on the advice received from the Income Tax Department, that theinterest payable to them on the Fixed Deposits maintained with the Bank isnot 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 the KottayamDistrict Co-operative Bank and hence, as per the provisions of Section194A(3)(v), the provisions of sub section (1) thereof, which contemplate adeduction of tax at source would not apply in cases where the income is paidby a Co-operative Society to any other Co-operative Society. It is the case ofthe petitioner that the payment of interest from the Kottayam District Co-operative Bank to the petitioner has to be viewed as a payment of income bya Co-operative Society to another Co-operative Society and hence theprovisions of Section 194A (3)(v) would apply to exclude the receipts ofinterest income by the petitioner from the requirement of tax deduction atsource. 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 Bank Kottayam tothe petitioner. SD/- A.K.JAYASANKARAN NAMBIARJUDGE 4 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 THE TRUE COPY OF THE CIRCULAR BEARING NO.40/2018-19 DATED 14.2.2019 ISSUED BY THEFOURTH RESPONDENT AND THE ENGLISH TRANSLATION. EXHIBIT P2 THE TRUE COPY OF THE CIRCULAR DATED 14.1.2019 ISSUED BY THE FORUTH RESPONDENT TO THE SECRETARIAES OF ALL THE PRIMARY CO-OPERATIVE SOCIETIES INCLUDING THE PETITIONER AND ITS ENGLISH TRANSLATION.