Wp(C)/11801/2019 Of The Manjoor Service Co-Operative Bank Ltd.no.k.73 v. The Additional Commissioner Of Income Tax (Ids)

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.11801 OF 2019(A) PETITIONERS: 1THE MANJOOR SERVICE CO-OPERATIVE BANK LTD.NO.K.73KURUPPANTHARA MANJOOR P.O.KOTTAYAM, REP. BY ITS SECRETARY MR. GEORGE PHILIP. 2THE VAIKOM PALLIPRETHUSSERY SERVICE CO-OPERATIVE BANKLTD NO 923,LTD NO 923, PALLIPRETHUSSERY P.O.VAIKOM, REP. BY IT SECRETARY MR.N.K. SEBASTIAN. 3THE THALAPPALAM SERVICE CO-OPERATIVE BANK LTD NO 3937, PLASSANAL,3937, PLASSANAL, REP. BY ITS SECRETARY MRS. JESSY THOMAS. 4THE NALUNNAKKAL SERVICE CO-OPERATIVE BANK LTD, NO 296,NALUNNAKKAL- 686 538, REP. BY ITS SECRETARY MR. SHAJIJOSEPH.296,NALUNNAKKAL- 686 538, REP. BY ITS SECRETARY MR. SHAJIJOSEPH. 5ITHITHANAM SERVICE CO-OPERATIVE BANK LTD, NO 476,MALAKUNNAM P.O.REP. BY ITS SECRETARY MR. KURIAN POTHEN.MALAKUNNAM P.O.REP. BY ITS SECRETARY MR. KURIAN POTHEN. BY ADVS. SRI.A.KUMARSRI.P.J.ANILKUMARSMTG.MINI(1748)SRI.P.S.SREE PRASADSHRI.ABRAHAM JOBSRI.AJAY V.ANAND RESPONDENTS: 1THE ADDITIONAL COMMISSIONER OF INCOME TAX (TDS)3RD FLOOR, AAYAKARBHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 003. 2THE KOTTAYAM DISTRICT CO-OPERATIVE BANK LTD,DISTRICT CO-OPERATIVE BANK BUILDING, POST BOX NO 140,KOTTAYAM-686 001.DISTRICT CO-OPERATIVE BANK BUILDING, POST BOX NO 140,KOTTAYAM-686 001. 2 R1 BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENTR2 BY ADV. SRI.ATHUL SHAJI OTHER PRESENT: SC CHRISTOPHER ABRAHAM SMT. M M JASMINE; GP THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON18.10.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 3 JUDGMENT The petitioners are Primary Agricultural Credit Society registeredunder the provision of the Kerala Co-operative Societies Act. In the writpetition, the petitioners are aggrieved by Ext.P2 communication receivedfrom the General Manager, Kottayam 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 petitioners that the interest incomeaccruing to it is from the deposits made by the petitioners with theKottayam 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 petitioners that the payment of interest from theKottayam District Co-operative Bank to the petitioners have 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 petitioners 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 petitioners would get 4 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 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1TRUE COPY OF THE COMMUNICATION DATED 31.1.2019 EXHIBIT P2TRUE COPY OF THE COMMUNICATION DATED 14.2.2019 ISSUED BY THE 2ND RESPONDENT ALONG WITH ITS TRUE ENGLISH TRANSLATION