Wp(C)/9453/2019 Of Vakathanam Service Co-Operative Bank Ltd 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.9453 OF 2019(F) PETITIONER: VAKATHANAM SERVICE CO-OPERATIVE BANK LTDNJALIANKUZHI VAKATHANAM, KERALA 686 011,REPRESENTED BY SECRETARY. BY ADVS.SRI.ANIL D. NAIRSRI.SREEJITH R.NAIRSRI.ACHYUT K PADMARAJSMT. ARYA ANILSHRI.GOKULRAJ L. RESPONDENTS: 1ADDITIONAL COMMISSIONER OF INCOME TAXTDS RANGE, 3RD FLOOR, AAYKAR BHAWAN, KAWDIAR, THIRUVANANTHAPURAM-03. 2KOTTAYAM DISTRICT COOPERATIVE BANK LTD,DISTRICT CO-OPERATIVE BANK BUILDING, KOTTAYAM,KERALA 686 001. R2 BY ADV. SRI.ATHUL SHAJIR2 BY SRI.ATHUL SHAJI, SC, KOTTAYAM DISTRICT CO.OPERATIVE BANK LTD. 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.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 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 Kottayam tothe petitioner. SJ SD/- A.K.JAYASANKARAN NAMBIAR JUDGE 4 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1TRUE COPY OF THE INCOME TAX RETURN ACKNOWLEDGEMENT DATED 13.4.2017 FOR THE A.Y.2016-17 EXHIBIT P1 ATRUE COPY OF THE INCOME TAX RETURN ACKNOWLEDGEMENT DATED 31.3.2018 FOR THE A.Y.2017-18 EXHIBIT P1 BTRUE COPY OF THE INCOME TAX RETURN ACKNOWLEDGEMENT DATED 2.11.2018 FOR THE A.Y.2018-19 EXHIBIT P2TRUE COPY OF THE LETTER DATED 14.1.2019 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER EXHIBIT P2 ATRANSLATED COPY OF EXHIBIT P3 LETTER DATED 14.1.2019