Wp(C)/9541/2019 Of The Champakara Service Co-Operative Bank Limited v. The Additional 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.9541 OF 2019(P) PETITIONER: THE CHAMPAKARA SERVICE CO-OPERATIVE BANK LIMITED NO.3511KARUKACHAL P.O, KOTTAYAM DISTRICT, REPRESENTED BY ITSSECRETARY. BY ADV. SRI.O.D.SIVADAS RESPONDENTS: 1THE ADDITIONAL COMMISSIONER OF INCOME TAX (TDS).THIRUVANANTHAPURAM, PIN-678001.THIRUVANANTHAPURAM, PIN-678001. 2THE GENERAL MANAGER,KOTTAYAM DISTRICT CO-OPERATIVE BANK LTD, DISTRICT CO-OPERATIVE BANK BUILDING, KOTTAYAM, PIN-686001.KOTTAYAM DISTRICT CO-OPERATIVE BANK LTD, DISTRICT CO-OPERATIVE BANK BUILDING, KOTTAYAM, PIN-686001. 3THE REGISTRAR OF CO-OPERATIVE SOCIETIES,DEPARTMENT OF CO-OPERATIVE SOCIETIES. DEPARTMENT OF CO-OPERATIVE SOCIETIES. DEPARTMENT OF OPERATION, JAWAHAR SAHAKARANA BHAVAN, DPI JUNCTION, THYCAUD P.O, THIRUVANANTHAPURAM-PIN-695014.DPI JUNCTION, THYCAUD P.O, THIRUVANANTHAPURAM-PIN-695014. R1 BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENTR2 BY SRI.ATHUL SHAJI, SC, KOTTAYAM DISTRICT CO.OPERATIVE BANK LTD.R2 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: WP(C).No.9541 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 Exts.P1 and P2 communicationsreceived from the General Manager, Kottayam District Co-operative Bank,intimating them, based on the advice received from the Income TaxDepartment, that the interest payable to them on the Fixed Depositsmaintained with the Bank is not exempt from the procedure for taxdeduction at source (TDS) and that tax would be deducted at source andremitted to the Government on such interest payments. It is the case of thepetitioner that the interest income accruing to it is from the deposits madeby the petitioner with the Kottayam District Co-operative Bank and hence,as per the provisions of Section 194A(3)(v), the provisions of sub section (1)thereof, which contemplate a deduction of tax at source would not apply incases where the income is paid by a Co-operative Society to any other Co-operative Society. It is the case of the petitioner that the payment of interestfrom the Kottayam District Co-operative Bank to the petitioner has to beviewed as a payment of income by a Co-operative Society to another Co-operative Society and hence the provisions of Section 194A (3)(v) wouldapply to exclude 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 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. SJ SD/- A.K.JAYASANKARAN NAMBIARJUDGE 4 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE LETTER NO.AS/562-A/2018-19DATED 14.01.2019 ISSUED BY THE 2ND RESPONDENT PROPOSING TO LEVY TDS FROM DEPOSITS WITH TRANSLATION. EXHIBIT P2 THE COPY OF THE CIRCULAR NO.40/2018-19 DATED 14.02.2019 ISSUED BY THE 2ND RESPONDENT WITH TRANSLATION. EXHIBIT P3 THE COPY OF THE PROCEEDING DATED 6.03.2019 ISSUED BY THE 1ST RESPONDENT.