Wp(C)/9585/2019 Of The Ramapuram Regional 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.9585 OF 2019(W) PETITIONER: THE RAMAPURAM REGIONAL SERVICE CO-OPERATIVE BANK LIMITED.NO.4111,RAMAPURAM, RAMAPURAM BAZAR.P.O., KOTTAYAM DISTRICT, REPRESENTED BY ITS SECRETARY BY ADV. SRI.O.D.SIVADAS RESPONDENTS: 1THE ADDITIONAL COMMISSIONER OF INCOME TAX (TDS),THIRUVANANTHAPURAM, PIN - 678 001THIRUVANANTHAPURAM, PIN - 678 001 2THE GENERAL MANAGERKOTTAYAM DISTRICT CO-OPERATIVE BANK LTD, DISTRICT CO-OPERATIVE BANK BUILDING, KOTTAYAM, PIN - 686 001KOTTAYAM DISTRICT CO-OPERATIVE BANK LTD, DISTRICT CO-OPERATIVE BANK BUILDING, KOTTAYAM, PIN - 686 001 3THE REGISTRAR OF CO-OPERATIVE SOCIETIESDEPARTMENT OF CO-OPERATION, JAWAHAR SAHAKARANA BHAVAN, DPI JUNCTION, THYCAUD.P.O., THIRUVANANTHAPURAM, PIN - 695 014 R2 BY ADV. SRI.ATHUL SHAJI 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 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/2018-19 DATED 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 PROCEEDINGS DATED 6.03.2019ISSUED BY THE 2ND RESPONDENT