AO disallowed interest paid to various members of the society where interest exceeded 10,000 under section 40(a)(ia) and relied on the provisions of section 194A(3)(i)(b). The CIT(A) relied on provisions of section 194A(3)(v) and held that provisions of section 194A(1) did not apply to income credited or paid by a co-operative society to its members. High Court upheld the tribunal and CIT(A) order relying on the Finance Act 2015, where clause (v) of section 194A(3) was amended to exclude co-operative banks w.e.f 1-6-2015 which indicates that prior to the said date benefit of exemption was available to co-operative banks. (ITA No. 14 of 2017 dt. 7-01-2021) (AY.2013-14 ,2014-15)
PCIT v. Goa State Co-operative Bank Ltd (2021) 318 CTR 497 / 197 DTR 305 / 110 CCH 54 (Bom.)(HC)
S. 194A : Deduction at source – Interest other than interest on securities – No liability to deduct tax based on the specific exclusion provided to the assessee under section 194A(3)(v) – Provisions would not apply [S. 40(a)(ia), 194A(3)(i)(b) , 194A(3)(v)]