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Co-operative Banks are eligible for TDS exemption : ITAT
Co-operative Banks are eligible for TDS exemption : ITAT Reversing the orders of the lower authorities, it directed the AO to revise the assessment The Pune Branch of the Income Tax Appellate Tribunal (ITAT) has held that a cooperative bank is eligible for Tax Deducted at Source (TDS) exemption for deposits by nominal members under the Income Tax Act. The appellants are a group...
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Co-operative Banks are eligible for TDS exemption : ITAT
Reversing the orders of the lower authorities, it directed the AO to revise the assessment
The Pune Branch of the Income Tax Appellate Tribunal (ITAT) has held that a cooperative bank is eligible for Tax Deducted at Source (TDS) exemption for deposits by nominal members under the Income Tax Act.
The appellants are a group of cooperative banks engaged in the business of banking registered under the provisions of the Maharashtra Cooperative Societies Act.
The assessing officer (AO) made an addition under the IT Act alleging that the assessee failed to deduct the TDS on the interest paid on deposits received.
On appeal, the Commissioner of Income Tax (Appeals) confirmed the addition. Aggrieved, the appellant approached ITAT.
The appellant submitted that any person who had done any transaction of business of banking with the appellant society was entitled to become a nominal member as per the provisions of the Societies Act. The term 'member of co-operative society' included 'nominal members.'
The Coram of S. S. Viswanethra Ravi (judicial member) and Inturi Rama Rao (accountant member) observed that the cooperative bank was also a specie of cooperative societies and entitled to the benefit of general exemption provided to all the cooperative societies.
The tribunal also noted that the provisions of the Societies Act provided that the members include nominal members. Therefore, there was no reason for the denial of the exemption to it.
The division bench held, "The reasoning of the lower authorities cannot be appreciated in the eyes of the law. The orders of the lower authorities are hereby reversed, and we direct the AO to delete the addition made for non-deduction of TDS on interest paid on deposit received from the nominal members of the society.".
Advocates Pramod Shingte and MG Jasnani appeared on behalf of the appellants and the respondent, respectively.