The Tax Publishers2021 TaxPub(DT) 0705 (Bom-HC)

INCOME TAX ACT, 1961

Section194A

There was no liability for deducting tax at source under section 194A in respect of amount of interest paid by assessee cooperative society to its members for the assessment year 2012-13 as the very fact that the Legislature had to step in and specifically exclude the co-operative banks with effect from 01-06-2015, indicates that prior to the said date the benefits of exemption were very much available to the co-operative banks like the assessee as well.

Tax deduction at source - Under section 194A - Interest paid to various members of Society - Applicability of amendment to clause (v) of section 194A(3)

AO made disallowance of interest paid to various members of the Society in terms of section 40(a)(ia) on the ground that the assessee failed to deduct tax at source under section 194A on the said amount and deposit the same in the Government treasury on or before the due date. For this purpose, he relied upon the provisions of section 194A(3)(i)(b). Held: No doubt, by the Finance Act, 2015 which entered into force with effect from 01-06-2015, clause (v) of section 194A(3) came to be amended and the exemption from application of provisions of sub-section (1) of section 194A was restricted to co-operative society other than a co-operative bank. This subsequent amendment, will however not apply for the assessment year 2012-13 with which was concerned in the present case. Further, the very fact that the Legislature had to step in and specifically exclude the co-operative banks with effect from 01-06-2015, indicates that prior to the said date the benefits of exemption were very much available to the co-operative banks like the assessee as well.

REFERRED :

FAVOUR : In favour of assessee

A.Y. : 2012-13



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