INCOME TAX ACT, 1961

Section 194A

Tax deduction at source - Under section 194A - Interest on fixed deposits paid by assessee-bank to the members of the Cooperative Society -

AO made disallowance of interest on fixed deposits paid by assessee-bank to the members of the Cooperative Society under section 40(a)(ia) as assessee had not deducted tax at source and as AO was of the view that the amendment made to section 194A vide Finance Act, 2015 which reads as, the exemption provided from deduction of tax under section 194A(3)(v) shall not apply to the payment of interest on time deposits by the cooperative bank to its members is clarificatory and therefore retrospective in nature. Assessee contended that it was a Cooperative Society and therefore, the interest paid to its members was not liable for deduction of tax at source. Held: Amendment to section 194A vide Finance Act, 2015 which reads as, the exemption provided from deduction of tax under section 194A(3)(v) shall not apply to the payment of interest on time deposits by the cooperative bank to its members was expressly provided from the prospective date of 1-6-2015 but not retrospectively. Therefore, as in the instant case the assessment year involved was 2014-15, the amendment made to section 194A had no application in assessee's case.

Followed:Asstt. CIT v. Maharaja Co-Operative Urban Bank Ltd. [ITA No. 211 & 212/Viz/2018 & Cross Objection Nos. 32 & 33/Viz/2018, 17-Aug-2018] : 2019 TaxPub(DT) 2279 (Visakhapatnam-Trib)

REFERRED : ACIT v. Belgaum District Central Co-Op. Bank Ltd. [ITA No. 324/Pnj/2013, dt. 14-11-2014]

FAVOUR : In assessee's favour

A.Y. : 2014-15 & 2015-16

INCOME TAX ACT, 1961

Section 37(1)

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