Allowed

Kallara Village Service Co-Operative Bank Ltd. NO.3123, v. the Commissioner of Income Tax (Tds)

Kerala HC18 Oct 2019WP(C)/9415/2019

Case brief

AI extract

What is this about?

The High Court of Kerala allowed a writ petition filed by five co-operative banks seeking exemption from tax deduction at source on interest payments received from the Kottayam District Co-operative Bank. The court held that interest paid by one co-operative society to another falls under the exemption provided in Section 194A(3)(v).

What did the court decide?

The writ petition is allowed declaring that there will be no requirement of deducting tax at source in the case of payment of interest from the District Co-operative Bank Kottayam to the petitioners.

Kallara Village Service Co-Operative Bank Ltd. NO.3123, Vs the… — Income Tax | Kerala HC (2019)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR

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FRIDAY, THE 18TH DAY OF OCTOBER 2019 / 26TH ASWINA, 1941

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WP(C).No.9415 OF 2019(B)

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PETITIONERS:

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1 KALLARA VILLAGE SERVICE CO-OPERATIVE BANK LTD NO.3123, KALLARA SOUTH P.O., KOTTAYAM DISTRICT, REPRESENTED BY ITS SECRETARY A. MATHEW.

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2 KURICHY SERVICE CO-OPERATIVE BANK LTD. NO.1538, KURICHY P.O., KOTTAYAM, REPRESENTED BY ITS SECRETARY N. VINOD.

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3 MANGANAM SERVICE CO-OPERATIVE BANK LTD. NO.1920, MANGANAM P.O., KOTTAYAM, REPRESENTED BY SECRETARY MATHEW SCARIA.

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4 ITHITHANAM JANATHA SERVICE CO-OPERATIVE BANK LTD. NO.1297, ITHITHANAM P.O., CHANGANASSERY, KOTTAYAM-686004, REPRESENTED BY ITS SECRETARY T.K. KUNJUMON.

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5 THE ARPOOKARA SERVICE SERVICE CO-OPERATIVE BANK LTD. NO.1931,

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VILLOONNI P.O., ARPOOKARA, KOTTAYAM, REPRESENTED BY ITS SECRETARY, HAREENDRAN NAIR M.S.

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BY ADVS.

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SRI.T.A.SHAJI (SR.) SHRI.NIKHIL SUNNY MOOKEN SRI.S.ABHILASH VISHNU

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RESPONDENTS:

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1 THE COMMISSIONER OF INCOME TAX (TDS), CENTRAL REVENUE BUILDING, IS PRESS ROAD, COCHIN682018.

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2 THE ADDL. COMMISSIONER OF INCOME TAX, TDS RANGE, 3RD FLOOR, AYAKAR BHAWAN, KAWADIAR, TRIVANDRUM-695003.

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3 INCOME TAX OFFICER,

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WP(C).No.9415 OF 2019

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WARD-1, KOTTAYAM-686001.

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4 INCOME TAX OFFICER, WARD-2, KOTTAYAM-686001.

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5 INCOME TAX OFFICER, WARD-3, KOTTAYAM-686001.

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6 INCOEM TAX OFFICER, WARD-4, THIRUVALLA-689101.

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7 INCOME TAX OFFICER, WARD-5, THIRUVALLA-689101.

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8 THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, KERALA REGION, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, CENTRAL REVENUE BUILDINGS, IS PRESS ROAD, KOCHI-682018.

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9 THE CENTRAL BOARD OF DIRECT TAXES, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI-110001, REPRESENTED BY ITS CHAIRMAN.

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10 THE KOTTAYAM DISTRICT CO-OPERATIVE BANK LTD., DISTRICT CO-OPERATIVE BANK BUILDING, T.B. ROAD, CENTRAL JUNCTION, KOTTAYAM-6860001, REPRESENTED BY ITS GENERAL MANAGER.

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11 STATE OF KERLA, REPRESENTED BY THE PRINCIPAL SECRETARY TO GOVT., CO-OPERATIVE (C) DEPARTMENT, THIRUVANANTHAPURAM695001.

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OTHER PRESENT:

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GP MM JASMINE, SC CHRISTOPHER ABRAHAM

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18.10.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No.9415 OF 2019

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JUDGMENT

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The petitioners are Primary Agricultural Credit Society registered under the provision of the Kerala Co-operative Societies Act. In the writ petition, the petitioners are aggrieved by Exts.P1 and P3 communications received from the General Manager, Kottayam District Co-operative Bank, intimating them, based on the advice received from the Income Tax Department, that the interest payable to them on the Fixed Deposits maintained with the Bank is not exempt from the procedure for tax deduction at source (TDS) and that tax would be deducted at source and remitted to the Government on such interest payments. It is the case of the petitioners that the interest income accruing to it is from the deposits made by the petitioners with the kottayam District Co-operative Bank and hence, as per the provisions of Section 194A(3)(v), the provisions of sub section (1) thereof, which contemplate a deduction of tax at source would not apply in cases where the income is paid by a Co-operative Society to any other Cooperative Society. It is the case of the petitioners that the payment of interest from the Kottayam District Co-operative Bank to the petitioner has to be viewed as a payment of income by a Co-operative Society to another Co-operative Society and hence the provisions of Section 194A (3)(v) would apply to exclude the receipts of interest income by the petitioners from the requirement of tax deduction at source.

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Through a statement filed by the learned Standing Counsel appearing on behalf of the 1^st respondent, it is conceded that the petitioners would get

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WP(C).No.9415 OF 2019

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the benefit of the exemption provided under Section 194A(3)(v) of the Income Tax Act. Taking note of the statement, I allow the writ petition by declaring that there will be no requirement of deducting tax at source in the case of payment of interest from the District Co-operative Bank Kottayam to the petitioners.

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SD/-

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A.K.JAYASANKARAN NAMBIAR JUDGE

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WP(C).No.9415 OF 2019

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APPENDIX

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PETITIONER'S/S EXHIBITS:

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EXHIBIT P1	TRUE COPY OF THE	COMMON LETTER DATED
	14.1.2019 ISSUED	TO PETITIONER BANKS
EXHIBIT P2	TRUE COPY OF THE ISSUED BY THE 2ND KOTTAYAM DISTRICT	LETTER DATED 26.12.2018 RESPONDENT TO THE CO-OPERATIVE BANK
EXHIBIT P3	TRUE COPY OF THE DATED 14.2.2019 I DISTRICT CO-OPERA	CIRCULAR NO.40/2018-19 SSUED BY THE KOTTAYAM TIVE BANK
EXHIBIT P4	TRUE COPY OF THE ISSUED BY THE 1ST KOTTAYAM DISTRICT	LETTER DATED 31.1.2019 RESPONDENT TO THE CO-OPERATIVE BANK
EXHIBIT P5	TRUE COPY OF THE THE INCOME TAX AP BENCH IN ITA NO.5	ORDER DATED 29.1.2018 OF PELLATE TRIBUNAL COCHIN 96/COCH/2017
EXHIBIT P6	TRUE COPY OF THE THE INCOME TAX AP BENCH IN ITA NO.4	ORDER DATED 25.10.2018 OF PELLATE TRIBUNAL COCHIN 20/COCH/2018

Kallara Village Service Co-Operative Bank Ltd. NO.3123, v. the Commissioner of Income Tax (Tds)

Case brief

What is this about?

What did the court decide?

Kallara Village Service Co-Operative Bank Ltd. NO.3123, v. the Commissioner of Income Tax (Tds)

Case brief

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What did the court decide?

What the court decided

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