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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER
I.T.A. No. 142/Asr/2023 Assessment Year: 2014-15
The Phambra Multipurpose Vs. Income Tax Officer, Cooperative Society Ltd., VPO (TDS) Jalandhar. Phambra. [PAN:-AAATT7674B] (Appellant) (Respondent)
Appellant by Sh. Rakesh Joshi, Adv. Respondent by Sh. Mohit Kumar Nigam, Sr.DR.
Date of Hearing 31.07.2023 03.08.2023 Date of Pronouncement
ORDER Per: Anikesh Banerjee, JM: The instant appeal of the assessee was filed against the order of the ld. NFAC, Delhi, (in brevity ‘the CIT (A)’) order passed u/s 250 of the Income-tax Act, 1961 (in brevity the Act) for assessment year 2014-15. The impugned order
was emanated from the order of the ld. ITO, TDS, Jalandhar, (in brevity the ld. AO) order passed u/s 201(1) of the Act.
The appeal of the assessee was filed with delay of 102 days. The assessee filed the petition for condonation of delay and an affidavit. The assessee
I.T.A. No. 142/Asr/2023 2 Assessment Year: 2014-15
explained that the delay was caused due taking permission from Asst. Registrar Co-operative, Nawanshahr which was caused ultimate delay for granting
permission for filing appeal. The ld. DR had not made any objection in the
issue. Accordingly, the delay for 102 days is condoned.
Brief facts as culled out from the records are that the assessee is
cooperative society. The assessment was framed U/s 201 with addition of TDS
@10% on the interest payment to nominal members amount to Rs. 2,70,663/-
which works out to amount of Rs. 27,066/- and interest was calculated U/s
201(1A) amount to Rs. 25,984/-. The total amount was calculated to Rs.
53,050/- (Rs.27,066/- + Rs. 25,984/-) which was ascertained the TDS liability
by the ld. AO. Aggrieved assessee filed as appeal before the ld. CIT(A) and has
taken plea that the TDS will not be applicable on the interest payment to
nominal members. The ld. CIT(A) rejected the grounds of the assessee. Being
dissatisfied the assessee filed an appeal before us.
The ld. AR vehemently argued and placed that the TDS U/s 201 will not
be applicable on the interest payment to nominal members. The ld. AR
mentioned that the issue was decided in favour of the assessee by the order of ITAT-Amritsar Bench bearing ITA No. 64/Asr/2023 date of pronouncement 20/06/2023 in case of The Jhingran Coop. Multipurpose Service Society Ltd vs. ITO (TDS).The relevant paragraph is extracted as below: -
I.T.A. No. 142/Asr/2023 3 Assessment Year: 2014-15
“8. On parity of facts, following the judgment of the Hon’ble jurisdictional High Court, in the case of “CIT vs. Punjab State Co-operative Bank Ltd” (Supra), the ITAT Amritsar Bench in the case of “The Rurkee Coop Agri M/P Society Ltd; VPO: Rurkee Vs Jt CIT(OSD) Phagwara circle, Phagwara in ITAT No 459(ASR)/2012/Assessment Year 2009-10] has also held that the assessee was not required to deduct tax at source on interest payments to the nominal members, who are members of the society.
The Hon’ble High Court of Bombay in the case of ‘The JalgonDistrict Central Bank Vs Union of India and Ore.’, (Supra) have adjudicated upon the question of whether the exemption granted to the co-operative society under Section 194A(3)(v) can be taken away be creating a distinction between duly registered member and a nominal member, which is unknown to the exemption. clause contained in Section 194A(3)(v) of the IT Act, 1961. Having examined the validity of the impugned circular from all angles, the Hon’ble High Court has \given clear opinion that CBDT has no authority to make a crack in the exemption clause contained in Section 194A(3)(v) of the IT Act, 1961, by issuing the impugned circular and that the CBDT cannot usurp the powers of Parliament by virtue of Section 119 of the IT Act, 1961. Meaning thereby that the CBDT, under the garb of Section 119 of the IT Act, 1961, cannot exercise wider powers than the powers bestowed on it. Thus, the CBDT has no power to introduce a substantial change or alteration in the provisions of the IT Act. 1961, by importing the ideas unknown to the IT Act. 1961. The impugned circular, therefore, does not stand to the legal test. Accordingly, the
I.T.A. No. 142/Asr/2023 4 Assessment Year: 2014-15
impugned Circular No. 9 of 2002 dt. 11th Sept., 2002 [F. No. 275/106/2000/IT(B)--Annexure*A] was quashed and set aside. Thus, in our view, the reliance of the Worthy CIT(A) NFAC, Delhi on this circular is against law.
Further, the Hon’ble Supreme Court in the case of “Mavilayi Service Co-operative Bank Ltd: Vs. Commissioner of Income Tax, Calicut, [2021] 123 taxmann.com 161 (SC) has also observed that the expression “member” is not defined in the Act. Since a cooperative society has been established under the provisions of the law made by the State Legislature in that regard, the expression “member” in section 80-P(2)(a)(i) must therefore, be construed in the context of the provisions of the law enacted by the state Legislature under which the cooperative society claiming exemption has been formed.
It is further noted that the CIT(A) NFAC, Delhi in the assesse’s own case for the proceeding in respect of the Assessment Year 2014-15, has accepted nominal members as members and held that interest paid to them is not liable for TDS u/s. 194 of the Income Tax Act,1961 (Copy of Order filed on record). In view of the matter, we hold that the CIT/NFAC has acted against Res Judicata.
In the above view, we accept the grievance of the assessee genuine. The order of the Ld. CIT/NFAC is held to be infirm and against law. Accordingly, the impugned order is quashed.”
The ld. DR vehemently argued and relied on the order of the revenue
authority.
I.T.A. No. 142/Asr/2023 5 Assessment Year: 2014-15
We heard the rival submission and consider documents available in records. The assessee is a cooperative society and allowed the immunity under
section 194A(3)(V)for non-deduction of TDS on payment of interest to the
members of the cooperative society. The grievance revenue is thatthe nominal
member cannot be eligible for non-deduction of TDS on payment of interest. The ld. AR relied on the order of ITAT Amritsar bench in the case ofThe Jhingran Coop. Multipurpose Service Society Ltd(supra). The said order is
duly recognised the nominal member of cooperative society for granting
immunity for non-deduction of TDs on interest payment. There is no violation
under section 201 of the act related to non-deduction of TDS for nominal
member of the cooperative society. We fully relied on the order of ITAT- Amritsar bench, The Jhingran Coop. Multipurpose Service Society Ltd(supra). The ld. DR was unable to place any contrary judgment against the
submission of the ld. AR. The impugned appeal order is dismissed. Accordingly,
the addition amount of Rs.53,050/- is quashed.
In the result, the appeal of the assessee bearing ITA No. 142/Asr/2023 is
allowed.
Order pronounced in the open court on 03 .08.2023
Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member AKV
I.T.A. No. 142/Asr/2023 6 Assessment Year: 2014-15
Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order