The Jaipur ITAT, in a recent ruling observed that TDS provisions under the Income Tax act is not applicable to payments made by a cooperative bank in respect of interest amount paid to its members.
The assessee, in the instant case, is engaged in the business of banking. For the relevant assessment year, the assessee filed return by claiming expenses under various heads, including the interest expenses which indicate the payment of interest made by the assessee to its members. The Assessing Officer had disallowed the expenses by pointing out that TDS was not paid on such amount.
The CIT(A), on first appeal, deleted the addition by holding that no TDS is deductible on the same.
Upholding the order of the first appellate authority, the bench observed “Looking into the observation of the ld. CIT(A)-1, Jaipur (supra) in quantum appeal of the assessee, the ld. CIT(A)-III, Jaipur in appellate proceedings in the case of the assessee relating to non-deduction of TDS in the above heads held that no tax is deductible on interest paid to members and thus the liability raised u/s 201(1) and consequential interest u/s 201(1A) was deleted. Hence, in view of the above facts and circumstances of the case, I concur with the findings of the ld. CIT(A) on the issue. Thus the appeal of the Revenue is dismissed.”
Read the full text of the order below.