Kerala HC: Co-operative Societies Not Engaged in Banking Not Eligible for TDS Exemption u/s 194A(3)(iii)

The Kerala High Court held that co-operative societies not engaged in the business of banking are not entitled to the TDS exemption under Section 194A(3)(iii) of the Income Tax Act. The Court clarified that only societies functioning as “co-operative banks” fall within the exemption, and societies performing general or mixed-purpose functions cannot claim benefit. It analyzed legislative intent and previous judicial interpretations and emphasized strict construction of tax exemption provisions. The ruling has significant implications for financial operations of co-operative societies, requiring compliance with TDS obligations.