Income TAx Officer Ward-1 , Hubballi V. The Sarawat Co-op Bank Ltd , Hubballi

ITA 1246/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7322 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 02-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHREYA RAO
• Assessee Lawyers: PADMA MEENAKSHI
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO S . 1246 TO 1249 /BANG/201 7 ASSESSMENT YEAR S : 2010 11 TO 20 13 14 ITO TDS WARD 1, HUBBALLI VS. THE SARASWAT CO-OPERATIVE BANK LTD., B RANCH DEVIATE COMPLEX, CLUB ROAD, HUBBALLI - 580029. PAN: AA BAT4497Q APPELLANT RESPONDENT APPELLANT BY : MS. SHREYA RAO, ADVOCATE RESPONDENT BY : SMT. PADMAMEENAKSHI, JCIT DR DATE OF HEARING : 0 1 . 11 .201 7 DATE OF PRONOUNCEMENT : 03 .1 1 .2017 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THESE FOUR APPEALS ARE REVENUES APPEALS DIRECTED A GAINST THE COMBINED ORDER OF LD. CIT (A) HUBLI DATED 31.07.2015 FOR ASSESSMENT YEA RS 2010 11 TO 2013 14. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE REVENUE HAS RAISED AS MANY AS 4 COMMON GROUN DS IN EACH YEAR BUT THERE IS ONLY ONE COMMON GRIEVANCE THAT THE LEARNED CIT (A) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 194A (3) (V) IS APPLICABLE IN THE PRESENT CASE AND NOT SECTION 194A (3) (VIIA). 3. LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS P ASSED BY THE A.O. U/S 194A. LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF C IT (A) AND PLACED RELIANCE ON A ITA NOS. 1246 TO 1249/BANG/2017 PAGE 2 OF 3 JUDGMENT OF HONBLE BOMBAY HIGH COURT (GOA BENCH) I N ASSESSEES OWN CASE IN TAX APPEALS NO. 3 TO 9 & 11 OF 2015 DATED 07.03.201 7. SHE SUBMITTED A COPY OF THIS JUDGMENT. SHE ALSO PLACED RELIANCE ON TWO SEPARATE JUDGMENTS OF DHARWAD BENCH OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F THE BAILHONGAL URBAN CO OPERATIVE BANK LTD. VS. CIT IN ITA NO. 100001 OF 20 14 DATED 16.12.2015 AND IN THE CASE OF CIT VS. THE JAMKHANDI URBAN CO OPERATIVE BA NK IN ITA NO. 100003 OF 2015 ALSO DATED 16.12.2015. SHE POINTED OUT THAT AS PER THESE JUDGMENTS, THE AMENDMENT IN SECTION 194A (3) (V) IS EFFECTIVE FROM 01.06.201 5 AND AS PER THIS AMENDMENT, THE EXEMPTION PROVIDED TO CO OPERATIVE BANK HAS BEEN WI THDRAWN AND THEREFORE PRIOR TO THIS DATE, A CO OPERATIVE BANK IS ALSO EXEMPT FROM DEDUCTING TDS FROM INTEREST PAID TO MEMBERS. IN THE REJOINDER, LEARNED DR OF THE REV ENUE PLACED RELIANCE ON A JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CITIZEN CO OPERATIVE SOCIETY LTD. VS. ACIT AS REPORTED IN 397 ITR 1. SHE POINTED OUT THAT ALTHOUGH THIS JUDGMENT IS IN THE CONTEXT OF ALLOWABILITY OF DEDUC TION U/S 80P OF I T ACT BUT AS PER PARA 25 OF THIS JUDGMENT, THE MEMBERS OF A CO OPERA TIVE SOCIETY ARE CLASSIFIED IN TWO CATEGORIES I.E. RESIDENT OR ORDINARY MEMBERS AND (I I) NOMINAL MEMBERS. THE SECOND CATEGORY OF MEMBERS ARE THOSE MEMBERS WHO ARE MAKIN G DEPOSITS WITH THE ASSESSEE FOR THE PURPOSE OF OBTAINING LOANS. SHE SU BMITTED THAT THE MATTER MAY BE RESTORED TO AO OR CIT (A) FOR THE PURPOSE OF FINDIN G OUT AS TO WHETHER THE INTEREST PAID BY THE ASSESSEE IS TO ORDINARY MEMBERS OR NOMI NAL MEMBERS AND AS A CONSEQUENCE, EXEMPTION FROM TDS PROVISIONS IS AVAIL ABLE OR NOT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGARD ING THIS ASPECT THAT THE IN RESPECT OF INTEREST PAYMENT BY THE ASSESSEE TO ITS MEMBERS, TDS IS NOT REQUIRED TO BE DEDUCTED BY THE ASSESSEE U/S 194A PRIOR TO 01.06.20 15, WE HOLD THAT THIS ASPECT IS COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS JUDGME NTS CITED BEFORE US BY THE LEARNED AR OF THE ASSESSEE AND HENCE, ON THIS LEGAL ASPECT, WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A) IN ANY OF THE FOUR YEARS WH ICH ARE BEFORE US. BUT THERE IS A FACTUAL ASPECT ALSO THAT WHETHER THE PERSONS TO WHO M INTEREST WAS PAID BY THE ASSESSEE WITHOUT TDS WERE MEMBERS OR NOT? THIS IS V ERY IMPORTANT BECAUSE THE EXEMPTION FROM TDS REQUIREMENT IS ONLY IN RESPECT O F PAYMENT OF INTEREST TO MEMBERS BY A CO OPERATIVE BANK UP TO 31.05.2015. TH ERE IS NO FINDING OF CIT (A) ON THIS FACTUAL ASPECT. HENCE, WE FEEL IT PROPER TO RE STORE THE MATTER BACK TO CIT (A) FOR ITA NOS. 1246 TO 1249/BANG/2017 PAGE 3 OF 3 THE LIMITED PURPOSE TO EXAMINE THIS FACTUAL ASPECT IN THE LIGHT OF THIS JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CITIZEN CO OPERATIVE SOCIETY LTD. VS. ACIT (SUPRA). WE WANT TO MAKE IT CLEAR THAT THIS AS PECT IS ALSO OPEN AS TO WHETHER THIS JUDGMENT IS APPLICABLE IN THE PRESENT CASE OR NOT BECAUSE THE DISPUTE IN THAT CASE WAS WITH REGARD TO DEDUCTION U/S 80P AND IN TH E PRESENT CASE, THE DISPUTE IS REGARDING TDS U/S 194A. APPARENTLY, THE DEFINITION OF A MEMBER OF A CO OPERATIVE SOCIETY FOR THE PURPOSE OF DEDUCTION U/S 80P AND FO R THE PURPOSE OF TDS U/S 194A CANNOT BE DIFFERENT BUT BECAUSE THIS ASPECT WAS NOT EXAMINED BY ANY OF THE AUTHORITIES BELOW AND BEFORE US ALSO, THE PARTIES W ERE NOT PREPARED TO ARGUE ON THIS ASPECT, WE FEEL IT PROPER TO RESTORE THE MATTER BAC K TO DECIDE THIS ISSUE AFRESH KEEPING THIS ASPECT OPEN. 5. IN THE RESULT, ALL THE FOUR APPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (GEORGE GEORGE K) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 03 RD NOVEMBER, 2017. /MS/ COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.