M/s Vasavamba Co-operative Bank Ltd , Hollenarasipura V. Assistant Commissioner of Income TAx Circle-1 , Hassan

ITA 1386/BANG/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4711 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 01-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S RAMASUBRAMANIAN
• Keywords: Question of law

Judgement Text

ITA.1386/BANG/2018 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'B', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NO.1386/BANG/2018 (ASSESSMENT YEAR : 2012-13) M/S. VASAVAMBA CO-OPERATIVE BANK LTD, P. B. NO.3, MAIN ROAD, HOLENARASIPURA 573211 .. APPELLANT PAN : AAAAS4950L V. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE -1, HASSAN .. RESPONDENT ASSESSEE BY : SHRI. S. RAMASUBRAMANIAN, CA REVENUE BY : SMT. PADMAMEENAKSHI, JCIT HEARD ON : 30.05.2018 PRONOUNCED ON : 01.06.2018 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THE PRESENT APPEAL IS FILED BY THE ASSESSEE BEING AGGRIEVED BY THE ORDER OF THE CIT (A), MYSURU, DT.28.02.2018, FO R THE ASSESSMENT YEAR 2012-13, ON THE FOLLOWING GROUNDS : ITA.1386/BANG/2018 PAGE - 2 02. BRIEF FACTS ARE, THE ASSESSEE IS A COOPERATIVE BANK REGISTERED UNDER THE KARNATAKA STATE CO-OPERATIVE SOCIETIES AC T, 1959 AND HAD ALSO OBTAINED LICENSE FROM THE RBI FOR CARRYING ON BANKING OPERATIONS. THE ASSESSEE FILED RETURN OF INCOME FO R THE IMPUGNED YEAR DECLARING TOTAL INCOME OF RS.46,78,250/-. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY. IN AN ASSESSMENT U/S.14 3(3), THE AO DETERMINED THE TOTAL INCOME AT RS.1,58,57,200/-. T HE AO NOTICED THAT THE ASSESSEE HAD PAID AN INTEREST OF RS.1,09,1 6,354/- TO ITS MEMBERS WHERE THE INDIVIDUAL PAYMENT TO MEMBERS EXC EEDED RS.10,000/- PER ANNUM. AS THE ASSESSEE HAD NOT DED UCTED THE TDS ON THE ASSUMPTION THAT THE ASSESSEE WAS NOT DEDUBTI BLE. THE AO HAS DISALLOWED AN AMOUNT OF RS.1,09,16,354/- U/S.40 (A)(IA) OF THE ACT AS THE TAX WAS NOT DEDUCTED AT SOURCE, U/S.194A OF THE ACT. BEING AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). ITA.1386/BANG/2018 PAGE - 3 03. THE CIT (A) IN HIS APPELLATE ORDER, AFTER DEALI NG THE ISSUE AT LENGTH, UPHELD THE ORDER OF THE AO. FURTHER AGGRIE VED, THE ASSESSEE HAS FILED APPEAL BEFORE THIS TRIBUNAL. 04. THE LD. AR HAS SUBMITTED THAT THE ISSUE IS COV ERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENTS OF THE HONBLE JUR ISDICTIONAL HIGH COURT IN BAILHONGAL URBAN COOPERATIVE BANK V. CIT [ITA.NO.100001 OF 2014, DT.16.12.2015], CIT V. CANF IN HOMES LTD [(2012) 347 ITR 382] AND THE DECISION OF THE COORDI NATE BENCH OF THE TRIBUNAL IN BAGALKOT DISTRICT CENTRAL CO-OPERAT IVE BANK LTD V. JCIT [ITA NO.1572/BANG/2013, DT.30.05.2014]. 05. PER CONTRA, THE LD. DR RELIED UPON THE ORDERS P ASSED BY THE LOWER AUTHORITIES. 06. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE COORDINATE BENCH IN A RECENT DECISION IN ACI T V. THE BELLARY DIST. CO-OPERATIVE CENTRAL BANK LTD [I.T.A NO.2016/ BANG/2016, DT.01.06.2018] HAS CONSIDERED THE JUDGMENTS CITED B Y THE AO AS WELL AS BY THE ASSESSEE AND AFTER RELYING UPON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN PARA 6, WHICH IS REPRODUCED HEREIN BELOW, IN THE MATTER OF CIT V. BIJAPUR DISTR ICT CENTRAL [(2018) 93 TAXMANN.COM 211], HAD DISMISSED THE APPE AL OF THE REVENUE AND HELD IN FAVOUR OF THE ASSESSEE : 06. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE BEFORE THE AO HAD RELIED UPON THE DECISION OF THE TRIBUNAL IN THE BAGALKOT DISTRICT C ENTRAL CO- OP. BANK (SUPRA) AND IT WAS THE CASE OF THE AO THAT THE REVENUE IS IN APPEAL BEFORE THE HONBLE JURISDICTIO NAL HIGH COURT ON THE SAID MATTER. HOWEVER, WE NOTICE THAT THE APPEAL ITA.1386/BANG/2018 PAGE - 4 OF THE REVENUE IN THE MATTER OF THE BAGALKOT DISTRI CT CENTRAL CO-OP. BANK (SUPRA) WAS DECIDED BY THE DIVISION BEN CH VIDE ITS JUDGMENT DT.16.12.2015, WHICH WAS APTLY MENTION ED BY THE JURISDICTIONAL HIGH COURT IN THE MATTER OF SRI BASA VESWARA SAHAKARI BANK LTD (SUPRA) IN PARA 5, TO THE FOLLOWI NG EFFECT : 5. THE FIRST QUESTION IS ANSWERED AT PARA 2 AS FOLLOW S: '2. THE POINT IS SQUARELY COVERED BY A DIVIS ION BENCH JUDGMENT OF THIS COURT IN ITA NO. 100116/2014 BETWE EN THE COMMISSIONER OF INCOME TAX AND ANOTHER V. THE BAGAL KOT DISTRICT CENTRAL CO-OPERATIVE BANK DATED 16.12.2015 WHEREIN, WITH REFERENCE TO A CIRCULAR OF THE GOVERNMENT OF INDIA BEARING NO.19/2015 IN F.NO.142/14/2015 TPL, IT HAS BEEN HEL D AS FOLLOWS: '42.5 IN VIEW OF THIS, THE PROVISIONS OF THE SECTIO N 194(3)(V) OF THE INCOME-TAX ACT HAVE BEEN AMENDED SO AS TO EXPRESSLY PROVIDE THAT THE EXEMPTION PROVIDED FROM DEDUCTION OF TAX FROM P AYMENT OF INTEREST TO MEMBERS BY A CO-OPERATIVE SOCIETY UNDER SECTION 194A(3)(V) OF THE INCOME-TAX ACT SHALL NOT APPLY TO THE PAYMENT OF INTEREST ON TIME DEPOSITS BY THE CO-OPERATIVE BANKS TO ITS MEMBERS. AS THIS AMENDMENT IS EFFECTIVE FROM THE PROSPECTIVE DATED OF 1ST JUNE, 2015, THE CO-OPERATIVE BANK SHALL BE REQUIRED TO DEDUCT TAX FROM THE PAYMENT OF INTEREST ON TIME DEPOSITS OF IT S MEMBERS, ON OR AFTER THE 1ST JUNE, 2015. HENCE, A COOPERATIVE BANK WAS NOT REQUIRED TO DEDUCT TAX FROM THE PAYMENT OF INTEREST ON TIME DEPOSITS OF ITS MEMBERS PAID OR CREDITED BEFORE 1ST JUNE, 20 15.' IN VIEW OF THE ABOVE CIRCULAR, THE SAID SUBSTANTIAL QUESTION OF LAW DOES NOT SURVIVE FOR CONSIDERATION.' MOREOVER, THE DIVISION BENCH IN THE MATTER OF BIJAP UR DISTRICT CENTRAL (SUPRA) IN PARA 6 HAD HELD AS UNDER : 6. THIS COURT IN THE AFORESAID CASE OF KARNATAKA VIKAS GRAMEENA BANK HELD AS UNDER : '1. THE LEARNED COUNSEL FOR THE DEPARTMENT - REVENUE MR . Y.V.RAVIRAJ, SUBMITS THAT THE CONTROVERSY IS NO LON GER RES INTEGRA AND IS COVERED BY THE DECISION OF THE CO-OR DINATE BENCH I.E. THE COMMISSIONER OF INCOME TAX AND ANOTHER V. THE ILKAL CO-OPERATIVE BANK LTD., THE CO - ITA.1386/BANG/2018 PAGE - 5 ORDINATE BENCH IN THE SAID CASE HAS HELD AS BELOW: 'IN THIS APPEAL BY THE REVENUE, THE ISSUE INVOLVED IS FOR CONSIDERATION WHETHER THE CO-OPERATIVE BANK WAS REQ UIRED TO DEDUCT TAX WHILE PAYING INTEREST TO ITS MEMBERS ON TIME DEPOSITS UNDER SECTION 194-A OF THE INCOME TAX ACT. ' 2. THE MINISTRY OF FINANCE, GOVERNMENT OF INDIA VIDE C IRCULAR NO.19/2015 IN F.NO.142/14/2015-TPL, HAS HELD THAT T HE CO- OPERATIVE BANKS ARE NOT REQUIRED TO DEDUCT TAX AT SOURCE ON TIME DEPOSITS OF ITS MEMBERS PAID OR CRED ITED ON OR BEFORE 1.6.2015. THE RELEVANT PORTION OF THE CIR CULAR READS AS UNDER: '42.5 IN VIEW OF THIS, THE PROVISIONS OF THE SECTIO N 194A(3)(V) OF THE INCOME-TAX ACT HAVE BEEN AMENDED SO AS TO EXPRESSLY PROVIDE THAT THE EXEMPTION PROVIDED FR OM DEDUCTION OF TAX FROM PAYMENT OF INTEREST TO MEMBER S BY A CO- OPERATIVE SOCIETY UNDER SECTION 194A(3)(V) OF T HE INCOME-TAX ACT SHALL NOT APPLY TO THE PAYMENT OF IN TEREST ON TIME DEPOSITS BY THE CO-OPERATIVE BANKS TO ITS MEMB ERS. AS THIS AMENDMENT IS EFFECTIVE FROM THE PROSPECTIVE DA TE OF 1ST JUNE, 2015, THE CO-OPERATIVE BANK SHALL BE REQUIRED TO DEDUCT TAX FROM THE PAYMENT OF INTEREST ON TIME DEP OSITS OF ITS MEMBERS, ON OR AFTER THE 1ST JUNE, 2015. HENCE, A COOPERATIVE BANK WAS NOT REQUIRED TO DEDUCT TAX FRO M THE PAYMENT OF INTEREST ON TIME DEPOSITS OF ITS MEMBERS PAID OR CREDITED BEFORE 1ST JUNE, 2015.' IN VIEW OF THE AFORESAID CIRCULAR, THIS APPEAL DOES NOT SURVIVE FOR CONSIDERATION AND IS ACCORDINGLY DISMIS SED. NO COSTS. 3. IN VIEW OF THE SAME, THE PRESENT APPEAL FILED BY RE VENUE IS ALSO DISPOSED OF, IN THE SAME TERMS.' FOLLOWING THE DECISION OF THE COORDINATE BENCH IN T HE MATTER OF THE BELLARY DIST. CO-OPERATIVE CENTRAL BANK LTD (SUPRA) , WE FIND SUBSTANCE AND MERIT IN THE APPEAL OF THE ASSESSEE A ND ACCORDINGLY GROUND NOS.2 AND 3 OF THE ASSESSEE ARE DECIDED IN F AVOUR OF THE ITA.1386/BANG/2018 PAGE - 6 ASSESSEE. THE AO IS DIRECTED TO ALLOW THE EXPENDIT URE OF RS.1,09,16,354/-. 08. GROUND NO.4 IS NOT PRESSED BEFORE US AND HENCE, THE SAME IS DISMISSED. 09. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1ST DAY OF JU NE, 2018. SD/- SD/- (A. K. GARODIA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER BENGALURU DATED : 01.06.2018 MCN* COPY TO: THE ASSESSEE THE ASSESSING OFFICER THE COMMISSIONER OF INCOME-TAX COMMISSIONER OF INCOME-TAX(A) DR GF, ITAT, BANGALORE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.