The Coimbatore District Central Co-operative Bank Ltd., Coimbatore V. ITO, Coimbatore

ITA 1690/CHNY/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2631 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 10-12-2015
• Assessment Year: 2014-2015
• Appeal Filed On: 22-07-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: K RAVI
• Section: 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.1678, 1679, 1680, 1681, 1682 & 1683/MDS/201 5 ' (' / ASSESSMENT YEARS : 2008-09 TO 2013-14 THE COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK LTD. (R.S. PURAM BRANCH), CHINTHAMANI COOP SUPER MARKET COMPOUND, COIMBATORE 641 002. PAN : AABAT 3010 F V. THE INCOME TAX OFFICER, TDS WARD I(5), COIMBATORE. (*+/ APPELLANT) (,-*+/ RESPONDENT) ./ ITA NOS.1684, 1685, 1686, 1687, 1688, 1689 & 1690/MDS/2015 ' (' / ASSESSMENT YEARS : 2008-09 TO 2014-15 THE COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK LTD., D.NO.80, STATE BANK ROAD, COIMBATORE 641 002. PAN : AABAT 3010 F V. THE INCOME TAX OFFICER, TDS WARD I(5), COIMBATORE. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI K. RAVI, ADVOCATE ,-*+ . / / RESPONDENT BY : SH. P. RADHAKRISHNAN, JCIT 0 . 1$ / DATE OF HEARING : 10.12.2015 2!( . 1$ / DATE OF PRONOUNCEMENT : 14.01.2016 2 I.T.A. NOS.1678 TO 1683/MDS/15 / O R D E R PER BENCH : THE ASSESSEE IN THESE APPEALS HAS CHALLENGED THE CORRECTNESS OF THE ORDERS OF THE COMMISSIONER OF IN COME TAX (APPEALS) 2, COIMBATORE, DATED 29.05.2015, FOR TH E RESPECTIVE ASSESSMENT YEARS, CONFIRMING THE ORDERS OF THE ASSE SSING OFFICER PASSED UNDER SECTIONS 201(1) AND 201(1A) OF THE INC OME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. SHRI K. RAVI, THE LD.COUNSEL FOR THE ASSESSEE, S UBMITTED THAT THE ASSESSEE CONTENDED BEFORE THE LOWER AUTHORITIES THAT TAX NEED NOT BE DEDUCTED WHILE MAKING PAYMENT OF INTEREST ON THE DEPOSIT. ACCORDING TO THE LD. COUNSEL, THE ISSUE ARISES FOR CONSIDERATION IS WHETHER THE ASSESSEE CARRYING ON THE BUSINESS OF BA NKING WITH THE APPROVAL OF RESERVE BANK OF INDIA, IS LIABLE TO DED UCT TAX UNDER SECTION 194A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') ON THE INTEREST PAID BY IT TO THE MEMBERS. THE MADRAS HIG H COURT, BY A COMMON JUDGMENT DATED 15.10.2015, IN THE ASSESSEE'S OWN CASE CONSIDERED AN IDENTICAL ISSUE AND AFTER TAKING NOTE OF THE AMENDMENT MADE BY THE PARLIAMENT IN SECTION 194A(3) OF THE ACT BY FINANCE BILL, 2015 WITH EFFECT FROM 1.6.2015, FO UND THAT THE 3 I.T.A. NOS.1678 TO 1683/MDS/15 EXPRESS LANGUAGE OF SECTION 194A DOES NOT INDICATE ANY RETROSPECTIVITY, THEREFORE, THE ASSESSEE CANNOT ESC APE THE LIABILITY FROM DEDUCTION OF TAX AT SOURCE FROM 1.6.2015. THE MADRAS HIGH COURT CLARIFIED THAT BEFORE 1.6.2015, THE ASSESSEE WAS NOT EXPECTED TO DEDUCT TAX ON THE INTEREST PAID TO ITS MEMBERS. ACCORDINGLY, THE QUESTION WAS ANSWERED IN FAVOUR OF ASSESSEE. IN VIEW OF THIS JUDGMENT OF MADRAS HIGH COURT, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE NEED NOT DEDUCT TAX IN RESPECT OF INTEREST PAID TILL 31.05.2015. THIS JUDGMENT OF MADRAS HIGH COURT WAS SUBSEQUENTLY FOLLOWED IN THE ASSESSEE'S OWN CASE BY JUDGMENT DAT ED 29.10.2015. 3. WE HEARD SH. P. RADHAKRISHNAN, THE LD. DEPARTMEN TAL REPRESENTATIVE ALSO. ACCORDING TO THE LD. D.R., SE CTION 194A(3) OF THE ACT WAS AMENDED TO CLARIFY THE EXISTING LEGAL P OSITION, THEREFORE, IT IS OPERATIVE RETROSPECTIVELY. HENCE, ACCORDING TO THE LD. D.R., THE ASSESSEE IS LIABLE TO DEDUCT TAX WHILE MAKING PAYME NT OF INTEREST ON THE DEPOSIT TO ITS MEMBERS. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE, THE M ADRAS HIGH COURT CONSIDERED AN IDENTICAL ISSUE IN THE ASSESSEE 'S OWN CASE. IN 4 I.T.A. NOS.1678 TO 1683/MDS/15 FACT, THE QUESTION CONSIDERED BY THE MADRAS HIGH CO URT READS AS FOLLOWS:- WHETHER A CO-OPERATIVE SOCIETY, CARRYING ON BANKING BUSINESS WITH THE APPROVAL OF THE RESERVE BANK OF IN DIA, IS LIABLE TO DEDUCT TAX UNDER SECTION 194A OF THE INCO ME- TAX ACT, 1961 ON THE INTEREST PAID TO ITS MEMBERS? THE MADRAS HIGH COURT, AFTER CONSIDERING THE AMENDM ENT MADE IN SECTION 194A OF THE ACT BY FINANCE BILL, 2015 WITH EFFECT FROM 01.006.2015, FOUND THAT THE EXPRESS LANGUAGE OF SEC TION 194A(3) CLEARLY INDICATES THAT THE EXEMPTION PROVIDED FOR D EDUCTION OF TAX FROM THE PAYMENT OF INTEREST TO THE MEMBERS BY A CO -OPERATIVE SOCIETY UNDER SECTION 194A(3)(V) OF THE ACT SHALL N OT APPLY TO PAYMENT OF INTEREST ON ANY DEPOSIT BY THE CO-OPERAT IVE BANKS TO ITS MEMBERS WITH EFFECT FROM 01.06.2015. THE MADRAS HI GH COURT FOUND THAT AFTER 01.06.2015, THE ASSESSEE CANNOT ES CAPE FROM THE LIABILITY OF DEDUCTION OF TAX AT SOURCE. THE MADRA S HIGH COURT FURTHER FOUND THAT THE AMENDMENT MADE IN SECTION 19 4A(3) OF THE ACT WAS NOT RETROSPECTIVE IN OPERATION. IT IS INTE NDED TO HAVE PROSPECTIVE EFFECT WITH EFFECT FROM 01.06.02015. A CCORDINGLY, THE QUESTION WAS ANSWERED IN FAVOUR OF ASSESSEE. THE L D.COUNSEL FOR THE ASSESSEE HAS PRODUCED COPIES OF THE UNREPORTED JUDGMENT OF MADRAS HIGH COURT. FOR THE PURPOSE OF CONVENIENCE, WE ARE 5 I.T.A. NOS.1678 TO 1683/MDS/15 REPRODUCING THE RELATED PORTION OF THE JUDGMENT AT PARAGRAPHS 63 & 64 HEREUNDER:- 63. IT CAN BE SEEN FROM THE LAST PART OF THE PORTION EXTRACTED ABOVE THAT THE VERY NOTE EXPLAINING THE CLA USE WAS SPECIFIC TO THE EFFECT THAT THE PROPOSAL WAS TO BRING FORTH AN AMENDMENT WITH PROSPECTIVE EFFECT FROM 1.6. 2015. THERE IS NO DISPUTE NOW THAT ON AND FROM 1.6.2015 THE APPELLANT CANNOT ESCAPE THE LIABILITY FROM DEDUCTIO N OF TAX AT SOURCE. 64. ONCE AN AMENDMENT IS INTRODUCED, FOR THE PURPOSE OF REMOVING THE ANOMALOUS SITUATION OR FOR THE PURPOSE OF REMOVING THE CONFUSIONS BOTH IN THE MANNER IN WHICH THE PROVISIONS STOOD AND THE MANNER IN WHICH THEY WERE UNDERSTOOD, THE SAME COULD BE TAKEN ONLY TO HAVE PROSPECTIVE EFFECT. IT MUST BE POINTED OUT THAT TH E PARLIAMENT DID NOT CHOOSE TO ANSWER A QUESTION. RA THER IT CHOSE TO AMEND THE PROVISIONS. IT IS NOW WELL SETT LED THAT AN AMENDMENT CAN ONLY BE PROSPECTIVE UNLESS IT IS M ADE RETROSPECTIVE BY EXPRESS LANGUAGE OR NECESSARY IMPLI CATION. APART FROM THE FACT THAT THE EXPRESS LANGUAGE OF SEC TION 194A AFTER AMENDMENT DOES NOT INDICATE ANY RETROSPECTIVITY, THE NOTE EXPLAINING THE CLAUSES GOE S ONE STEP FURTHER IN MAKING IT CLEAR THAT IT WAS INTENDE D TO HAVE PROSPECTIVE EFFECT FROM 1.6.2015. 6. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT T AX UNDER SECTION 194A OF THE ACT ON THE INTEREST PAID TO ITS MEMBERS TILL 31.05.2015. BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE MADRA S HIGH COURT IN THE ASSESSEE'S OWN CASE, THE ORDERS OF THE LOWER AU THORITIES ARE SET ASIDE. 6 I.T.A. NOS.1678 TO 1683/MDS/15 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED. ORDER PRONOUNCED ON 14 TH JANUARY, 2016 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 14 TH JANUARY, 2016. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-2, COIMBATORE 4. 0 81 /CIT, TDS, CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.