ACIT, Jaipur V. MALVIYA URBAN CO-OPERATIVE BANK LTD., Jaipur

ITA 175/JPR/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2083 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 02-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA ACIT
• Assessee Lawyers: S R SHARMA C A DHK
• Keywords: Question of law; Non-deduction of tax

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 175/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2014-15. THE ASSTT. COMMISSIONER OF INCOME - TAX, CIRCLE-6, ROOM NO. 318, NCR BUILDING, STATUE CIRCLE, B.D. ROAD, JAIPUR. CUKE VS. M/S MALVIYA URBAN CO - OPERATIVE BANK LTD., 203, ANUKAMPA-I, MI ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAAAM 2058 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ACIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.R. SHARMA (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25.05.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 29/05/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT (A)-I, JAIPUR DATED 19.12.2016 PERTAINING TO ASSESSMENT YE AR 2014-15. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL :- .1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F RS. 4,82,85,223/- MADE U/S 40(A)(IA) OF THE IT ACT ON ACCOUNT OF INTE REST PAID BY THE ASSESSEE WITHOUT MAKING TDS THEREON. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT INTEREST PAID BY T HE ASSESSEE IS GOVERNED BY CLAUSE (V) OF SUB-SECTION (3) OF SECTIO N 194A OF THE ACT AND NOT BY SUB-CLAUSE (B) OF CLAUSE (I) OF SUBSECTI ON (3) OF SECTION 194A OF THE ACT. 3. THE APPELLANT CRAVES ITS RIGHT TO ADD, AMEND OR ALTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. 2 ITA NO. 175/JP/2017. M/S MALVIYA URBAN CO-OPERATIVE BANK, LTD., JAIPUR . 2. BRIEFLY STATED THE FACTS ARE THE CASE OF THE ASS ESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND ASSESSMENT U/S 143 OF THE I NCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). WHILE FRAMIN G THE ASSESSMENT THE ASSESSING OFFICER ASSESSING OFFICER OBSERVED THAT THE ASSESSE E HAD MADE PAYMENT OF RS. 70040830/- ON ACCOUNT OF INTEREST OTHER THAN INTERE ST ON SECURITIES, WHEREAS SHOWN ONLY RS. 5127604/- AS LIABLE FOR TDS DEDUCTION. TH E ASSESSING OFFICER PROCEEDED TO MAKE ADDITION BY MAKING DISALLOWANCE U/S 40(IA), FO R NON-DEDUCTION OF TAX AT SOURCE. 3. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APP EAL BEFORE LD. CIT(A), WHO AFTER CONSIDERING SUBMISSION DELETED THE DISALLOWAN CE. LD. DEPARTMENTAL REPRESENTATIVES VEHEMENTLY ARGUED THAT LD. CIT(A) W AS NOT JUSTIFIED IN DELETING THE DISALLOWANCE. HE SUBMITTED THAT THE ASSESSING OFFI CER HAD RIGHTLY MADE DISALLOWANCE. 4. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESSE E REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE ISSUE DEDUCTIBILITY OF TAX HAS BEEN DECIDED BY THE HON. KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT, TDS, BANGLORE VS NATIO NAL CO-OPERATIVE BANK LTD. (2016) 71 TAXMANN.COM 352 (KARNATAKA) AND RELIANCE IS ALSO PLACED UPON THE DECISION OF THE HONBLE MADRAS HIGH COURT RENDERED IN THE CASE OF COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK LTD. VS. ITO, TD S-WARD I(5), COIMBATORE. THE LD. COUNSEL FOR THE ASSEESSEE PLACED RELIANCE ON OT HER JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF COMMIS SIONER OF INCOME TAX VS. SHRI BASAVESHWARA SAHAKARI BANK (2016) 74 TAXMANN.COM 21 (KARNATAKA) AND THE OTHER 3 ITA NO. 175/JP/2017. M/S MALVIYA URBAN CO-OPERATIVE BANK, LTD., JAIPUR . DECISIONS OF THE CO-ORDINATE BENCH RENDERED IN THE CASE OF BAGALKOT DISTRICT CENTRAL CO-OPERATIVE BANK LTD. VS. JOINT COMMISSIONER OF IN COME TAX, ITA NO. 1572(BANG)2013. THE DECISION OF THE CO-ORDINATE BE NCH IN THE CASE OF ACIT, CIRCLE- 1(1), VISAKHAPATNAM VS. VISAKHAPATNAM CO-OPERATIVE BANK LTD ITA NO. 5 & 9 (VIZAG.) 2011. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH; THE JUDICIAL PRONOUNCEMENT HAS RE LIED BY THE LD. COUNSEL FOR THE ASSESSEE. THE HONBLE KARNATAKA HIGH COURT UNDER T HE IDENTICAL FACTS IN THE CASE OF COMMISSIONER OF INCOME TAX, BANGALORE VS. NATIONAL CO-OPERATIVE BANK LTD. (SUPRA) HAS HELD AS UNDER:- 3. THE AFORESAID SHOWS THAT THE TRIBUNAL WAS BOUN D BY ITS EARLIER DECISION IN CASE OF BAGALKOT DISTRICT CENTRAL CO-OP. BANK V. JT . CIT [2014] 48 TAXMANN.COM 117 (BANG). WHEN WE FURTHER ENQUIRED FROM THE LEARNED COUNSEL FOR THE REVENUE AS TO WHETHER THE DECISION OF THE TRIBUNAL WAS CARRIED BY THE DEPARTMENT BEFORE THIS COURT OR NOT AND IN RESPONSE THERETO, THE LEARNED COUNSEL FOR THE APPELLANTS HAS BROUGHT TO OUR NOTICE THE DECISION OF THIS COURT DATED 16.12.2 015 IN ITA 100116/2014 WHEREBY, THE VIEW TAKEN BY THE TRIBUNAL HAS NOT BEEN INTERFE RED WITH. WE MAY RECORD THAT THIS COURT IN THE ABOVE REFERRED DECISION OBSERVED THUS: 'IN THIS APPEAL BY THE REVENUE, THE ISSUED INVOLVED IS FOR CONSIDERATION WHETHER THE CO-OPERATIVE BANK WAS REQUIRED 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 VID E CIRCULAR NO. 19/2015 IN F. NO. 142/14/2015-TPL, HAS HELD THAT THE CO-OPERAT IVE BANKS ARE NOT REQUIRED TO DEDUCT TAX AT SOURCE ON TIME DEPOSITS O F ITS MEMBERS PAID OR CREDITED ON OR BEFORE 01.07.2015. THE RELEVANT POR TION OF THE CIRCULAR READS AS UNDER: '42.5. IN VIEW OF THIS, THE PROVISIONS OF THE SECTI ON 194A(3) (V) OF THE INCOME- TAX ACT HAVE BEEN AMENDED SO AS TO EXPRESSLY PROVID E THAT THE EXEMPTION PROVIDED FROM DEDUCTION OF TAX FROM PAYMENT OF INTE REST TO MEMBERS BY A CO- OPERATIVE SOCIETY UNDER SECTION 194 A (3)(V) OF THE INCOME-TAX ACT SHALL NOT APPLY TO THE PAYMENT OF INTEREST ON TIME-DEPOSITS B Y THE CO-OPERATIVE BANKS TO ITS MEMBERS. AS THIS AMENDMENT IS EFFECTIVE FRO M THE PROSPECTIVE DATE OF 4 ITA NO. 175/JP/2017. M/S MALVIYA URBAN CO-OPERATIVE BANK, LTD., JAIPUR . 1ST JUNE, 2015, THE CO-OPERATIVE BANK SHALL BE REQU IRED TO DEDUCT TAX FROM THE PAYMENT OF INTEREST ON TIME DEPOSITS OF ITS MEMBERS , ON OR AFTER THE 1ST JUNE, 2015. HENCE, A CO-OPERATIVE BANK WAS NOT REQUIRED TO DEDUCT TAX FROM THE PAYMENT OF INTEREST ON TIME DEPOSITS OF ITS MEMBERS PAID OR CREDITED BEFORE 1ST JUNE 2015' 3. IN VIEW OF THE AFORESAID CIRCULAR, THIS APPEAL D OES NOT SURVIVE FOR CONSIDERATION AND IS ACCORDINGLY DISMISSED. NO COS TS. 4. AS SUCH, IN VIEW OF THE REFERRED DECISION OF THI S COURT IN CASE OF BAGALKOT DISTRICT CENTRAL CO-OP. BANK (SUPRA) REFERRED WHEN THE QUESTION IS ALREADY COVERED BY THE DECISION OF THIS COURT, IT CANNOT BE SAID THAT ANY SUBSTANTIAL QUESTION OF LAW WOULD ARISE FOR CONSIDERATION. 5. HOWEVER, THE LEARNED COUNSEL APPEARING FOR THE A PPELLANTS-REVENUE MADE AN ATTEMPT TO CONTENT AND REITERATE THE SAME CONTENTIO N THAT IN VIEW OF SPECIAL PROVISION SECTION 194A(3)(B), THE GENERAL EXEMPTION AS PROVIDED UNDER 194A(3)(V), WOULD NOT BE APPLICABLE FOR THE CO-OPERATIVE BANKS AND HE CONTENDED THAT THE VIEW TAKEN BY THE TRIBUNAL CANNOT BE SAID AS CORRECT VIE W AND THIS COURT MAY INDEPENDENTLY CONSIDER THE MATTER AND MAY HOLD THAT IN VIEW OF SPECIFIC PROVISION, GENERAL EXEMPTION WOULD NOT BE AVAILABLE TO CO-OPER ATIVE BANK. HENCE THE TDS FROM THE INTEREST EXCEEDING THE AMOUNT OF RS. 10,000/- W AS REQUIRED TO BE DEDUCTED BY THE RESPONDENT-ASSESSEE IN THE PRESENT CASE WHICH IS A CO-OPERATIVE BANK. 6. AS SUCH, WE ARE NOT IMPRESSED BY THE SUBMISSION THAT THERE IS ANY SPECIFIC PROVISION AND THEREFORE GENERAL EXEMPTION WOULD NOT APPLY FOR THE SIMPLE REASON THAT THE WORD 'MEMBERS' IS MISSING IN CLAUSE (B). FURTHER, IN CIRCULAR NO. 19/2015 DATED 27.11.2015 AT PARAGRAPH 42.5, IT HAS BEEN INT ER ALIA MENTIONED AS UNDER: '..................HENCE, THE CO-OPERATIVE BANK WAS NOT REQUIRED TO DEDUCT TAX FROM THE PAYMENT OF INTEREST ON THE TIME-DEPOSITS OF ITS MEM BERS PAID OR CREDITED BEFORE FIRST JUNE 2015'. 5.1 IN THE LIGHT OF THE ABOVE JUDGMENT OF THE HONB LE KARNATAKA HIGH COURT, WE DO NOT SEE ANY MERIT INTO THE CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVES. THEREFORE, THE GROUND RAISED IN THIS APPEAL IS DISM ISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 175/JP/2017 IS DISMISSED. 5 ITA NO. 175/JP/2017. M/S MALVIYA URBAN CO-OPERATIVE BANK, LTD., JAIPUR . ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 29TH DAY OF MAY 2017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 29 /05/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ACIT, CIRCLE-6, JAIPUR. 2. THE RESPONDENT- M/S MALVIYA URBAN CO-OPERATIVE B ANK, LTD., JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 175/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR