Income Tax Officer (TDS-2), Chandigarh V. The Punjab State Co-operative Bank Ltd., Chandigarh

ITA 195/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6973 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 30-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Section: 12AA; 201(1); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.195/CHD/2017 ASSESSMENT YEAR: 2013-14 ITO (TDS-2) VS. THE PUNJAB STATE CO-OP BANK LTD . CHANDIGARH SCO 175-187 SECTOR 34-A, CHANDIGARH PAN NO. PTLT10607C (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. M.R. SHARMA REVENUE BY : SH. RAVI SARANGAL DATE OF HEARING : 29/06/2017 DATE OF PRONOUNCEMENT : 02/08/2017 ORDER PER B.R.R. KUMAR A.M. THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(A)-2, CHANDIGARH DATED 04/11/2016. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPE AL: (I) WHETHER THE ID. CIT(A) IS RIGHT IN LAW IN DELET ING THE DEMANDS CREATED U/S 201(1)/ 201(1A) IN RESPECT OF BOARD OF TRUSTEE FUND -PF, PUNJAB STATE COOP. BANK EMPLOYEES PENSION FUND AND BHAI GHANAIYA TRUST IGNORING THE FACT THAT ABOVE CONCERNS ARE NOT STATUTORILY EXEMPT FROM FILING THEIR INCOME TAX RETURNS AND THEY SHOULD HAVE APPLIED NO DEDUCTION C ERTIFICATE U/S 197 FROM THE CONCERNED INCOME TAX OFFICER OF TDS CHARGE. (II) WHETHER THE LD. CIT(A) IS RIGHT IN LAW IN DELE TING THE DEMAND U/S 201(1)/201(1A) IN RESPECT OF M/S HOUSEFED PUNJAB, C HANDIGAR AND KRIBHCO-TD BY IGNORING THE FACT THAT THOUGH APPELLANT IS CO-OP ERATIVE SOCIETY BUT ENGAGED IN THE BUSINESS OF BANKING AND THEREFORE NOT EXEMPT U/S 194A(3)(V). (III) WHETHER THE LD. CIT(A) IS RIGHT IN LAW IN DEL ETING THE DEMAND U/S 201(1)/201(1A) IN RESPECT OF M/S HOUSEFED PUNJAB, C HANDIGARH AND KRIBHCO-TD BY IGNORING THE FACT THAT SPECIFIC PROVISIONS MADE IN SECTION 194A(3)(VIIA)(B) WHEREIN IT HAS BEEN SPECIFICALLY PROVIDED THAT INTE REST ON TIME DEPOSITS MADE ON OR AFTER THE 1ST DAY OF JULY, 1995 IS LIABLE FOR TD S. (IV) WHETHER THE LD. CIT(A) IS RIGHT IN LAW IN DELE TING THE DEMAND U/S 201(1)/201(1A) IN RESPECT OF M/S HOUSEFED PUNJAB, C HANDIGARH AND KRIBHCO-TD IGNORING THE FACT THAT 'A SPECIAL PROVISION SHOULD BE GIVEN TO THE EXTENT OF ITS SCOPE LEAVING THE GENERAL PROVISION TO CONTROL CASE S WHERE THE SPECIAL PROVISION DOES NOT APPLY' AS HELD BY THE SUPREME COURT IN THE CASE OF SOUTH INDIAN CORPN. (P) LTD. VS. SECRETARY, BOARD OF REVENUE AIR 1964 S C 207. 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE COUR SE OF TDS PROCEEDINGS, A.O NOTICED THAT THE ASSESSEE BANK HAD PAID INTEREST TO ITS MEMBER SOCIETIES/ CO- 2 OPERATIVE SOCIETIES BUT NO TAX WAS DEDUCTED AT SOUR CE ON PAYMENT OF INTEREST ON TIME DEPOSITS/TERM DEPOSITS AT THE TIME OF PAYME NT /CREDITING AS REQUIRED UNDER THE PROVISIONS OF THE SECTION 194A OF INCOME TAX ACT, 1961. ASSESSING OFFICER OBSERVED THAT ASSESSEE IS A CO-OPERATIVE SO CIETY ENGAGED IN THE BUSINESS OF BANKING AND IS COVERED BY THE PROVISION S OF SUB CLAUSE (B) OF CLAUSE (1) OF SECTION 194A(3) OF THE ACT. THUS ANY COOPERA TIVE SOCIETY WHICH IS ENGAGED IN THE BUSINESS OF BANKING SHALL HAVE TO DE DUCT TAX ON INTEREST PAID OR PAYABLE TO ANY PERSON ON TIME DEPOSITS IF SUCH INTE REST AMOUNT EXCEEDED THE TIME LIMIT PRESCRIBED IN PROVISO TO SECTION 194A(3) (1) OF THE ACT. ASSESSING OFFICER OBSERVED THAT THE ASSESSEE BANK HAD PAID INTEREST T O THE FOLLOWING MEMBER SOCIETIES / COOPERATIVE SOCIETIES AND NO TAX HAD BE EN DEDUCTED AT SOURCE AT THE TIME OF PAYMENT / CREDITING THE SAME AS REQUIRE D UNDER THE PROVISIONS OF SECTION 194(A) OF THE ACT. S.NO. NAME OF MEMBER SOCIETY/COOPERATIVE SOCIETY INTEREST PAID DURING F.Y. 2012-13 1 HOUSEFED PUNJAB, CHANDIGARH 12,08,308/- 2. BOARD OF TRUSTEE FUND - PF 2,17,20,361/- 3. PUNJAB STATE COOP BANK EMPLOYEES PENSION FUND 6, 64,54,701/- 4. BHAI GHANAYA TRUST 19,55,178/- 5. KRIBHCO TD 6,42,432/- 3.1 THEREFORE, AO(TDS) FOUND THE APPELLANT AS PERSO N-IN DEFAULT U/S 201(1) FOR NON DEDUCTING TAX U/S 194A(1) OF THE ACT AND ALSO H ELD THEM LIABLE TO PAY INTEREST U/S 201(1 A) OF THE ACT IN RESPECT OF PAYM ENT OF INTEREST MADE TO THE ABOVE MENTIONED ENTITIES AND CREATED A TOTAL DEMAND ON ACCOUNT OF TDS ON INTEREST AND INTEREST U/S 201(1 A) OF RS. 1,15,01,4 76/-. 3.2 CIT(A) HELD THAT IN THE CASE OF THE APPELLANT F OR A.Y. 2012-13 IN APPEAL NO. 97/ 2016 HON'BLE ITAT, CHANDIGARH DECIDED THE ISSUE WITH REGARD TO LEVY OF INTEREST AND LEVY OF TAX AND THUS ISSUE IS COVERED IN FAVOUR OF THE APPELLANT. 4. BEFORE US THE LD. DR RELIED ON THE ORDER UNDER S ECTION 201(1)/ 201(1A) WHEREAS THE LD. AR SUPPORTED THE ORDER OF THE LD. C IT(A). THE SUBMISSIONS HAVE BEEN CONSIDERED. OUT OF THE ABOVE ENTITIES M/S HOUS EFED PUNJAB AND M/S KRIBHCO TD ARE COOPERATIVE SOCIETIES WHO ARE MEMBER S WITH THE ASSESSEE SOCIETY. AS PER THE MEMORANDUM OF FINANCE BILL, 201 5 THE EXEMPTION PROVIDED U/S 194A(3)(V) OF THE ACT FROM THE DEDUCTION OF TAX FROM INTEREST PAID BY COOPERATIVE SOCIETY TO ANOTHER COOPERATIVE SOCIETY EXISTED BEFORE THE AMENDMENT AND SHALL CONTINUE TO APPLY TO THE COOPER ATIVE BANK EVEN AFTER THE AMENDMENT. IT WAS MADE CLEAR FURTHER THAT SUCH EXEMPTION TO COOPERATIVE BANK IS AVAILABLE ONLY WHEN THE DEPOSITOR IS A COOP ERATIVE SOCIETY. IN THE INSTANT CASE M/S HOUSEFED PUNJAB & M/S KRIBHCO TD WHO HAS D EPOSITED THE AMOUNT WITH THE APPELLANT COOPERATIVE BANK ARE COOPERATIVE SOCIETIES ONLY. THE M/S 3 PUNJAB STATE CO-OPERATIVE BANK EMPLOYEES PENSION FU ND IS A TRUST REGISTERED AND THE INCOME OF THE TRUST IS EXEMPT UNDER SECTION 10 OF THE ACT. THEREFORE THERE IS NO LIABILITY ON THE APPELLANT TO DEDUCT TA X ON THE INTEREST PAYMENTS MADE TO IT. REGARDING M/S BHAI GHANAYA TRUST IT HAS REGISTRATION UNDER SECTION 12AA AND THE INCOME OF THE TRUST ARE EXEMPT UNDER S ECTION 10 OF THE INCOME TAX ACT. IN THE CASE OF BOARD OF TRUSTEE FUND THE A PPELLANT FILED A COPY OF ACKNOWLEDGMENT OF RETURN FILED AND COPY OF APPROVAL FROM THE COMMISSIONER OF INCOME TAX SHOWING THAT THE INCOME OF THE TRUST IS EXEMPT UNDER SECTION 10, THEREFORE, THE APPELLANT IS NOT REQUIRED TO DEDUCT TAX FROM THE PAYMENT OF INTEREST ON TIME DEPOSITS TO ITS MEMBERS BEING COOP ERATIVE SOCIETIES OR OTHER COOPERATIVE SOCIETIES AND HENCE, THE APPELLANT IS N OT LIABLE U/S 201(1) AS PERSON IN DEFAULT FOR NOT DEDUCTING TAX AT SOURCE U/S 194A (1) OF THE ACT. THIS VIEW WAS AFFIRMED ITAT IN ITS ORDER DATED 01.07.2016 IN ITA NO. 279/CHD/2016 IN THE CASE OF APPELLANT IN A.Y. 2012-13. HENCE, THE DEMAND CREATE D U/S 201(1) AND 201 (1A) IN RESPECT OF THESE MEMBER SOCIETIES IS DELETED. TH E GROUND RAISED IN RESPECT OF HOLDING THE ASSESSEE AS PERSON IN DEFAULT FOR THE P AYMENT OF INTEREST MADE TO THESE COOPERATIVE SOCIETIES IS DISMISSED. 5. SINCE THE MATTER IS ALREADY COVERED IN THE EARLI ER ORDER OF THE COORDINATE BENCH OF ITAT CHANDIGARH BENCH IN ITA NO. 279/CHD/2 016 RELATING TO AY 2012- 13, THEREFORE NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A). 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (B.R.R.KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 02/08/2017 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR