Assistant Commissioner of Income-Tax, Bangalore V. M/s. The Bellary Dist. Co-operative Central Bank Ltd., Hospet

ITA 2016/BANG/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4694 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 21-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law

Judgement Text

ITA.2016/BANG/2016 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.2016/BANG/2016 (ASSESSMENT YEAR : 2012-13) ASST. COMMISSIONER OF INCOME-TAX, CIRCLE -1, BELLARY .. APPELLANT V. M/S. THE BELLARY DIST. CO-OPERATIVE CENTRAL BANK LT D, OPP. POLICE STATION, HOSPET .. RESPONDENT PAN : AACAT2081M ASSESSEE BY : SHRI. SURESH MUTHUKRISHNAN, CA REVENUE BY : MS. NEERA MALHOTRA, CIT - DR HEARD ON : 29.03.2018 PRONOUNCED ON : 01.06.2018 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT (A), GULBARGA, DT.22.09.2016, FOR THE ASSESSMEN T YEAR 2012-13, ON THE FOLLOWING EFFECTIVE GROUNDS : ITA.2016/BANG/2016 PAGE - 2 02. BRIEF FACTS ARE THAT THE ASSESSEE IS A COOPERAT IVE SOCIETY REGISTERED UNDER THE KARNATAKA COOPERATIVE SOCIETY ACT, 1959, IT IS ENGAGED IN THE BUSINESS OF BANKING, WITH PERMISSION FROM THE RBI, DT.15.12.2011, TO DO BUSINESS OF BANKING IN THE NAM E AND STYLE OF BELLARY DISTRICT COOPERATIVE CENTRAL BANK LTD. DUR ING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED RS.26,42, 47,278/- AS TOTAL EXPENSES TOWARDS INTEREST PAYMENT. OUT OF THE SAID AMOUNT THE ASSESSEE MADE A PAYMENT OF RS.6,26,99,189/-, WHICH WAS ABOVE THE STATUTORY LIMIT OF RS.10,000/-. IT WAS THE CASE OF THE AO THAT THE ASSESSEE WAS REQUIRED TO DEDUCT THE TAX AT THE TIME OF MAKING THE SAID INTEREST PAYMENT. HOWEVER THE ASSESSEE RELIED ON THE ORDER OF ITA.2016/BANG/2016 PAGE - 3 THE TRIBUNAL RENDERED IN THE CASE OF THE BAGALKOT D ISTRICT CENTRAL CO-OP. BANK V. JCIT [ITA.1572/BANG/2013, DT.30.05.2 014] AND SUBMITTED THAT IT IS NOT REQUIRED TO DEDUCT TDS. T HE AO WAS NOT CONVINCED WITH THE REASONING GIVEN BY THE ASSESSEE AND THEREFORE HAD DISALLOWED THE AMOUNT OF RS.6,26,99,189/- ON TH E PREMISE THAT THE REVENUE HAD NOT ACCEPTED THE VIEW OF THE ITAT I N THE ABOVE ORDER OF BAGALKOT DISTRICT CENTRAL AND HAS FILED TH E STATUTORY APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. FEEL ING AGGRIEVED BY THE ORDER PASSED BY THE AO THE ASSESSEE PREFERRED A N APPEAL BEFORE THE CIT (A). 03. THE CIT (A) IN PARA 5.3 AND 5.4 DECIDED THE ISS UE IN FAVOUR OF THE ASSESSEE AND AS SUCH THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 04. IT WAS SUBMITTED BY THE LD. DR THAT THE ORDER O F THE AO IS IN ACCORDANCE WITH LAW AND THE RELIANCE WAS PLACED ON THE PROVISIONS OF THE ACT AND SUBMITTED THAT THE ASSESSEE WAS LIAB LE TO DEDUCT THE TAX AT THE TIME OF MAKING THE PAYMENT. AS THE ASSE SSEE FAILED TO DEDUCT THE TAX, THEREFORE THE AO HAS RIGHTLY DISALL OWED THE SUM OF RS.6,26,99,189/-. 05. PER CONTRA, THE LD. AR RELIES UPON THE ORDER PA SSED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE MATTER OF CIT V. NATIONAL CO-OPERATIVE BANK LTD [(2016 387 ITR 702], CIT V. B IJAPUR DISTRICT CENTRAL [(2018) 93 TAXMANN.COM 211] AND SR I BASAVESWARA SAHAKARI BANK LTD [(2016) 74 TAXMAN.COM 21]. ITA.2016/BANG/2016 PAGE - 4 06. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE BEFORE THE AO HAD RELIED UPON THE DECI SION OF THE TRIBUNAL IN THE BAGALKOT DISTRICT CENTRAL CO-OP. BA NK (SUPRA) AND IT WAS THE CASE OF THE AO THAT THE REVENUE IS IN AP PEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT ON THE SAID MATTE R. HOWEVER, WE NOTICE THAT THE APPEAL OF THE REVENUE IN THE MATTER OF THE BAGALKOT DISTRICT CENTRAL CO-OP. BANK (SUPRA) WAS DECIDED BY THE DIVISION BENCH VIDE ITS JUDGMENT DT.16.12.2015, WHICH WAS AP TLY MENTIONED BY THE JURISDICTIONAL HIGH COURT IN THE MATTER OF S RI BASAVESWARA 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 : ITA.2016/BANG/2016 PAGE - 5 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 - 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.' ITA.2016/BANG/2016 PAGE - 6 IN VIEW OF THE ABOVE JUDGMENTS OF JURISDICTIONAL H IGH COURT , WE DO NOT FIND ANY SUBSTANCE AND MERIT IN THE APPEAL FILED BY THE REVENUE AS THE GROUNDS RAISED BY REVENUE ARE COVERE D AGAINST IT BY THE AFORESAID TWO JUDGMENTS .ACCORDINGLY, APPEAL OF THE REVENUE IS DISMISSED. 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.