Asst. Commissioner of Income Tax, Circle-2(1), Tirupati V. The Tirupati Co-operative Bank, Tirupati

ITA 2032/Hyd/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 8412 (ITAT-HYDERABAD)
• Duration Of Justice: 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2012-2013
• Appeal Filed On: 10-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FOLLOWING HONBLE MADRAS HIGH COURTS JUDGEMENT SUPRA MUTATIS MUTANDIS. THEIR
• Keywords: TDS
• Section: 143(3); 40(a)(ia); 40a(ia)

Judgement Text

ITA No 2032 of 2018 Tirupati Coop Bank Tirupati Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad (Through Video Conferencing) Before Shri A. Mohan Alankamony, Accountant Member and Shri S.S. Godara, Judicial Member ITA No.2032/Hyd/2018 Assessment Year: 2012-13 A.C.I.T Circle 2(1) Tirupati Vs. The Tirupathi Cooperative Bank Tirupati PAN:AAAAT9912D (Appellant) (Respondent) Revenue by: Sri Rajendra Kumar Assessee by : Sri S. Rama Rao Date of hearing: 20/02/2022 Date of pronouncement: 22/02/2022 ORDER Per S. S. Godara, J.M. This Revenue’s appeal for A.Y 2012-13 arises against the CIT (A)-Tirupati’s order dated 30.7.2018 passed in case No.10136/17-18/CIT(A)/TPT involving proceedings u/s 143(3) r.w.s. 144A & 263 of the Income Tax Act, 1961, in short, the Act. Heard both the parties. Case file perused. 2. The Revenue has raised the following substantive grounds in the instant appeal: “1. The order of the Commissioner of Income Tax (Appeals) is erroneous both on the facts of the case and in law. 2. The Learned Commissioner of Income Tax (Appeals) erred in deleting the disallowance u/s. 40(a)(ia) of Rs 7,28,51,487/-. 3. The Learned Commissioner of Income Tax (Appeals) erred in considering the assessee's plea that TDS need not be deducted on interest payments made above Rs. 10,000/- by referring to section 194A(3)(v) of the IT ITA No 2032 of 2018 Tirupati Coop Bank Tirupati Page 2 of 4 Act,1961 which is a general provision dealing with cooperative society, whereas the disallowance was made u/s 194A3(i)(b), which is a specific section dealing with the cooperative societies engaged in the business of banking. 4. The Learned Commissioner of Income Tax (Appeals) erred in ignoring the provisions of section 194A(3)(i)(b) and in relying on the provisions of section 194A(3) (v). 5. Any other ground that may be urged at the time of hearing”. 3. It transpires during the course of hearing that this tribunal’s coordinate bench in the Revenue’s identical appeals ITA Nos.482 & 483/Hyd/2018 for the A.Y 2013-14 and 2014-15 decided on 25.6.2021 has rejected the very substantive ground(s) reads as under: “2. We notice at the outset that the Revenue's identical sole substantive grievance pleaded in both these appeals seek to revive Section 40(a)(ia) disallowance of Rs.8,08,89,208/- and Rs.8,26,00,035/-; assessment year-wise, respectively as under: "1.The Learned Commissioner of Income Tax (Appeals) erred in deleting the disallowance u/s.40(a) (ia) of Rs.8,08,89,208/- 2.The Learned Commissioner of Income Tax (Appeals) erred in considering the assessee's plea that TDS need not be deducted on interest payments made above Rs.10,000/- by referring to section 194A3(v) of the IT Act. 1961 which is a general provision dealing with cooperative society, whereas the disallowance was made u/s. 194A3(i)(b), which is a specific section dealing with the cooperative societies engaged in the business of banking. 3. The Learned Commissioner of Income Tax (Appeals) erred in ignoring the provisions of sec 194A(3)(i)(b) and in relying on the provisions of sec 194A(3)(v). 4. Any other ground that may be urged at the time of hearing". 3. Both the learned representatives next took us to the CIT(A)'s identical detailed discussion deleting impugned disallowance as follows: "5. This contention of the appellant was that appellant, has paid interest to only members and it is not liable for deduction of tax u/s 194A(3)(v) of the I.T.Act. In the course of appellate proceedings, AR of the appellant furnished list of members with membership number to whom interest was paid above Rs.10,000/-. It was submitted that a total of 3858 number of fixed deposits accounts above Rs.10,000/- carrying a total interest of Rs.7,97,64,271/- and total of 67 savings deposits interest above Rs.10,000/- carrying total interest of Rs.11,24,937/- was paid during the assessment year under consideration. It was further submitted by ITA No 2032 of 2018 Tirupati Coop Bank Tirupati Page 3 of 4 the AR of appellant that its case is covered u/s 194A(3)(v) of the I.T.Act. exempting the assessee from TDS liability on payment of interest to members. It was further contended by the AR of the appellant that amendment to section 194A(3)(v) of the I.T.Act, 1961 prohibiting from exempting TDS liability of co- operative banks was carried out by the Finance Act, 2015 w.e.f. 01-06-2015 and hence the appellant is not liable for TDS as the entire interest is paid to its members only. The AR of the appellant further relied on the decision of Madras High Court in case of M/s Coimbatore District Central Co-operative Bank Ltd., (Madathakulam Branch) Vs ITO(TDS), Ward-1(5), Coimbatore decided in Tax case (Appeal) No.588 to 643, 647 to 688, 744 to 750, 942 to 948, 969 to 982 of 2015 T.C.(A) No.588 of 2015 dated 15-10-2015 in support of its claim. I have carefully considered' the facts of the case and also the case law relied upon by the appellant. As I stated earlier, the appellant has paid interest to its members only. This fact was not disputed by the AG. The Hon'ble Madras High Court in the case cited supra categorically held that amendment to section 194A(3)(v) of the I.T.Act, 1961 prohibiting from exempting TDS liability of co-operative banks was carried out by the Finance Act, 2015 w.e.f. 01-06-2015 and such amendment was intended to have prospective effect from 01-06-2015. Respectfully following the ratio of the decision of Hon'ble Madras High Court. I direct AO to delete the disallowance of interest made u/s 40a(ia) of the I.T.Act". 4. We have given our thoughtful consideration to rival pleadings against and in support of the impugned Section 40(a)(ia) disallowance pertaining to the assessee a co-operative bank having not deducted TDS whilst making interest payments exceeding Rs.10,000/- each to its members. The Revenue's case in light of its pleadings is that the CIT(A) has erred in law and on facts in making the assessee's act of non- deduction of TDS as covered u/s.194A(3)(v) than u/s.194A(3)(i)(b) for the reason that the same are general and specific provisions; respectively wherein the latter prevails over the former "generalia specialibus non derogant". We find no merit in Revenue's foregoing arguments. This is for the reason that although Section 194A3(i)(b) prescribes the threshold limit of TDS deduction as Rs.10,000/- in the impugned assessment year(s), section also contains sub clause-(v) that this mechanism does not come into play in case of payments made by a co-operative society to its members. We make it clear that we are dealing with AYs.2013-14 and 2014-15 whereas the legislature has excluded a co-operative bank vide Finance Act, 2015 w.e.f.01-06-2015 only. It further transpires that the Hon'ble President of the tribunal had also constituted a Special Bench in ITA Nos.2055 & 2056/Chny/2014 in The Virudhunagar District Central Co-operative Bank Ltd. Vs. ITO u/s.255(4) of the Act to this effect. The said learned Special Bench's order dt.09-10-2018 has decided the very issue in assessee's favour and against the department by following hon'ble Madras high court's judgement (supra) mutatis mutandis. Their lordships have also considered the explanatory Memorandum to the Finance Bill 2015 to hold that the foregoing amendment in Section 194A(3)(i)(v) of the Act excluding a co-operative bank from a co-operative society; applies with prospective effect only. It has been further emphasized in para 53 of the said hon'ble high court's detailed discussion that "if a taxing statute and an exclusion clause contained in a taxing statute are to be construed strictly, the provisions themselves should make it clear as to who are to be charged or exempted and what are the circumstances under which they are charged or excluded". We adopt the very analogy herein as well to hold that the exclusion clause herein is section 194A(3)(v) of the Act. We reject Revenue's substantive grounds raised in the instant appeal in light thereof. The CIT(A)'s identical action deleting Section 40(a)(ia) disallowance in both these years stands upheld”. ITA No 2032 of 2018 Tirupati Coop Bank Tirupati Page 4 of 4 4. There is no distinction on law and on facts forthcoming in Revenue’s pleadings. We thus adopt our foregoing detailed reasoning mutatis mutandis to uphold the CIT (A)’s order deleting the impugned TDS disallowance. 5. No other ground has been pressed before us. 6. This Revenue appeal is rejected in above terms Order pronounced in the Open Court on 22 nd February, 2022. Sd/- Sd/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER Hyderabad, dated 22 nd February, 2022 Vinodan/sps Copy to: S.No Addresses 1 2 ITO/ACIT/Dy.CIT 3 CIT (A)- Hyderabad 4 Pr. CIT - Hyderabad 5 DR, ITAT Hyderabad Benches 6 Guard File By Order