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

ITA 2051/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9605 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-06-2015
• Assessment Year: 2013-2014
• Appeal Filed On: 01-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: K RAVI
• Section: 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. ASSESS MENT Y EAR ( / APPELLANT )*( /RESPONDENT 2051 /MDS/2014 & 2052/MDS/2014 2013-14 & 2014-15 THE MADURAI DISTRICT CENTRAL CO-OPERATIVE BANK LTD., 187, NORTH VELI STREET, MADURAI-625 011. PAN:AADFT2450J THE INCOME TAX OFFICER, TDS WARD, MADURAI 2118 /MDS/2014 & 2119/MDS/2014 2012-13 & 2013-14 THE RAMANATHAPURAM DISTRICT CENTRAL CO-OPERATIVE BANK LTD., 265-E, VANDIKKARA STREET, RAMANATHAPURAM. PAN: AAIFR2500A THE INCOME TAX OFFICER, TDS WARD, VIRUDHUNAGAR 2120 /MDS/2014 & 2121/MDS/2014 2013-14 & 2014-15 THE DINDIGUL CENTRAL CO- OPERATIVE BANK LTD., 1, KOOTURAVU NAGAR, TRICHY ROAD, DINDIGUL. PAN: AAAJD0325P THE INCOME TAX OFFICER, TDS WARD, MADURAI. 2127 /MDS/2014 & 2128/MDS/2014 2012-13 & 2013-14 THE SIVAGANGAI DISTRICT CENTRAL CO-OPERATIVE BANK LTD., P.B.NO.3, 163, GANDHI ROAD, SIVAGANGAI-630 561. PAN: AAAAS0659L THE INCOME TAX OFFICER, TDS WARD, VIRUDHUNAGAR 2185/MDS/2014 2013-14 THE TIRUNELVELI DISTRICT CENTRAL CO-OPERATIVE BANK LTD., 4, TRIVANDRUM ROAD, VANNARPET,TIRUNELVELI-627003. PAN: AAAAT9755J THE INCOME TAX OFFICER, TDS WARD, TIRUNELVELI / APPELLANT BY : MR. K.RAVI, ADVOCATE /RESPONDENT BY : MR. A.B.KOLI, JCIT / DATE OF HEARING : 28 TH MARCH , 2016 /DATE OF PRONOUNCEMENT : 6 TH APRIL, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- ALL THESE NINE APPEALS ARE FILED BY THE FIVE DIF FERENT ASSESSEES AGGRIEVED BY THE SEPARATE ORDERS OF THE L EARNED ITA NOS.2051, 2052, 2118 TO 2121, 2127, 2128 & 2185/MDS/2014 2 COMMISSIONER OF INCOME TAX (APPEALS)-1, MADURAI ALL DATED 30.06.2014 [IN ITA NOS.309 & 310/2013-14, 9 & 10/2 014-15, 192 & 193/2013-14, 35 & 36/2014-15 AND 33/2014-15] PASSED UNDER SECTION 201(1) / 201(1A) OF THE ACT. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THEY A RE CLUBBED TOGETHER AND DISPOSED OF BY THIS COMMON ORD ER FOR THE SAKE OF CONVENIENCE. 2. THE AFORESAID ASSESSEES HAVE RAISED SEVERAL ELA BORATE GROUNDS, HOWEVER, THE CRUX OF THE COMMON ISSUE IN A LL THESE APPEALS IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAS HELD THAT THE CO-OPERATIV E SOCIETY IS LIABLE TO DEDUCT TAX UNDER SECTION 194A OF THE ACT ON THE INTEREST PAID TO ITS MEMBERS. 3. AT THE OUTSET, THE LEARNED AUTHORIZED REPRESENTA TIVE HAS SUBMITTED THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CHENNAI BENCH OF THE TRIBUNAL I N THE CASE OF THE COIMBATORE DISTRICT CENTRAL CO-OPERATIV E BANK ITA NOS.2051, 2052, 2118 TO 2121, 2127, 2128 & 2185/MDS/2014 3 LTD. VS. ITO IN ITA NOS.1678 TO 1683/MDS/2015 FO R THE ASSESSMENT YEARS 2008-09 TO 2013-14 DATED 14.01.201 6 BY FOLLOWING THE DECISION OF THE HONBLE JURISDICTION AL HIGH COURT DATED 15.10.2015 IN THE ABOVE STATED ASSESSEES OW N CASE WHEREIN IT WAS CLARIFIED THAT BEFORE 01.06.2015 TH E ASSESSEE WAS NOT EXPECTED TO DEDUCT TAX ON THE INTEREST PAID TO ITS MEMBERS. THEREFORE, IT IS PLEADED THAT A SIMILAR V IEW MAY BE TAKEN IN THE CASE OF THE PRESENT ASSESSEES ALSO. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NO T CONTROVERT TO THE SUBMISSIONS OF THE LEARNED AUTHOR IZED REPRESENTATIVE. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND MERIT IN THE CONTENTION OF THE LEARNED AUTHORIZED REPRESENTATIVE . THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF THE COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK LTD. VS. ITO IN ITA NOS.1678 TO 1683/MDS/2015 VIDE ITS ORDER DATED 14. 01.2016 FOLLOWING THE DECISION OF THE HONBLE JURISDICTION AL HIGH COURT ITA NOS.2051, 2052, 2118 TO 2121, 2127, 2128 & 2185/MDS/2014 4 DATED 15.10.2015 HAS HELD THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX UNDER SECTION 194 OF THE ACT ON THE INTE REST PAID TO ITS MEMBERS TILL 31.05.2015. THE GIST OF DECISION I S REPRODUCED HEREIN BELOW:- 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 MADRAS HIGH COURT CONSIDERED AN IDENTICAL ISSUE IN THE ASSESSEE'S OWN CASE. IN FAC T, THE QUESTION CONSIDERED BY THE MADRAS HIGH COURT READS AS FOLLOWS:- WHETHER A CO-OPERATIVE SOCIETY, CARRYING ON BANKING BUSINESS WITH THE APPROVAL OF THE RESERVE BANK OF INDIA, IS LIABLE TO DEDUCT TAX UNDER SECTIO N 194A OF THE INCOME-TAX ACT, 1961 ON THE INTEREST PAID TO ITS MEMBERS? THE MADRAS HIGH COURT, AFTER CONSIDERING THE AMENDMENT MADE IN SECTION 194A OF THE ACT BY FINANC E BILL, 2015 WITH EFFECT FROM 01.006.2015, FOUND THAT THE EXPRESS LANGUAGE OF SECTION 194A(3) CLEARLY INDICAT ES THAT THE EXEMPTION PROVIDED FOR DEDUCTION OF TAX FR OM THE PAYMENT OF INTEREST TO THE MEMBERS BY A CO-OPERATIV E SOCIETY UNDER SECTION 194A(3)(V) OF THE ACT SHALL N OT APPLY TO PAYMENT OF INTEREST ON ANY DEPOSIT BY THE CO- OPERATIVE BANKS TO ITS MEMBERS WITH EFFECT FROM 01.06.2015. THE MADRAS HIGH COURT FOUND THAT AFTER 01.06.2015, THE ASSESSEE CANNOT ESCAPE FROM THE LIABILITY OF DEDUCTION OF TAX AT SOURCE. THE MADRA S HIGH COURT FURTHER FOUND THAT THE AMENDMENT MADE IN SECT ION 194A(3) OF THE ACT WAS NOT RETROSPECTIVE IN OPERATI ON. IT IS INTENDED TO HAVE PROSPECTIVE EFFECT WITH EFFECT FROM 01.06.02015. ACCORDINGLY, THE QUESTION WAS ANSWERE D IN FAVOUR OF ASSESSEE. THE LD.COUNSEL FOR THE ASSE SSEE HAS PRODUCED COPIES OF THE UNREPORTED JUDGMENT OF MADRAS HIGH COURT. FOR THE PURPOSE OF CONVENIENCE, WE ARE REPRODUCING THE RELATED PORTION OF THE JUDGMENT AT PARAGRAPHS 63 & 64 HEREUNDER:- ITA NOS.2051, 2052, 2118 TO 2121, 2127, 2128 & 2185/MDS/2014 5 63. IT CAN BE SEEN FROM THE LAST PART OF THE PORTIO N EXTRACTED ABOVE THAT THE VERY NOTE EXPLAINING THE C LAUSE 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 DEDUCTION 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 MANN ER IN WHICH THE PROVISIONS STOOD AND THE MANNER IN WHICH THEY WERE UNDERSTOOD, THE SAME COULD BE TAKEN ONLY TO HA VE 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 IMPLICATION. APART FROM THE FACT THAT THE EXPRESS LANGUAGE OF SECTION 194A AFTER AMENDMENT DOES NOT INDICATE ANY RETROSPECTIVITY, THE NOTE EXPLAINING T HE CLAUSES GOES ONE STEP FURTHER IN MAKING IT CLEAR TH AT IT WAS INTENDED 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 MADRAS HIGH COURT IN THE ASSESSEE'S OWN CASE, THE O RDERS OF THE LOWER AUTHORITIES ARE SET ASIDE. 6. FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL AND THE HONBLE JURISDICTIONAL HIGH COURT, WE HEREBY HOLD T HAT IN THE CASE OF ALL THE ABOVE ASSESSEES TAX IS NOT LIABLE TO BE DEDUCTED AT SOURCE UNDER SECTION 194A OF THE ACT ON THE ITA NOS.2051, 2052, 2118 TO 2121, 2127, 2128 & 2185/MDS/2014 6 INTEREST PAID TO ITS MEMBERS TILL 31.05.2015 AND TH EREFORE, TO THAT EXTENT CONSEQUENTIAL PROVISIONS OF THE ACT WIL L NOT BE APPLICABLE. 7. IN THE RESULT, ALL THE ABOVE APPEALS OF THE ASSE SSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 6 TH APRIL, 2016 AT CHENNAI. SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.MOHAN AL ANKAMONY ) ! / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER /CHENNAI, $ /DATED 6 TH APRIL, 2016 SOMU () *) /COPY TO: 1. APPELLANT 2. RESPONDENT 3. + () /CIT(A) 4. + /CIT 5. ) / /DR 6. 2 /GF