SHREE SIDHIVINAYAK NAGARI SAHAKARI BANK LTD, RAIGAD V. DCIT PANVEL CIR PANVEL, PANVEL

ITA 2741/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6809 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 17-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS; Set aside
• Section: 143(3); 40(a)(ia); 143(1); 264

Judgement Text

P A G E | 1 ITA NO. 2741/MUM/2017 A.Y. 2012 - 13 M/S SHREE SIDHIVINAYAK NAGARI SAHAKARI BANK LTD. VS. DY. COMMISSIONER OF INCOME TAX IN THE INCOME TAX APPELLATE TRIBUNAL ' J ' BENCH, MUMBAI BEFORE SHRI G.S.PANNU, VICE PRESIDENT AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 2741/MUM/2017 (ASSESSMENT YEAR: 2012 - 13 ) M/S SHREE SIDHIVINAYAK NAGARI SAHAKARI BANK LTD; KAMDHENU BLD G , NEAR JANATA V IDYALAY, DR. BABASAHEB AMBEDKAR ROAD KHOPOLI, TALUKA : KHALAPUR, DIST RICT RAIGAD 410 203 . VS. DY. COMMISSIONER OF INCOME TAX, PANVEL CIRCLE, PANVEL. PAN AAAAS0937 P ( APPELLANT ) ( RESPONDENT ) APPELLANT BY: SHRI PIYUSH CHHAJED, A.R RESPONDENT BY: SHRI SUHAS KULKARNI , D.R DATE OF HEARING: 11 .02 .2019 DATE OF PRONOUNCEMENT: 2 8 .02.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - AURANGABAD, DATED 20.02.2017, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT IT ACT), DATED 30.03.2015 FOR A.Y. 2012 - 13. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAIS ED BEFORE US THE FOLLOWING GROUNDS OF APPEAL : THE GROUNDS MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.1,15,21,357/ - U/S.40(A)(IA) IN REGARD TO NON - DEDUCTION OF TDS ON INTEREST PAID BY THE APPELLANT CO - OPERATIVE BANK TO ITS MEMBERS WITHOUT APPRECIATING THAT TDS WAS NOT DEDUCTIBLE U/S.194A. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN DISALLOWING RS.1,15,21,357/ - ULS.40(A)(IA) WITHOUT APPRECIATING THAT THE SAID AMOUNT WAS ALREADY PAID DURING THE YEAR AND THEREFORE THE PROVISION OF SECTION 40(A)(IA) WAS NOT APPLICABLE. P A G E | 2 ITA NO. 2741/MUM/2017 A.Y. 2012 - 13 M/S SHREE SIDHIVINAYAK NAGARI SAHAKARI BANK LTD. VS. DY. COMMISSIONER OF INCOME TAX THE APPELLANT CRAVES THE LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY OF THE ABOVE GROUNDS OF APP EAL AT/OR BEFORE THE TIME OF HEARING. 2. BRIEFLY STATED, THE ASSESSEE WHICH IS A CO - OPERATIVE BANK HAD FILED ITS RETURN OF INCOME FOR A.Y 2012 - 13 ON 30.06.2013, DECLARING TOTAL INCOME AT RS.30,07,594/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE IT ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2). 3. D URING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 2,40,06,149/ - IN ITS P ROFIT AND LOSS ACCOUNT ON ACCOUNT OF INTEREST PAID ON TIME DEPOSITS. AS THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE ON THE INTEREST PAYMENTS EXCEEDING RS.10,000/ - , THEREFORE, THE A.O CALLED UPON IT TO EXPLAIN AS TO WHY THE SAME MA Y NOT BE DISALLOWED UNDER SEC.40(A)(IA) OF THE IT ACT. THE CONTENTION OF THE ASSESSEE THAT AS PER THE PRE - AMENDED SEC. 194A(3)(V) ( I.E PRIOR TO ITS AMENDMENT VIDE THE FINANCE ACT, 2015, W.E.F 01.06.2015 ) NO OBLIGATION WAS CAST UPON A CO - OPERATIVE SOCIETY TO DEDUCT TAX AT SOURCE ON THE INTEREST PAID TO ITS MEMBERS, HOWEVER , DID NOT FIND FAVOUR WITH THE A.O. IT WAS OBSERVED BY THE A.O THAT AS PER THE PROVISIONS OF SEC. 194A(3)(VIIA)(B) OF THE IT ACT , FROM 01.07.1995 ONWARDS IT WAS OBLIGATORY FOR A CO - OPERATIVE BANK TO DEDUCT TAX AT SOURCE ON THE INTEREST PAYMENTS EXCEEDING RS.10,000/ - ON THE TIME DEPOSITS . ON THE BASIS OF HIS AFORESAID OBSE RVATION THE A.O HOLDING A CONVICTION THAT THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE UNDER SEC. 194A ON INTEREST OF RS. 1,15,21,357/ - PAID ON TIME DEPOSITS , THEREFORE, DISALLOWED THE SAME UNDER SEC. 40(A)(IA) OF THE IT ACT AND ASSESSED ITS INCOME AT R S.1,45,61,120/ - . 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS ADVANCED BY THE ASSESSEE WAS HOWEVER NOT PERSUADED TO SUBSCRIBE TO THE SAME. IT WAS OBSERVED BY THE CIT(A) THAT A CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING WAS FROM 01.07.1995 ONWARDS NO MORE EXEMPT FROM DEDUCTION OF TAX AT SOURCE UNDER SEC.194A ON THE INTEREST PAYMENTS EXCEEDING AN P A G E | 3 ITA NO. 2741/MUM/2017 A.Y. 2012 - 13 M/S SHREE SIDHIVINAYAK NAGARI SAHAKARI BANK LTD. VS. DY. COMMISSIONER OF INCOME TAX AMOUNT OF RS. 10,000/ - ON TIME DEPOSITS. IN FACT, IT WAS OBS ERVED BY THE CIT(A) THAT IN THE CASE OF THE PAYER WHICH IS A CO - OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING , ONCE THE INTEREST PAYMENT EXCEED ED THE PRESCRIBED MONETARY LIMIT OF RS.10,000/ - , IT WAS RENDERED LIABLE TO DEDUCT TAX AT SOURCE ON THE SAM E. INSOFAR, THE CONTENTION OF THE ASSESSEE THAT IT WAS NOT OBLIGATORY ON THE PART OF A CO - OPERATIVE BANK TO DEDUCT TAX AT SOURCE ON THE INTEREST PAID TO ITS MEMBERS WAS CONCERNED , IT WAS OBSERVED BY THE APPELLATE AUTHORITY THAT CLAUSE (VIIA) OF SEC.194A(3) DID NOT PROVIDE THAT THE OBLIGATION TO DEDUCT TAX AT SOURCE ON THE INTEREST PAYMENTS WAS ONLY IN RESPECT OF THE NON - MEMBERS. IN SUM AND SUBSTANCE, IT WAS OBSERVED BY THE CIT(A) THAT A CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING WA S REQUIRED TO DEDUCT TAX AT SOURCE ON INTEREST EXCEEDING AN AMOUNT OF RS. 10,000/ - ON THE TIME DEPOSITS . ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE CIT(A) CONCLUDED THAT AS THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE UNDER SEC.194A IN RESPECT OF I NTEREST AMOUNT OF RS.1,15,21,357/ - ON TIME DEPOSITS, THEREFORE, THE SAME WAS RIGHTLY DISALLOWED BY THE A.O. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE SUBMITTED THAT THE LOWER AUTHORITIES HAD ERRED IN CONCLUDING THAT THE ASSESSEE HAD DEFAULTED BY FAILING TO DEDUCT TAX AT SOURCE UNDER SEC.194A OF THE IT ACT. IN ORDER TO BUTTRESS HIS AFOR ESAID CONTENTION , I T WAS SUBMITTED BY THE LD. A.R THAT AS PER THE PRE - AMENDED CLAUSE (V) OF SEC.194A(3) IT WAS NOT OBLIGATORY FOR A CO - OPERATIVE SOCIETY TO DEDUCT TAX AT SOURCE ON INTEREST THAT WAS PAID OR CREDITED ON THE TIME DEPOSITS OF ITS MEMBER S . THE LD. A.R SUBMITTED THAT IT WAS ONLY BY WAY OF AN AMENDMENT THAT WAS MADE AVAILABLE ON THE STATUTE VIDE THE FINANCE ACT, 2015 W.E.F 01.06.2015 , THAT THE EXEMPTION THAT WAS EARLIER AVAILABLE TO A CO - OPERATIVE BANK IN RESPECT OF DEDUCTION OF TAX AT SOURCE ON T HE INTEREST PAID OR CREDITED ON THE TIME DEPOSITS OF ITS MEMBERS WAS WITHDRAWN. THE LD. A.R SUBMITTED THAT AS THE CASE OF THE ASSESSEE PERTAINED TO A.Y. 2012 - 13, THEREFORE , AS PER THE PRE - AMENDED SEC.194A(3)(V) NO OBLIGATION WAS CAST UPON IT TO DEDUCT TAX P A G E | 4 ITA NO. 2741/MUM/2017 A.Y. 2012 - 13 M/S SHREE SIDHIVINAYAK NAGARI SAHAKARI BANK LTD. VS. DY. COMMISSIONER OF INCOME TAX AT SOURCE ON THE INTEREST PA ID OR CREDITED ON THE TIME DEPOSITS OF ITS MEMBERS. THE LD. A.R IN ORDER TO FORTIFY HIS AFORESAID CONTENTION TOOK US THROUGH A CBDT CIRCULAR NO. 19/2015 [F. NO. 142/2015 - TPL], DATED 27.11.2015, WHEREIN IT WAS PROVIDED THAT A CO - OPERATIVE BANK WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE ON THE INTEREST THAT WAS PAID OR CREDITED BEFORE 01.06.2015 ON TIME DEPOSITS OF ITS MEMBER S . THE LD. A.R FURTHER RELIED ON THE JUDGMENTS OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF VIZ. (I) C OMMISSIONER OF INCOME - TAX (APPEALS) VS. BIJAPUR DISTRICT CENTRAL (2018) 93 TAXMAN N .COM 211 (KAR); (II) CIT VS. BASA V ESHWARA SAH A KARI BANK (2016) 74 TAXMAN N .COM 21 (KAR); AND (III) CIT VS. BELGA UM VS. SHRI SIDDESHWAR CO - OPERATIVE BANK LTD. (2016) 71 TAXMA N N .COM 126 (KAR), WHEREIN IT WAS OBSERVED BY THE HONBLE HIGH COURT THAT A CO - OPERATIVE BANK WAS NOT REQUIRED TO DEDUCT TAX ON INTEREST THAT WAS PAID OR CREDITED ON TIME DEPOSITS OF ITS MEMBERS BEFORE 01.0 6 .2015. APART THEREFROM, THE LD. A.R ALSO RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF COIMBATORE DISTRICT CENTRAL CO - OPERATIVE BANK LTD. VS. ITO, TDS WARD - 1(5), COIMBATORE (2016) 382 ITR 266 (MAD), WHEREIN TOO IT WAS OBSERVED BY THE HONBLE HIGH COURT THAT THE AMENDMENT MADE T O SUB - SECTION (3) OF SEC. 194A W.E.F 01.06.2015 WAS APPLICABLE PROSPECTIVELY. FURTHER , THE LD. A.R TOOK SUPPORT OF THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF JALGAON D ISTRICT CENTRAL CO - OPERATIVE BANK LTD. VS. UNION OF INDIA (2004) 265 ITR 423 (BOM), WHEREIN THE HONBLE HIGH COURT WHILE DELIBERATING ON THE SCOPE AND GAMUT OF A CBDT CIRCULAR NO. 9 / 2002 ; DATED 11.09.2002 HAD OBSERVED THAT THE PROVISIONS RELATING TO TDS WERE INAPPLICABLE TO THE INCOME CREDITED OR PAID BY A COOPERATIVE SOCIETY TO A MEMBER THEREOF OR TO ANY OTHER COOPERATIVE SOCIETY. INSOFAR, THE ORDER OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF THE MARATHWADA URBAN BANK CO - OP ASSOCIATION L IMITED VS. UNION OF INDIA & ORS. (CWP NO. 4935 OF 2003; DATED 31.04.2014) WA S CONCERNED, IT WAS SUBMITTED BY THE LD. A.R THAT THOUGH THE HONBLE HIGH COURT BY CARRYING OUT A CONJOINT READING OF CLAUSE (VIIA) AND CLAUSE (V) OF SEC. 194A HAD CONCLUDED THAT A CO - OPERATIVE BANK AS PER THE MANDATE OF LAW WAS LIABLE TO DEDUCT TAX AT SOU RCE O N INTEREST EXCEEDING RS.10,000/ - ON TIME DEPOSITS, HOWEVER, IT WAS NOWHERE SO HELD P A G E | 5 ITA NO. 2741/MUM/2017 A.Y. 2012 - 13 M/S SHREE SIDHIVINAYAK NAGARI SAHAKARI BANK LTD. VS. DY. COMMISSIONER OF INCOME TAX THAT THE CO - OPERATIVE SOCIETY WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE ON THE INTEREST PAID TO ITS MEMBER S PRIOR TO 01.06.2015 . IN SUM AND SUBSTANCE , IT WAS THE CONTEN TION OF THE LD. A.R THAT AS PER THE EXCEPTION CARVED OUT IN CLAUSE (V) OF SEC. 194A(3) OF THE IT ACT (AS WAS AVAILABLE ON THE STATUTE PRIOR TO ITS AMENDMENT VIDE THE FINANCE ACT, 2015, W.E.F 01.06.2015) , IT WAS SPECIFICALLY PROVIDED THAT NO TAX WAS REQUIRE D TO BE DEDUCTED AT SOURCE ON THE INTEREST PAID BY A CO - OPERATIVE BANK TO A MEMBER THEREOF . IT WAS THUS THE CONTENTION OF THE LD. A.R THAT AS PER THE LAW AS WAS THEN SO AVAILABLE ON THE STATUTE, AS NO OBLIGATION WAS CAST UPON THE ASSESSEE CO - OPERATIVE BANK TO DEDUCT TAX AT SOURCE ON THE INTEREST PAYMENT OF RS.1,15,21,357/ - THAT WAS PAID TO ITS MEMBERS, THEREFORE, THE LOWER AUTHORITIES HAD ERRED IN DISALLOWING THE SAID AMOUNT UNDER SEC.40(A)(IA) OF THE IT ACT. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESE NTATIVE (FOR SHORT D.R) SUBMITTED THAT AS THE ASSESSEE WHICH REMAINED UNDER A STATUTORY OBLIGATION TO HAVE DEDUCTED TAX AT SOURCE ON INTEREST IN EXCESS OF RS.10,000/ - ON THE TIME DEPOSITS HELD BY IT HAD FAILED TO DO SO, THEREFORE , THE LOWER AUTHORITIES H AD RIGHTLY DISALLOWED THE AFORESAID INTEREST EXPENDITURE UNDER SEC.40(A)(IA) OF THE IT ACT. THE LD. D.R RELIED ON THE ORDER OF THE CIT(A). APART THEREFROM, THE LD. D.R TOOK SUPPORT OF THE JUDGMENT OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF THODUPUZ HA URBAN COOPERATIVE BANK LTD. 264 ITR 36 AS WAS RELIED UPON BY THE CIT(A) TO FORTIFY HIS AFORESAID VIEW. 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT OUR INDULGENCE IN THE PRESENT APPEAL HAS BEEN SOUGHT BY THE ASSESSEE FOR ADJUDICATING AS TO WHETHER A CO - OPERATIVE BANK AS PER THE PRE - AMENDED SEC. 194A(3)(V) REMAINED UNDER A STATUTORY OBLIGATION TO DEDUCT TAX AT SOURCE ON THE INTERES T PAID TO ITS MEMBERS, OR NOT. A S PER SEC. 194A(1) OF THE IT ACT, ANY PERSON NOT BEING AN INDIVIDUAL OR A HUF, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF INTEREST OTHER THAN INCOME [BY WAY OF INTEREST OF SECURITIES], SHALL , AT THE TIM E OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH P A G E | 6 ITA NO. 2741/MUM/2017 A.Y. 2012 - 13 M/S SHREE SIDHIVINAYAK NAGARI SAHAKARI BANK LTD. VS. DY. COMMISSIONER OF INCOME TAX OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER , DEDUCT INCOME - TAX THEREON AT THE RATES IN FORCE. SUB - SECTION (3) OF SEC. 194A CARV ES OUT THE EXCEPTIONS WHERE IN DEDUCT ION OF TAX AT SOURCE AS ENVISAGED IN SUB - SECTION (1) OF SEC. 194A OF THE ACT HAD BEEN DISPENSED WITH BY THE LEGISLATURE . 8. WE FIND THAT AS PER SUB - SECTION (V) TO SEC.194A [AS WAS AVAILABLE ON THE STATUTE PRIOR TO ITS AMENDMENT VIDE THE FINANCE ACTS, 2015 W.E.F. 01.06.2015] , INCOME CREDITED OR PAID BY A CO - OPERATIVE SOCIETY TO A MEMBER THEREOF OR TO ANY OTHER CO - OPERATIVE SOCIETY WAS NOT LIABLE FOR DE DUCTION OF TAX AT SOURCE. OUR AFORESAID VIEW STANDS FORTIFIED BY THE CBDT CIRCULAR NO. 19/2015, DATED 27.11.2015, WHEREIN AT PARA 42.5 OF THE SAID CIRCULAR PERTAINING TO RATIONALISATION OF PROVISIONS RELATING TO DEDUCTION OF TAX ON INTEREST (OTHER THAN INT EREST ON SECURITIES), IT IS STATED AS UNDER: 42.5 IN VIEW OF THIS, THE PROVISIONS OF THE S EC.194A(3)(V) OF THE INCOME TAX ACT HAVE BEEN AMENDED SO AS TO EXPRESSLY PROVIDE THAT THE EXEMPTION PROVIDED FROM DEDUCTION OF TAX FROM PAYMENT OF INTEREST TO MEMB ERS 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 DATE OF 1ST JUNE, 2015, T HE CO - OPERATIVE BANK SHALL BE REQUIRED TO DEDUCT TAX FROM THE PAYMENT OF INTEREST ON TIME DEPOSITS OF ITS 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, 2015 . (EMPHASIS SUPPLIED) ON A PERUSAL OF THE AFORESAID EXTRACT OF THE CBDT CIRCULAR NO. 19/2015, DATED 27.11.2015, IT CAN SAFELY OR RATHER INESCAPABLY BE GATHERED THAT A CO - OPERATIVE BANK WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE ON THE INTEREST THAT WAS PAID OR CREDITED BEFORE 1 ST JUNE, 2015 ON THE TIME DEPOSITS OF ITS MEMBERS. IN FACT, WE FIND THAT THE AFORESAID CBDT CIRCULAR NO. 19/2015 HAD BEEN DELIBERATED UPON BY THE HON BLE HIGH COURT OF KARNATAKA IN CERTAIN CASES VIZ. (I) CIT VS. VS. BIJAPUR DISTRICT CENTRAL (2018) 93 TAXMAN N .COM 211 (KAR); (II) CIT VS. BASA V ESHWARA S HA H A KARI BANK (2016) 74 TAXMAN N .COM 21 (KAR); AND (III) CIT , BELGA UM VS. SHRI SIDDESHWAR CO - OPERATIVE BANK LTD. (2016) 71 TAXMAN N .COM 126 (KAR) . IN THE AFORESAID JUDGMENTS , IT WAS OBSERVED THAT AS THE AMENDMENT MADE TO SEC.194A(3)(V) WAS APPLICABLE PROSPECTIVELY W.E.F 01.06.2015, THEREFORE, A CO - OPERATIVE BANK P A G E | 7 ITA NO. 2741/MUM/2017 A.Y. 2012 - 13 M/S SHREE SIDHIVINAYAK NAGARI SAHAKARI BANK LTD. VS. DY. COMMISSIONER OF INCOME TAX WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE ON IN TEREST THAT WAS PAID OR CREDITED ON TIME DEPOSITS OF ITS MEMBERS BEFORE 01.06.2015. ON A SIMILAR LINE THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF COIMBATORE DISTRICT CENTRAL CO - OPERATIVE BANK LTD. VS. ITO, TDS WARD - 1(5), COIMBATORE(2016) 382 ITR 266 (M AD) HAD CONCLUDED THAT AS THE AMENDMENT MADE TO SUB - SECTION (3) OF SEC. 194A W.E.F 01.06.2015 HAD A PROSPECTIVE OPERATION, THEREFORE, PRIOR TO THE SAID AMENDMENT NO OBLIGATION WAS CAST UPON A CO - OPERATIVE SOCIETY CARRYING ON BANKING BUSINESS WITH THE APPRO VAL OF RESERVE BANK OF INDIA TO DEDUCT TAX AT SOURCE UNDER SEC.194A ON THE INTEREST PAID TO ITS MEMBERS. FURTHER, WE FIND THAT THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF JALGAON DISTRICT CENTRAL CO - OPER A TIVE BANK LTD. VS. UNION OF INDIA (2004) 265 ITR 423 (BOM), WHILE DELIBERATING ON THE SCOPE AND GAMUT OF THE CBDT CIRCULAR NO. 9/2002, DATED 11.09.2002 , HAD OBSERVED THAT SEC.194A(3)(V) SUGGESTS THAT THE PROVISIONS RELATING TO TDS ARE INAPPLICABLE TO THE INCOME CREDITED OR PAID BY THE CO - OPERATIVE SOCIE TY TO A MEMBER THEREOF OR TO ANY OTHER CO - OPERATIVE SOCIETY. IN OUR CONSIDERED VIEW , IT IS ONLY PURSUANT TO THE AMENDMENT MADE TO CLAUSE (V) TO SEC. 194A (3), VIDE THE FINANCE ACT, 2015 W.E.F 01.06.2015 THAT INTEREST INCOME CREDITED OR PAID BY A CO - OPERATIVE BANK TO A MEMBER THEREOF HAD BEEN MADE LIABLE FOR DEDUCTION OF TAX AT SOURCE. BE THAT AS IT MAY, IN OUR CONSIDERED VIEW DURING THE PERIOD RELEVANT TO THE YEAR UNDER CONSIDERATION BEFORE US VIZ. A.Y. 2012 - 13, NO STATUTORY OBLIGATION WAS CAST UPON A CO - OPERATIVE BANK TO DEDUCT TAX AT SOURCE ON THE INTEREST INCOME PAID OR CREDITED ON THE TIME DEPOSITS OF ITS MEMBERS BEFORE 1 ST JUNE 2015. INSOFAR , THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF THE MARATHWADA URBAN BANK COOP ASSOCIATIO N LTD. VS. UNION OF INDIA & ORS. AS HAD BEEN RELIED UPON BY THE CIT(A) IS CONCERNED, WE ARE OF THE CONSIDERED VIEW THAT THE SAME IS DISTINGUISHABLE ON FACTS. THE HONBLE HIGH COURT IN ITS AFORESAID JUDGEMENT BY CARRYING OUT A CONJOINT READING OF CLAUSE (VI IA) AND CLAUSE (V) OF SEC.194A (3) , HAS CONCLUDED THAT A CO - OPERATIVE BANK WAS UNDER AN OBLIGATION TO DEDUCT TAX AT SOURCE ON INTEREST ABOVE RS.10,000/ - CREDITED ON ITS TIME DEPOSITS . HOWEVER, WE FIND THAT THERE IS NO SPECIFIC OBSERVATION OF THE HONBLE HIGH COURT THAT AS PER THE PRE - AMENDED SEC.194A(3)(V) OF THE IT ACT P A G E | 8 ITA NO. 2741/MUM/2017 A.Y. 2012 - 13 M/S SHREE SIDHIVINAYAK NAGARI SAHAKARI BANK LTD. VS. DY. COMMISSIONER OF INCOME TAX (I.E PRIOR TO ITS AMENDMENT VIDE THE FINANCE ACT, 2015 W.E.F 01.06.2015), ANY OBLIGATION WAS CAST UPON A CO - OPERATIVE BANK TO DEDUCT TAX AT SOURCE ON ANY INTEREST CREDITED OR PAID BY THE CO - OPERATIVE SOCIETY T O ITS MEMBER S PRIOR TO 01.06.2015 . 9 . ON THE BASIS OF OUR AFORESAID DELIBERATIONS, WE ARE PERSUADED TO SUBSCRIBE TO THE CONTENTION ADVANCED BY THE LD. A.R THAT A S PER THE PRE - AMENDED CLAUSE (V) TO SEC. 194A(3) OF THE IT ACT (I.E PRI OR TO ITS AMENDMENT VIDE THE FINANCE ACT, 2015 W.E.F 01.06.2015), A CO - OPERATIVE BANK WAS UNDER NO OBLIGATION TO DEDUCT TAX AT SOURCE ON THE IN TEREST CREDITED OR PAID TO A MEMBER PRIOR TO 01.06.2015 . WE THUS AFTER CONSIDERING THE AFORESAID CBDT CIRCULAR NO .19/2015, DATED 27.11.2015 AND RESPECT FULLY FOLLOW ING THE AFOREMENTIONED JUDICIAL PRONOUNCEMENTS WHICH SEIZES THE ISSUE UNDER CONSIDERATION, THEREIN CONCLUDE THAT AS PER THE MANDATE OF LAW AS WAS AVAILABLE ON THE STATUTE DURING THE YEAR UNDER CONSIDERATION VIZ. A.Y 2012 - 13 , NO STATUTORY OBLIGATION WAS CAST UPON THE ASSESSEE CO - OPERATIVE SOCIETY TO DEDUCT TAX AT SOURCE ON THE INTEREST OF RS.1,15,21,357/ - THAT WAS PAID OR CREDITED BY IT ON THE TIME DEPOSITS OF ITS MEMBERS . ON THE BASIS OF OUR AFORESAID OBSERV ATIONS , THE DISALLOW ANCE OF THE INTEREST EXPENDITURE OF RS. 1,15,21,357/ - MADE BY THE A.O UNDER SEC.40(A)(IA) OF IT ACT FOR THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE ON THE SAID AMOUNT UNDER SEC. 194A IS VACATED . 10. WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE DISALLOWANCE OF RS.1,15,21,357/ - MADE BY THE A.O UNDER SEC.40(A)(IA) OF THE IT ACT. THE G ROUND S OF APPEAL NO S . 1 & 2 RAISED BY THE ASSESSEE ARE ALLOWED. 11. THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 8 . 02.2019 S D / - S D / - ( G.S.PANNU) (RAVISH SOOD) VICE PRESIDENT JUDICIAL MEMBER MUMBAI ; 28.02.2019 PS. ROHIT P A G E | 9 ITA NO. 2741/MUM/2017 A.Y. 2012 - 13 M/S SHREE SIDHIVINAYAK NAGARI SAHAKARI BANK LTD. VS. DY. COMMISSIONER OF INCOME TAX / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI