Appeal Details
Counselvise Citation
[2017] 130 COUNSELVISE.COM (IT) 8222 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 2 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
23-03-2017
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
Not Allotted
Next Hearing Date
09-02-2017
Assessment Year
2011-2012
Appeal Filed On
20-01-2016
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACOCUNTANT MEMBER ITA NOS. 30 & 31/CHD/2016 ASSESSMENT YEAR S : 2012-13 & 2013-14 THE ITO (TDS-1). VS. THE CHANDIGARH STATE CO-OPER ATIVE BANK CHANDIGARH CHANDIGARH TAN NO. PTLTI1038G (APPELLANT) (RESPONDENT) APPELLANT BY : SH. AMITOZ SINGH KAMBOZ RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 01.03.2017 DATE OF PRONOUNCEMENT : 23.03.2017 ORDER PER ANNAPURNA GUPTA, AM BOTH APPEALS FILED BY THE REVENUE ARE AGAINST THE CONSOLIDATED ORDER OF CIT(A)-1,CHANDIGARH DATED 03.10.2016, FOR F.Y 2011- 12 & 2012-13 PASSED IN APPEAL AGAINST ORDER PASSED U/S 201(1)/201(1A) OF T HE INCOME TAX ACT,1961,. 2. THE ISSUE INVOLVED IN BOTH THE CASES ARE COMMON AND THEREFORE THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS C OMMON ORDER. FOR THE SAKE OF CONVENIENCE, WE SHALL BE DEALING WITH THE FACTS IN ITA NO.30/CHD/2017. 3. THE REVENUE IN THE PRESENT APPEAL HAS RAISED THE FOLLOWING GROUNDS:- (I) WHETHER THE ID. CIT(A) IS RIGHT IN LAW IN DELETING THE DEMAND CREATED BY THE AO U/S 201(1)/(201(1A) OF THE INCOME TAX ACT, 1961 IGNORING THE FACT THAT THOUGH THE 2 CHANDIGARH STATE CO-OPERATIVE BANK LTD. IS A CO- OPERATIVE SOCIETY BUT ENGAGED IN THE BUSINESS OF BANKING AND THEREFORE NOT EXEMPT U/S 194A(3)(V). (II) WHETHER THE HON'BLE ID. CIT(A) IS RIGHT IN L AW IN DELETING THE DEMAND U/S 201 (I) / 201(1A) BY IGNORI NG THE FACT THAT SPECIFIC PROVISIONS MADE IN SECTION L94A(3)(VIIA)(B) WHEREIN IT HAS BEEN, SPECIFICALLY PROVIDED THAT INTEREST ON TIME DEPOSITS MADE ON OR AFTER THE 1ST DAY OF JULY, 1995 IS LIABLE FOR TDS. (III) WHETHER THE HON'BLE ID. CIT{A) IS RIGHT IN LA W IN DELETING THE DEMAND U/S 201 (I)/201(1 A) BY IGNORIN G THE FACT THAT 'A SPECIAL PROVISION SHOULD BE GIVEN TO THE EXTENT OF ITS SCOPE LEAVING THE GENERAL PROVISI ON TO CONTROL CASES WHERE THE SPECIAL PROVISION DOES NOT APPLY AS HELD BY THE HON'BLE SUPREME COURT IN THE C ASE OF SOUTH INDIAN CORPN.(P) LTD. VS. SECRETARY, BOARD OF REVENUE AIR 1964 SC 207. THE ONLY ISSUE IN THE PRESENT APPEAL RELATES TO HOL DING THE ASSESSEE AS AN ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOU RCE ON THE INTEREST PAID ON TIME DEPOSITS MADE BY OTHER COOPERATIVE SOCIETIES. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT TDS INSPECTION/ SURV EY U/S 133A OF THE INCOME-TAX ACT, 1961 WAS CARRIED OUT AT THE OFFICE OF THE ASSESSEE . IT WAS NOTICED DURING THE PROCEEDINGS THAT THE AS SESSEE WAS A COOPERATIVE BANK AND HAD MADE CERTAIN PAYMENTS ON ACCOUNT OF INTERES T ON FIXED / TIME DEPOSITS TO ITS MEMBER COOPERATIVE SOCIETIES,LISTED AT PAGE 2-5 OF THE ASSESSMENT ORDER, FOR THE FINANCIAL YEARS 2011-12 AND 2012-13, WITHOU T DEDUCTION OF TAX AT SOURCE. THE ASSESSING OFFICER DISCUSSED THE PROVISIONS OF S ECTION 194A(1) READ WITH 194A(3)(I)(B), 194A (3)(V) AND 194A (3)(VIIA) OF TH E ACT AND HELD THAT SINCE THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BU SINESS OF BANKING, THE SPECIFIC PROVISION OF SECTION 194A(3)(VIIA)(B) OF T HE ACT WOULD APPLY TO IT AS 3 PER WHICH IT WAS REQUIRED TO DEDUCT TAX AT SOURCE O N THE INTEREST PAID ON TIME DEPOSITS MADE WITH IT, WHICH EXCEEDED MORE THAN RS. 10,000/-. THE ASSESSING OFFICER FURTHER RELIED UPON THE DECISION OF THE ITA T PUNE BENCH IN THE CASE OF BHAGANI NIVEDITA SAHAKARI BANK LTD VS. ACIT 87 ITD 579 IN SUPPORT OF ITS VIEW. AS SUCH, THE ASSESSEE WAS TREATED AS ASSESSE E IN DEFAULT FOR HAVING NOT DEDUCTED TAX AT SOURCE ON THE INTEREST PAID ON TIME DEPOSITS MADE WITH IT BY OTHER MEMBER SOCIETIES AND ORDER U/S 201(1) OF TH E ACT WAS PASSED RAISING A DEMAND OF RS.17,11,438/-. THE INTEREST, U/S 201(1A) OF THE ACT, WAS ALSO LEVIED AMOUNTING TO RS.4,27,859/-. THUS, A TOTAL DEMAND OF RS. 21,39,297/- FOR THE FINANCIAL YEAR 2011-12 AND RS. 21,47,237/-(19,00,21 0 + 2,47,027) FOR THE FINANCIAL YEAR 2012-13 WAS RAISED ON THE ASSESSEE . 5. BEING AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND SUBMITTED BEFORE HIM, THAT IDENTICAL ISSUE HAD BEEN DECIDED BY THE CHANDIGARH BENCH OF THE ITAT IN THE CASE OF PUNJAB STATE COOPE RATIVE BANK LTD IN ITA NO. 279/CHD/2016 VIDE ORDER DATED 1.7.2016. THE LD. CIT (A) FOLLOWING THE AFORESAID DECISION OF THE CHANDIGARH BENCH HELD THA T THE ASSESSEE SOCIETY WAS NOT REQUIRED TO DEDUCT TAX FROM THE PAYMENT OF INTE REST ON TIME DEPOSITS OF ITS MEMBER COOPERATIVE SOCIETIES AND DELETED THE DEMAND S RAISED U/S 201(1) / 201(1A) OF THE ACT, THEREBY ALLOWING THE ASSESSEES APPEAL. 6. AGGRIEVED BY THE SAME, THE REVENUE HAS NOW COME UP IN APPEAL BEFORE US. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER WHILE THE LD. AR RELIED ON THE ORDER OF THE CIT(A). 7. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S AND GONE THROUGH THE ORDERS PLACED BEFORE US. THE FACTS RELEVANT TO THE ISSUE BEFORE US AND NOT D ISPUTED, ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING, THAT IT HAS PAID INTEREST ON TIME DEPOSITS AND THE SAID INTEREST HAS BEEN PAID TO ITS MEMBER 4 COOPERATIVE SOCIETIES.SINCE NO TAX WAS DEDUCTED ON THESE INTERESTS, THE AO HELD THE ASSESSEE TO BE AN ASSESSEE IN DEFAULT AS PER SE CTION 201(1) OF THE ACT AND RAISED DEMAND ON ACCOUNT OF THE TAX NOT DEDUCTED AN D THE INTEREST THEREON U/S 201(1A) OF THE ACT. WHILE THE REVENUES CONTENTION IS THAT THE SPECIFI C PROVISION OF SECTION 194A(3)(VIIA)(B), REQUIRING COOPERATIVE SOCIETIES E NGAGED IN THE BUSINESS OF BANKING TO DEDUCT TAX AT SOURCE ON TIME DEPOSITS, W OULD PREVAIL OVER THE GENERAL EXEMPTION FROM TAX DEDUCTION AT SOURCE FROM INTERES T INCOME PAID BY A COOPERATIVE SOCIETY TO ANOTHER COOPERATIVE SOCIETY AS PER SECTION 194A(3)(V),THE ASSESSEE HAS RELIED UPON THE ORDER OF THE CHANDIGAR H BENCH OF THE ITAT IN THE CASE OF PUNJAB STATE COOPERATIVE BANK LTD IN ITA N O. 279/CHD/2016 ,DATED 1.7.2016 RELYING UPON WHICH THE LD. CIT(A) ALSO AL LOWED THE ASSESSEES APPEAL. ON PERUSAL OF THE AFORESAID ORDER OF THE ITAT, RELE VANT PORTION OF WHICH IS REPRODUCED AT PAGE 4 OF THE CIT(A) ORDER, WE FIND T HAT THE ITAT HAD RELIED ON THE MEMORANDUM OF THE FINANCE BILL 2015 ,WHICH HAD AMENDED PROVISIONS OF SECTION 194A(3)(V), AND ON READING THE SAID MEMORAN DUM, THE ITAT HAD POINTED OUT THAT IT CLEARLY STATES THAT THE GENERAL EXEMPTI ON PROVIDED U/S 194A(3)(V) OF THE ACT WITH REGARD TO DEDUCTION ON TAX AT SOURCE F ROM INTEREST PAYMENT BY A COOPERATIVE SOCIETY TO ANOTHER COOPERATIVE SOCIETY EXISTED BEFORE THE AMENDMENT AND CONTINUED TO APPLY TO COOPERATIVE BANKS EVEN A FTER THE AMENDMENT, PROVIDED THAT THE DEPOSITOR WAS A COOPERATIVE SOCI ETY. THE ITAT THEREAFTER HELD THAT EVEN AS PER THE MEMORANDUM OF THE FINANCE BILL, 2015, THE GENERAL EXEMPTION PROVIDED FROM DEDUCTION OF TAX AT SOURCE U/S 194A(3)(V) EXISTED BEFORE THE AMENDMENT AND WOULD PREVAIL OVER THE SPE CIFIC PROVISIONS OF SECTION 194A(3)(VIIA)(B). IN EFFECT IT WAS HELD THAT NO TAX WAS REQUIRED TO BE DEDUCTED ON THE INTEREST PAID ON TIME DEPOSITS MADE BY COOPE RATIVE SOCIETIES IN A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANK ING ON ACCOUNT OF THE EXEMPTION PROVIDED BY SECTION 194A(3)(V) OF THE ACT . 5 8. IN THE INSTANT CASE, IT IS NOT DENIED THAT THE INTEREST HAS BEEN PAID BY THE ASSESSEE, WHICH IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING, ON TIME / FIXED DEPOSITS MADE BY ITS MEMBER COOPERATIV E SOCIETIES. THEREFORE, IN THE LIGHT OF THESE FACTS AND IN THE LIGHT OF THE DE CISION OF THE CHANDIGARH BENCH OF THE ITAT, IN PUNJAB STATE COOPERATIVE BANK (SUPR A), THE LD. CIT(A) HAS RIGHTLY HELD THAT THE ASSESSEE WAS NOT LIABLE TO DE DUCT TAX AT SOURCE ON THE INTEREST PAID VIZ A VIZ THESE TIME DEPOSITS. THE L D. DR HAS NOT POINTED OUT ANY ANOMALY IN THE SAID ORDER OF THE CIT(A) NOR HAS BRO UGHT OUT ANY DIFFERENT FACTS BEFORE US TO DISTINGUISH THE CASE OF THE PUNJAB STA TE COOPERATIVE BANK LTD FROM THAT BEFORE US. IN VIEW OF THE SAME, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. GROUND NO (I),(II) &(III) RAISED BY THE REVENUE ARE THEREFORE DISMISSED. 9. IN EFFECT APPEAL OF THE REVENUE IS DISMISSED. ITA 31/CHD/2017 F.Y 12-13, A.Y 13-14 10. SINCE THE ISSUE INVOLVED IN THIS APPEAL IS IDE NTICAL AS ALSO FACTS AND THE SUBMISSIONS OF THE LD. COUNSELS WERE IDENTICAL, THE REFORE, THE DECISION RENDERED IN ITA NO. 30/CHD/2017 FOR ASSESSMENT YEAR 2012-13 WILL APPLY MUTATIS MUTANDIS TO THIS APPEAL ALSO. ACCORDINGLY, REVENUE S APPEAL STANDS DISMISSED. 11. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/03/2017 SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23/03/2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 6
Other Referred Cases
-
Laws Referred To
-
Tax Holiday Secrets for Startups
₹0
Guide to Charitable Trusts: Formation, Benefits, and Compliance
₹0
Tax Holiday Secrets for Startups
₹0
Non-Compete Agreement
₹0
Initial LLP Agreement
₹0
Residency Rules: Income Tax Act, 1961 vs Income Tax Bill, 2025 — A Subtle Yet Significant Shift!
Team Counselvise - February 18, 2026
When Global Talent Meets GST: The Huawei Secondment Ruling explained
Team Counselvise - March 09, 2026
Minimum Alternate Tax (MAT): Comprehensive Overview and Key Changes under Finance Bill, 2026
Team Counselvise - February 06, 2026