The Coimbatore District Central Co-operative Bank Ltd. (Thondamuthur Branch), Thondamuthur V. ITO, Coimbatore

ITA 3001/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7631 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 11-12-2014
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHALJCIT
• Assessee Lawyers: K RAVI
• Section: 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! , ' # $ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD , JUDICIAL MEMBER ./ I.T.A.NOS2991 TO 2997 /MDS./2014 ( / ASSESSMENT YEARS :2008-09 TO 2014-2015) THE COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK LTD., (KINATHUKADAVU BRANCH), 19,POLLACHI MAIN ROAD, KINATHUKADAVU 642 109. VS. THE INCOME TAX OFFICER, TDS WARD I (5), COIMBATORE. PAN AABAT 3010 F ( () / APPELLANT ) ( $*() / RESPONDENT ) ./ I.T.A.NOS2998 TO 3004 /MDS./2014 ( / ASSESSMENT YEARS :2008-09 TO 2014-2015) THE COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK LTD., (THONDAMUTHUR BRANCH BRANCH), 9/90,SRI KRISHNA BUILDINGS, MADHAMPATHY MAIN ROAD, THONDAMUTHUR 641 109. VS. THE INCOME TAX OFFICER, TDS WARD I (5), COIMBATORE. PAN AABAT 3010 F ( () / APPELLANT ) ( $*() / RESPONDENT ) ITA NO.2991 TO 3004/MDS/2014 THE COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK L TD. 2 / APPELLANT BY : MR.K.RAVI,ADVOCATE / RESPONDENT BY : DR.B.NISCHAL,JCIT, D.R / DATE OF HEARING : 24.03.2016 ! /DATE OF PRONOUNCEMENT : 30 .03.2016 + / O R D E R PER BENCH: ALL THESE APPEALS FILED BY THE ASSESSEE ARE DIRE CTED AGAINST THE DIFFERENT ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX(A)- II, COIMBATORE FOR THE RESPECTIVE ASSESSMENT YEARS WHEREIN THE ISSUE IS WITH REGARD TO CONFIRM THE ORDER OF LD. ASSESSIN G OFFICER PASSED UNDER SECTIONS 201(1) AND 201(1A) OF THE ACT. 2. THE AUTHORISED REPRESENTATIVE OF ASSESSEE SUBMI TTED THAT THE ASSESSEE CONTENDED BEFORE THE LOWER AUTHORITIES THAT TAX NEED NOT BE DEDUCTED WHILE MAKING PAYMENT OF INTEREST ON THE DEPOSIT. ACCORDING TO THE LD. COUNSEL, THE ISSUE ARISES FOR CONSIDERATION IS WHETHER THE ASSESSEE CARRYING ON THE BUSINESS OF BA NKING WITH THE APPROVAL OF RESERVE BANK OF INDIA, IS LIABLE TO DED UCT TAX UNDER SECTION 194A OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) ON THE INTEREST PAID BY IT TO THE MEMBERS. THE MADRAS HIGH COURT, BY A ITA NO.2991 TO 3004/MDS/2014 THE COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK L TD. 3 COMMON JUDGMENT DATED 15.10.2015, IN TC(A) NO.588/2 015 & OTHERS IN THE ASSESSEES OWN CASE CONSIDERED AN IDENTICAL ISSUE AND AFTER TAKING NOTE OF THE AMENDMENT MADE BY THE PARLIAMENT IN SECTION 1 94A(3) OF THE ACT BY FINANCE BILL, 2015 WITH EFFECT FROM 1.6.2015, FOUND THAT THE EXPRESS LANGUAGE OF SECTION 1 94A DO ES NOT INDICATE ANY RETROSPECTIVITY, THEREFORE, THE ASSESSEE CANNOT ESCAPE THE LIABILITY FROM DEDUCTION OF TAX AT SOURCE FROM 1.6.2015. THE MADRAS HIGH COURT CLARIFIED THAT BEFORE 1.6.2015, THE ASSESSEE WAS NOT EXPECTED TO DEDUCT TAX ON THE INTEIEST PAID TO ITS MEMBERS. ACCORDINGLY, THE QUESTION WAS ANSWERED IN FAVOUR OF ASSESSEE. IN. VI EW OF THIS JUDGMENT OF MADRAS HIGH COURT, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE NEED NOT DEDUCT TAX IN RESPECT OF INTERES T PAID TILL 31.05.2015. THIS JUDGMENT OF MADRAS HIGH COURT WAS SUBSEQUENTLY FOLLOWED IN THE ASSESSES OWN CASE BY JUDGMENT DATE D 29.10.2015. ON THE OTHER HAND, LD.D.R RELIED ON THE ORDER OF TH E LD.CIT(A). 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS RIGHTLY SUBMITTED BY THE LD.A.R, THE MA DRAS HIGH COURT CONSIDERED AN IDENTICAL ISSUE IN ASSESSEE'S OWN CAS E IN TC(A) ITA NO.2991 TO 3004/MDS/2014 THE COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK L TD. 4 NO.588/2015 & OTHERS. IN FACT, THE QUESTION CONSIDE RED BY THE MADRAS HIGH COURT READS AS FOLLOWS:- WHETHER A CO-OPERATIVE SOCIETY, CARRYING ON BANKIN G BUSINESS WITH THE APPROVAL OF THE RESERVE BANK OF I NDIA, IS LIABLE TO DEDUCT TAX UNDER SECTION 194A OF THE INCO ME TAX ACT, 1961 ON THE INTEREST PAID TO ITS MEMBERS? THE MADRAS HIGH COURT, AFTER CONSIDERING THE AMENDM ENT MADE IN SECTION 1 94A OF THE ACT BY FINANCE BILL, 2015 WITH EFFECT FROM 01.06.2015, FOUND THAT THE EXPRESS LANGUAGE OF SECT ION 194A (3) CLEARLY INDICATES THAT THE EXEMPTION PROVIDED FOR D EDUCTION OF TAX FROM THE PAYMENT OF INTEREST TO THE MEMBERS BY A CO-OPER ATIVE SOCIETY UNDER SECTION 194A(3)(V) OF THE ACT SHALL NOT APPLY TO PAYMENT OF INTEREST ON ANY DEPOSIT BY THE CO-OPERATIVE BANKS T O ITS MEMBERS WITH EFFECT FROM 01.06.2015. THE MADRAS HIGH COURT FOUND THAT AFTER 01.06.2015, THE ASSESSEE CANNOT ESCAPE FROM THE LIA BILITY OF DEDUCTION OF TAX AT SOURCE. THE MADRAS HIGH COURT F URTHER FOUND THAT THE AMENDMENT MADE IN SECTION 194A(3) OF THE ACT WA S NOT RETROSPECTIVE IN OPERATION. IT IS INTENDED TO HAVE PROSPECTIVE EFFECT WITH EFFECT FROM 01.06.02015. ACCORDINGLY, THE QUE STION WAS ITA NO.2991 TO 3004/MDS/2014 THE COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK L TD. 5 ANSWERED IN FAVOUR OF ASSESSEE. THE LD.COUNSEL FOR THE ASSESSEE HAS PRODUCED COPIES OF THE UNREPORTED JUDGMENT OF V MADRAS HIGH COURT. FOR THE PURPOSE OF CONVENIENCE, WE ARE REPRO DUCING THE RELATED PORTION OF THE JUDGMENT AT PARAGRAPHS 63 & 64 HEREUNDER:- 63. IT CAN BE SEEN FROM THE LAST PORT OF THE PORTI ON EXTRACTED ABOVE THAT THE VERY NOTE EXPLAINING THE CLAUSE WAS SPECIFIC TO THE EFFECT THAT THE PROPOSAL WAS TO BRING FORTH AN AMENDMENT WITH PROSP ECTIVE EFFECT FROM 1.6.2015. THERE IS NO DISPUTE NOW THAT ON AND FROM 1.6.2015 THE APPELLANT CANNOT ESCAPE THE LIABILITY FROM DEDUCTIO N 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 MANNER IN WHICH THE PROVISIONS STOOD AND THE MANNER IN WHICH THEY WERE UNDERSTOOD, THE SAME COULD BE TAKEN ONLY TO HAVE PROSPECTIVE EFFECT. IT MUST BE POINTED OUT THAT THE PARLIAMENT DID NOT CHOOSE TO ANSWER A QUESTION. RATHER IT CHOSE TO AME ND THE PROVISIONS. IT IS NOW WELL SETTLED THAT AN AMENDMENT CAN ONLY B E PROSPECTIVE UNLESS IT S MADE RETROSPECTIVE BY EXPRESS LANGUAGE OR NECE SSARY IMPLICATION. APART FROM THE FACT THAT THE EXPRESS LANGUAGE OF SE CTION 194A AFTER AMENDMENT DOES NOT INDICATE ANY RETROSPECTIVITY, TH E NOTE EXPLAINING THE CLAUSES GOES ONE- STEP FURTHER IN MAKING IT CLE AR THAT IT WAS INTENDED TO HAVE PROSPECTIVE EFFECT FROM 1.6.2015. ITA NO.2991 TO 3004/MDS/2014 THE COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK L TD. 6 4. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX UNDER SECTION 194A OF THE ACT ON THE INTEREST PAID TO ITS MEMBERS TILL 31.05.2015. B Y RESPECTFULLY FOLLOWING THE JUDGMENT OF THE MADRAS HIGH COURT IN THE ASSESSEES OWN CASE, THE ORDERS OF THE LOWER AUTHORITIES ARE S ET ASIDE. 5. FURTHER, SAME VIEW WAS TAKEN BY CO-ORDINATE BEN CH IN ASSESSEE'S OWN CASE VIDE ORDER DATED 14.01.2016 IN ITA NO.1678/MDS./2015 & OTHERS. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 30 TH OF MARCH,2016 AT CHENNAI. SD/- SD/- ( ' # $ ) (CHALLA NAGENDRA PRASAD ) ( ( ' # $ % ) ) & CHANDRA POOJARI '( JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 30 TH MARCH,2016 . K S SUNDARAM. ITA NO.2991 TO 3004/MDS/2014 THE COIMBATORE DISTRICT CENTRAL CO-OPERATIVE BANK L TD. 7 )*(( +,(-, /COPY TO: ( 1. /APPELLANT 2. /RESPONDENT 3. ( .(&' /CIT(A) 4. ( . /CIT 5. ,/0( 1 /DR 6. 0(2 /GF