Almora Urban Cooperative Bank Ltd., Almora V. ITO (TDS), Kashipur

ITA 5324/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0264 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-05-2015
• Assessment Year: 2012-2013
• Appeal Filed On: 26-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: K R RASTOGI
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. J .S.R EDDY , ACCOUNTANT MEMBER I.T.A .NO. - 5324 /DEL/201 3 (ASSESSMENT YEAR - 20 12 - 13 ) ALMORA UR B AN CO - OPERATIVE BANK LTD., GURUNANI COMPLEX, LALA BAZAR, ALMORA, UTTARAKHAND - 263601 PAN - AABAA0540K (APPELLANT) VS ITO(TDS), KASHIPUR (RESPONDENT) APPELLANT BY S H.K.R.RASTOGI, CA RESPONDENT BY MS.Y.KAKKAR, DR ORDER PER DIVA SINGH, JM BY THE PRESENT AP PEAL , THE ASSESSEE ASSAILS THE CORRECTNESS OF THE ORDER OF CIT( A) - II, DEH RADUN DATED 29.07.2013 PERTAINING TO 201 2 - 1 3 ASSESSMENT YEAR CONTENDING THAT IN THE FACTS OF THE PRESENT CASE THERE WAS NO OBLIGATION UPON THE ASSESSEE TO DEDUCT TAX AT SOURCE ON THE PAYMENTS IN QUESTION AND ACCORDINGLY THE DEMAND U/S 201(1)/201(1A) COULD NOT HAVE BEEN RAISED. IN THE FACTS OF THE P RESENT CASE THE AO CARRIED OUT ON THE SPOT VERIFICATION ON 26.04.2013 TO VERIFY THE TAX DEDUCT AT SOURCE UNDER DIFFERENT HEADS . V IDE HIS ORDER DATED 20.05.2013 PASSED U/S 201(1)/201(1A) , HE OBSERVED THAT T HE ASSESSEE HAD NOT DEDUCTED TAX ON THE TERM DEPOSITS. THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE AND AN EXPLANATION WAS CALLED FORTH. IN RESPONSE THERETO THE ASSESSEE IS FOUND TO HAVE STATED THAT IT WAS A CO - OPERATIVE SOCIETY ENGAGED IN CO - OPERATIVE BUSINESS OF BANKING WHICH WAS REGISTERE D UNDER UTTARAKHAND SAHKARI SAMITI ADHINIYAM 2003. IT WAS SUBMITTED THAT SECTION 2(19) OF I.T. ACT DEFINE S CO - OPERATIVE SOCIETY REGISTERED AS A CO - OPERATIVE SOCIETY REGISTERED UNDER THE CO - OPERATIVE SOCIETIES ACT, 1912 (2) OF 1912, OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY DATE OF HEARING 18 .0 5 .2015 DATE OF PRONOUNCEMENT 10 .0 6 .2015 I.T.A .NO. - 5324/DEL/2013 PAGE 2 OF 6 STATE FOR THE REGISTRATION OF CO - OPERATIVE SOCIETIES. SECTION 194A OF THE I.T. ACT, 1961 IT WAS SUBMITTED DEALS WITH INTEREST OTHER THAN THE INTEREST ON SECURITIES. SUB - SECTION 1 OF SECTION 194A IT WAS SUBMITTED MANDAT ES, DEDUCTION OF INCOME TAX AT SOURCE IN RESPECT OF THE INCOME BY WAY OF INTEREST. WHEREAS SUB - SECTION (3) OF SECTION 194A OF I.T. ACT IT WAS SUBMITTED ENGRAFTS AN EXCEPTION TO THE APPLICABILITY OF PROVISION OF SECTION (1). CLAUSE (V) OF SUB - SECTION (3) OF SECTION 194A OF THE I.T. ACT, IT WAS SUBMITTED GRANTS AN EXEMPTION FROM TAX DEDUCTED AT SOURCE TO SUCH INCOME CREDITED OR PAID BY A CO - OPERATIVE SOCIETY TO A MEMBER THEREOF OR TO ANY OTHER CO - OPERATIVE SOCIETY. THUS IT WAS SUBMITTED THAT AS PER THE PR OVISIONS OF SECTION 194A(3)(V) OF THE I.T. ACT THE PROVISIONS RELATING TO TAX DEDUCTED AT SOURCE ARE INAPPLICABLE TO THE INCOME CREDITED OR PAID BY THE COOPERATIVE SOCIETIES TO THE MEMBER THEREOF. IN THE PRESENT CASE EVERY DEPOSITOR IT WAS SUBMITTED IS A MEMBER OF THE ALMORA URBAN CO - OPERATIVE BANK LIMITED AND HENCE ANY INCOME PAID OR CREDITED TO THE MEMBER ON DEPOSITS WAS CLAIMED TO BE EXEMPT FROM THE DEDUCTION OF TDS U/S 194A(3)(V) OF THE I.T. ACT. RELIANCE WAS PLACED UPON THE DECISION OF JALGAON DISTR ICT CENTRAL CO - OP. BANK AND ANOTHER VS. UNION OF INDIA [2004] 265 ITR 423. 2. NOT CONVINCED WITH THE EXPLANATION OFFERED, THE AO DIRECTED THE ASSESSEE TO PAY RS.79,484/ - FOR THE DEFAULT COMMITTED. 3. THE SAID ACTION WAS CHALLENGED UNSUCCESSFULLY IN APPE AL BY THE ASSESSEE HOWEVER THE ACTION WAS UPHELD BY THE CIT(A). 4. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. AR APPEARING ON BEHALF OF THE ASSESSEE RE - ITERATED THE SUBMISSIONS BEFORE THE AUTHORITIES BELOW. APART FROM RELY ING ON VARIOUS OTHER ORDERS OF THE TRIBUNAL REFERRED TO IN THE PAPER BOOK , RELIANCE WAS ALSO PLACED ON THE ORDER DATED 14.11.2014 OF PUNE BENCH OF THE TRIBUNAL IN AN IDENTICALLY SITUATED CASE OF CO - OPERATIVE BANK NAMELY KASHIPUR URBAN COOPERATIVE BANK LTD. VS ITO PASSED BY THE DELHI BENCH IN ITA NO. - 5329/DEL/2013 IN THE SAME ASSESSMENT YEAR (COPY OF THE SAME PLACED AT PAGES 1 - 2 OF THE PAPER BOOK). RELIANCE WAS ALSO PLACED UPON THE ORDER DATED 30.05.2014 IN THE CASE OF BAGALKOT DISTRICT GENERAL CO - OPERATIVE BANK VS JCIT [2014] 48 TAXMAN.COM 117 (BANGLORE TRIBUNAL) WHEREIN THE ONLY CONTRARY VIEW ON THE ISSUE TAKEN BY SMC ORDER OF THE TRIBUNAL IN THE CASE OF BHAGANI NIVEDITA SAH. BANK LTD. VS. ACIT [2003] 87 ITD 569 (PUNE) (SMC) HAS I.T.A .NO. - 5324/DEL/2013 PAGE 3 OF 6 BEEN CONSIDERED BY WAY OF A DETAILED FINDING IN ITA NO. - 85/PN/2013 IN THE CASE OF BAILHONGAL URBAN CO - OP. BANK LTD. VS JCIT WHEREIN PANAJI BENCH VIDE ITS ORDER DATED 28.08.2013 WHICH HAS BEEN REFERRED TO AND FOLLOWED BY THE BANGLORE BENCH OF THE TRIBUNAL IN BAGALKOT DISTRICT GENERAL CO - OPERATIVE BANK VS JCIT (CITED SUPRA). ACCORDINGLY RELYING ON THE ORDERS OF KASHIPUR URBAN CO - OPERATIVE BANK LTD., VS INCOME TAX OFFICER, ITA NO. - 5329/DEL/2013; BAGALKOT DISTRICT GENERAL CO - OPERATIVE BANK VS JCIT, BIJAPUR, RANGE - BIJAPUR [2014] 48 TAXMA N.COM 117 (BANGLORE TRIBUNAL); SH. VIJAY MAHANTESH CO - OPERATIVE BANK LTD, COLLEGE ROAD, BAGALKOT VS JCIT (BIJAPUR RANGE - BIJAPUR) IN ITA NO. - 434/BANG./2013; ITO (TDS) VS THE HUBLI URBAN CO - OPERATIVE BANK LTD., HUBLI IN ITA NO. - 1191 TO 1194/BANG./2014; AND A CIT, CIRCLE - 1, NASHIK VS OZER MERCHANT CO - OPERATIVE BANK LTD. [2014] 41 TAXMANN.COM 110 (PUNE TRIBUNAL) , I T WAS SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. THE ARGUMENTS WERE ALSO ADVANCED SO AS TO CONTEND THAT BY THE AMENDMENT IN THE A CT IN 2015, THE ISSUE HAS BEEN ADDRESSED BY WAY OF RETROSPECTIVE AMENDMENT. 5. THE LD. SR. DR RELYING UPON THE IMPUGNED ORDER AND THE DECISION OF THE ITAT SMC BENCH IN THE CASE OF BHAGANI NIVEDITA SAH.BANK LTD. (CITED SUPRA) SUBMITTED THAT IN THE CASE OF T HE PRESENT CASE, IT MAY NEED TO BE SEEN WHETHER THE MEMBERS OF THE CO - OPERATIVE BANKS WERE THE PRIMARY MEMBERS OR THE SECONDARY MEMBERS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CONSIDERATION THEREOF, WE FI ND THAT AS FAR AS THE APPLICABILITY OF THE RELEVANT PROVISION IS CONSIDERED, THE CO - ORDINATE BENCH IN THE CASE OF KASHIPUR URBAN CO - OPERATIVE BANK LIMITED VS. ITO RELYING UPON THE DECISION RENDERED BY THE CO - ORDINATE BENCH AT VISHAKHAPATNAM IN ACIT VS VISA KHAPATNAM COOPERATIVE BANK LTD. IN ITA NOS. 5 & 9/2011 (VIZAG.) BENCH HAS HELD THAT THE ASSESSEE WAS NOT OBLIGED TO DEDUCT TDS ON THE INTEREST PAID ON TIME DEPOSITS U/S 194A OF THE ACT. THE RELEVANT DISCUSSION EXTRACTED BY THE CO - ORDINATE BENCH IS REPRODU CED HEREUNDER: - WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF THE ASSESSEE AND ALSO THE DECISION RENDERED BY LD. CIT(A). SECTION 194A(3) OF THE ACT PRESCRIBES THE MONETARY LIMITS AND ALSO A LIST OF PAYMENTS WHICH ARE EXEMPT FROM THE REQUIREMENT OF COMPLYI NG WITH THE PROVISIONS OF TDS PRESCRIBED UNDER SUB - SECTION (1) OF THAT SECTION. CLAUSE (V) OF SECTION 194A(3), ON WHICH RELIANCE WAS PLACED BY THE ASSESSEE, READS AS UNDER: I.T.A .NO. - 5324/DEL/2013 PAGE 4 OF 6 TO SUCH INCOME CREDITED OR PAID BY A COOPERATIVE SOCIETY TO A MEMBER THEREOF OR TO ANY OTHER COOPERATIVE SOCIETY. ON A PLAIN READING OF THE SECTION 194A(3)(V), WE NOTICE THAT THE SAID SECTION PROVIDES BLANKET EXEMPTION TO THE INTEREST PAID BY ANY COOPERATIVE SOCIETY TO ITS MEMBERS. THE TERM COOPERATIVE SOCIETY HAS BEEN DEFINED U/S 2(1 9) OF THE ACT AS UNDER: COOPERATIVE SOCIETY MEANS A COOPERATIVE SOCIETY REGISTERED UNDER THE COOPERATIVE SOCIETIES ACT, 1912 (2 OF 1912), OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY STATE FOR THE REGISTRATION OF COOPERATIVE SOCIETIES. IT CAN BE SEEN THAT NEITHER SEC. 2(19) NOR SEC. 194A(3) MAKES ANY DISCRIMINATION BETWEEN THE COOPERATIVE SOCIETIES CARRYING ON BANKING BUSINESS AND OTHER COOPERATIVE SOCIETIES. HOWEVER, AS PER SEC. 194A(3), THE SAID EXEMPTION IS AVAILABLE ONLY TO THE INTERES T PAYMENTS MADE TO ITS MEMBERS OR TO ANY OTHER COOPERATIVE SOCIETY. IN THE INSTANT CASE, IT IS THE CLAIM OF THE ASSESSEE THAT ALL THE INTEREST PAYMENTS HAVE BEEN MADE ONLY TO ITS MEMBERS. IN THAT CASE, THE ASSESSEE IS SQUARELY COVERED BY THE EXEMPTION PRO VIDED U/S 194A(3)(V) OF THE ACT. ACCORDINGLY WE FIND NO REASON WITH THE DECISION OF LD. CIT(A) ON THIS ISSUE. 6.1. IT IS ALSO SEEN THAT THE CO - ORDINATE BENCH VIDE ITS DECISION DATED 30.05.2014 IN BAGALKOT DISTRICT CENTRAL CO - OP. BANK (CITED SUPRA) HAS TA KEN AN IDENTICAL VIEW IN THE SAID DECISION. WHEREIN THE DECISION OF THE PUNE BENCH IN BHAGANI NIVEDITA SAH.BANK LTD. (CITED SUPRA) HAS BEEN TAKEN INTO CONSIDERATION. FOR READY - REFERENCE, WE EXTRACT THE RELEVANT PORTION FOR THE SAID ORDER W HICH WOULD ADD RESS THE OBJECTION OF THE AO ALSO WHICH HAVE BEEN UPHELD BY THE CIT(A) AND RELIED UPON BY THE LD. SR. DR : - 19. IN THE CASE DECIDED BY ITAT PANAJI BENCH IN ITA NO.85/PN/2013 FOR AY 09 - 10 IN THE CASE OF THE BAILHONGAL URABAN CO - OP BANK LTD. (SUPRA) ORDER DATED 28.8.2013, THE TRIBUNAL PROCEEDED ON THE FOOTING THAT THE AFORESAID CIRCULAR HAS BEEN QUASHED BY THE HO N'BLE BOMBAY HIGH COURT IN THE CASE OF THE JALGAON DISTRICT CENTRAL CO - OPERATIVE BANK LTD. (SUPRA) AND THEREFORE CHOSE TO FOLLOW THE DECISION RENDERED BY PUNE ITAT SMC IN THE CASE OF BHAGANI NIVEDITA SAHAKARI BANK LTD. (SUPRA). IN OUR VIEW THE HON'BLE BOMB AY HIGH COURT IN THE CASE OF JALGAON DISTRICT CENTRAL CO - OPERATIVE BANK LTD. 'S CASE (SUPRA) WAS DEALING WITH A CASE OF CHALLENGE TO PARA - 3 OF CBDT CIRCULAR NO.9 DATED 11.9.2002 WHICH TRIED TO INTERPRET THE WORD 'MEMBER' AS 'GIVEN IN SEC. 194A(3)(V) OF THE ACT. IT IS ONLY THAT PART OF THE CIRCULAR THAT HAD BEEN QUASHED BY THE HON'BLE BOMBAY HIGH COURT AND THE OTHER PARAGRAPHS OF THE CIRCULAR HAD NO CONNECTION WITH THE ISSUE BEFORE THE HON'BLE BOMBAY HIGH COURT. HOW COULD IT BE SAID THAT THE ENTIRE CIRCULAR HAS BEEN QUASHED BY THE HON'BLE BOMBAY HIGH COURT? IN OUR VIEW PARA - 2 OF THE CIRCULAR STILL HOLDS GOOD AND THE CONCLUSION OF THE ITAT PUNE BENCH IN THE CASE OF THE BAILHONGAL URABAN CO - OP BANK LTD. (SUPRA) ARE NOT FACTUALLY CORRECT. CONSEQUENTLY, THE CONCL USIONS DRAWN IN THE AFORESAID DECISION ALSO CONTRARY TO FACTS AND HENCE CANNOT BE CONSIDERED AS PRECEDENT. I.T.A .NO. - 5324/DEL/2013 PAGE 5 OF 6 20. THE LEARNED COUNSEL FOR THE ASSESSEE HAS BROUGHT TO OUR NOTICE THAT THE ITAT VISHAKAPATNAM BENCH IN THE CASE OF THE ASSTT. CIT V. VISAKHAPATNAM CO - OPERATIVE BANK LTD. [2011] 47 SOT 295/13 TAXMANN.COM 190 HAS HELD THAT CO - OPERATIVE SOCIETIES CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST TO ITS MEMBERS ON DEPOSITS IT NEED NOT DEDUCT TAX AT SOURCE IN VIEW OF THE PROVISIONS OF SEC. 194A(3)(V) OF THE ACT. SIMILAR VIEW HAS ALSO BEEN EXPRESSED BY THE PLU1E BENCH OF THE IT AT IN THE CASE OF ASSTT. CIT V. OZER MERCHANT CO - OPERATIVE BANK LTD. [2014] 62 SOT 14/41 TAXMANN.COM 110. WE MAY ADD THAT IN BOTH THESE DECISIONS THE DISCUSSION DID NOT TURN ON THE INTERPRETATION OF SEC. 194A(3)(I)(B) OF THE ACT VIS - A - VIS SEC.194A(3)(V) OF THE ACT. IT IS THUS CLEAR THAT THE PREPONDERANCE OF JUDICIAL OPINION ON THIS ISSUE IS THAT CO - OPERATIVE SOCIETIES CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST TO ITS MEMBERS ON DEPOSITS NEED NOT DEDUCT TAX AT SOURCE IN VIEW OF THE PROVISIONS OF SEC. 194A(3)(V) OF THE ACT. 21. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT THE ASSESSEE WHICH IS A CO - OPERATIVE SOCIETY CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST INCOME TO A M EMBER BOTH ON TIME DEPOSITS AND ON DEPOSITS OTHER THAN TIME DEPOSITS WITH SUCH CO - OPERATIVE SOCIETY NEED NOT DEDUCT TAX AT SOURCE UNDER SECTION 194A BY VIRTUE OF THE EXEMPTION GRANTED VIDE CLAUSE (V) OF SUB - SECTION (3) OF THE SAID SECTION. 6 .2. I N VIEW OF THE ABOVE, WE FIND THAT THE ISSUE HAS TO BE DECIDED IN FAVOUR OF THE ASSESSEE FOLLOWING THE JUDICIAL PRECEDENT CITED. CONSIDERING THE FACTUAL MATRIX, IT IS SEEN THAT THE RECORD SHOWS THAT THE ASSESSEE THROUGH ITS BRANCH MANAGER HAS FILED WRITTEN S UBMISSIONS ON 07.05.2013 CLAIMING THAT EVERY TAXPAYER IS A MEMBER OF ALMORA URBAN CO - OPERATIVE BANK LTD. THESE FACTS NEED VERIFICATION. THE LEGAL ISSUE HAVING BEEN DECIDED IN FAVOUR OF THE ASSESSEE , O N FACTS WE RESTORE THE ISSUE BACK TO THE FILE OF T HE AO FOR THIS LIMITED PURPOSE . ACCORDINGLY THE IMPUGNED ORDER IS SET ASIDE AND THE MATTER IS RESTORED FOR THIS LIMITED PURPOSE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 0 T H OF JUNE 2015. S D / - S D / - ( J .S.R EDDY ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 0 / 0 6 /2015 *AMIT KUMAR* I.T.A .NO. - 5324/DEL/2013 PAGE 6 OF 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI