DCIT, Bangalore V. Sree Subramanyeshwara Co-Op Bank Ltd., Bangalore

ITA 767/BANG/2015

• Counselvise Citation: 76721114 RSA 2015
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 22-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: I P S BINDRA CITIDR
• Keywords: Opportunity of being heard; Non-deduction of tax
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NOS.767 TO 771/BANG/2015 ASSESSMENT YEAR : 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX (TDS), CIRCLE 1(1), BANGALORE. VS. SREE SUBRAMANYESHWARA CO-OP. BANK LTD., SUBRAMANYANAGAR BRANCH, 150/33, IST MAIN, MARUTHI EXTN., SRIRAMAPURAM, BANGALORE 560 021. PAN: BLRS1 3234E SREE SUBRAMANYESHWARA CO-OP. BANK LTD., VIJAYANAGAR BRANCH, CA 10, NO.14, 2 ND MAIN, SERVICE ROAD, BANGALORE 560 040. PAN: BLRS1 3325E SREE SUBRAMANYESHWARA CO-OP. BANK LTD., V.V. PURAM BRANCH, R.V. ROAD, BANGALORE 560 004. PAN: BLRS0 2967C SREE SUBRAMANYESHWARA CO-OP. BANK LTD., AVENUE ROAD BRANCH, NO.565, 1 ST FLOOR, ANANDRAM COMPLEX, OPP. INDIAN BANK, AVENUE ROAD, BANGALORE 560 002. PAN: BLRS0 4448D ITA NOS.767 TO 771/BANG/2015 PAGE 2 OF 6 SREE SUBRAMANYESHWARA CO-OP. BANK LTD., PADMANABHA NAGAR BRANCH, NO.40, 100 FT. ROAD, OPP. BIS DEPOT, BSK III STAGE, BANGALORE 560 085. PAN: BLRS1 3295C APPELLANT RESPONDENT APPELLANT BY : SHRI I.P.S. BINDRA, CIT-I(DR) RESPONDENT BY : NONE DATE OF HEARING : 14.10.2015 DATE OF PRONOUNCEMENT : 16.10.2015 O R D E R PER BENCH THESE APPEALS ARE FILED BY THE REVENUE AGAINST TH E SEPARATE ORDERS DATED 25.02.2015 OF THE CIT(APPEALS)-13, BANGALORE PASSED U/S. 201(1) AND 201(1A) OF THE INCOME-TAX ACT, 1961 [THE ACT] IN RESPECT OF DIFFERENT BRANCHES OF THE SREE SUBRAMANYESHWARA CO-OP. BANK L TD. 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED I N THE BUSINESS OF BANKING. THE AO NOTICED THAT THE ASSESSEE HAD NOT D EDUCTED TAX FROM INTEREST PAID TO MEMBERS ON TIME DEPOSITS EVEN THOU GH INTEREST PAID DURING THE FINANCIAL YEAR EXCEEDED RS. 10,000/-. THE AO HELD THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX ON INTEREST PAYMENT EXCE EDING RS. 10,000/-. THE AO FURTHER HELD THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX U/S 194A(1) FROM INTERESTS PAID TO ALL DEPOSITORS IRRES PECTIVE OF THEIR ITA NOS.767 TO 771/BANG/2015 PAGE 3 OF 6 MEMBERSHIP STATUS. SINCE THE ASSESSEE FAILED TO MAK E ANY DEDUCTION U/S 194A(1) IN RESPECT OF ITS MEMBERS, THE AO HELD THAT PROVISIONS OF SECTION 201(1) WAS ATTRACTED WHICH PROVIDED FOR TREATING TH E ASSESSEE AS AN ASSESSEE IN DEFAULT. THEREAFTER BASED ON INFORMAT ION AVAILABLE ON RECORD, AN ORDER U/S 201(1) AND 201(1A) WAS PASSED SINCE AS SESSEE DID NOT AVAIL OPPORTUNITY OF BEING HEARD. 3. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) HEL D AS FOLLOWS:- IT IS SEEN THAT A SIMILAR MATTER ON IDENTICAL ISS UES WAS DECIDED BY THE HON ITAT BANGALORE BENCH IN ITA NO. 1572/BA NG/2013 ASSTT. YEAR 2009-10 N THE CASE OF THE BAGALKOT DIST RICT CENTRAL CO-OPERATIVE BANK WHEREIN THE HON BENCH HELD THAT AN ASSESSEE WHICH IS A CO-OPERATIVE SOCIETY CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST INCOME TO A MEMBER BOTH ON TI ME DEPOSITS AND ON DEPOSITS OTHER THAN TIME DEPOSITS WITH SUCH CO-OPERATIVE SOCIETY NEED NOT DEDUCT TAX AT SOURCE U/S 194A BY V IRTUE OF THE EXEMPTION GRANTED VIDE CLAUSE (V) OF SUB SECTION 3 OF THE SAID SECTION. SINCE THE CASE OF THE APPELLANT IS COVERED BY THE DECISION OF JURISDICTIONAL ITAT AND JUDICIAL DISCIPLINE REQU IRES THAT DECISION OF HIGHER JUDICIAL AUTHORITIES PREVAIL, TH E AO IS DIRECTED NOT TO HOLD THE APPELLANT AS AN ASSESSEE IN DEFAUL T U/S 201(1) FOR FAILURE TO DEDUCT TAX AT SOURCE ON INTEREST INCOME PAID TO MEMBER DEPOSITORS OF THE APPELLANT BANK. HENCE THE TAX DEM AND IS DELETED. 4. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE REVENUE IS IN APPEALS BEFORE THE TRIBUNAL ON THE FOLLOWING COMMON GROUNDS OF APPEAL:- 1. THE LD.CIT(A) HAS ERRED IN RELYING ON THE DECI SION OF HON. ITAT, BANGALORE BENCH IN THE CASE OF THE BAGALKOT D ISTRICT CENTRAL CO-OP. BANK VS. JCIT IN ITA NO.1512/BANG/20 13 WHICH IS ERRONEOUS AND AGAINST THE LAW. ITA NOS.767 TO 771/BANG/2015 PAGE 4 OF 6 2. THE LD.CIT(A) OUGHT TO HAVE CONSIDERED THE ORDE RS OF THE HONBLE ITAT, PUNE (857 LTD 569) AND HON.ITAT, PANA JI BENCH ORDER IN THE CASE OF BAILHONGAL URBAN CO-OPERATIVE BANK DTD.28.08.2013, WHICH HAVE BEEN DECIDED IN FAVOUR O F THE DEPARTMENT. 3. THE LD. CIT(A) ERRED IN RELYING ON THE DECISION OF THE HON. ITAT, BANGALORE WHICH HELD THAT THE PROVISIONS OF SEC.194A(3)(V) ARE APPLICABLE TO THE DEPOSITS MADE WITH THE ASSESSEE, THE ASSESSEE BEING A CO-OPERATIVE BANK. 4. THE LD.CIT(A) HAS ERRED IN RELYING ON THE DECIS ION OF THE HON. ITAT, BANGALORE WHICH HAD FAILED TO APPRECIATE THE FACT THAT THE CLAUSE 194A(3)(VIIA) IS A SPECIFIC PROVISION WH ICH HAS OVERRIDING EFFECT ON THE GENERAL PROVISIONS OF CLAU SE 194A(3)(V). 5. THE LD.CIT(A) HAS ERRED IN RELYING ON THE DECIS ION OF THE HON. ITAT, BANGALORE WHICH FAILED TO APPRECIATE THA T THE CLAUSE 194A(3)(V) IS A GENERAL CLAUSE APPLICABLE TO CO-OPE RATIVE SOCIETIES IN GENERAL, IT IS A NORMAL PRINCIPLE OF I NTERPRETATION OF LAW THAT IN THE PRESENCE OF A SPECIFIC PROVISION TH E GENERAL PROVISION WILL NOT APPLY. FOR THESE AND OTHER GROUNDS THAT MAY BE RAISED DURI NG THE COURSE OF APPEAL AND ACTUAL HEARING, THE APPELLANT PRAYS T HAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASIDE AND CANCELLED. 5. WE FIND THAT THE LD. CIT(APPEALS) HAS FOLLOWED THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF BAGALKOT DISTRICT CENTRAL CO-OPERATIVE BANK IN ITA NO.1572/BANG/2013 FOR THE A.Y. 2009-10 AND HAS DIRECTED THE AO NOT HOLD THE ASSESSEE AS AN AS SESSEE IN DEFAULT U/S. 201(1) AND 201(1A) FOR FAILURE TO DEDUCT TAX AT SOU RCE ON INTEREST INCOME PAID TO MEMBER DEPOSITORS OF THE ASSESSEE BANK AND DELETING THE TAX DEMAND. ITA NOS.767 TO 771/BANG/2015 PAGE 5 OF 6 6. WE HAVE HEARD BOTH THE PARTIES. WE ARE IN CONFO RMITY WITH THE ORDER OF THE CIT(APPEALS) WHO HAS FOLLOWED THE DECISION O F THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF BAGALKOT DISTRICT CENTRAL CO-OPERATIVE BANK (SUPRA) . THE GROUNDS RAISED BY THE DEPARTMENT MERELY STAT ING THAT THE DECISION OF ITAT PUNE BENCH IN 857 ITD 569 AND ITAT PANAJI BENCH IN THE CASE OF BAILHONGAL URBAN COOPERATIVE BANK BY ORDER DATED 28 .08.2013 ARE DECIDED IN FAVOUR OF THE DEPARTMENT AND THEREFORE T HE MATTER HAS NOT REACHED FINALITY; CANNOT BE AN ARGUMENT BY THE DEPA RTMENT TO DECIDE THE ISSUE AGAINST THE ASSESSEE. WE THEREFORE, RESPECT FULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL CITED SUPRA , DISMISS ALL THE APPEALS FILED BY THE REVENUE. 7. IN THE RESULT, ALL THE APPEALS BY THE REVENUE AR E DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF OCTOBER, 2015. SD/- SD/- ( ABRAHAM P. GEORGE ) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 16 TH OCTOBER, 2015. /D S/ ITA NOS.767 TO 771/BANG/2015 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.