ITO, Bangalore V. The Bharat Co-Operative Bank (Mumbai) Ltd., Bangalore

ITA 962/BANG/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95334 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Keywords: Period of limitation; 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 JASON P. BOAZ, ACCOUNTANT MEMBER ITA NOS. 962 TO 964/BANG/2015 ASSESSMENT YEARS : 2011-12 TO 2013-14 THE INCOME TAX OFFICER (TDS), WARD 2(2), BANGALORE. VS. THE BHARATH CO-OPERATIVE BANK (MUMBAI) LTD., K.H. ROAD BRANCH, NO.16, MONEY TERRACE, K.H. ROAD, NEAR KSRTC CENTRAL OFFICE, BANGALORE. PAN: BLRTO 1227C APPELLANT RESPONDENT CO NO.196/BANG/2015 [IN ITA NO.962/BANG/2015 ASSESSMENT YEAR : 2011- 12 THE BHARATH CO-OPERATIVE BANK (MUMBAI) LTD., BANGALORE. PAN: BLRTO 1227C VS. THE INCOME TAX OFFICER (TDS), WARD 2(2), BANGALORE. CROSS OBJECTOR RESPONDENT REVENUE BY : DR. P.K. SRIHARI, ADDL. CIT (DR) RESPONDENT BY : SHRI RAVI SHANKAR, ADVOCATE DATE OF HEARING : 03.11.2015 DATE OF PRONOUNCEMENT : 04.11.2015 ITA NOS. 962 TO 964/BANG/2015 & CO NO.196/BANG/2015 PAGE 2 OF 12 O R D E R PER BENCH THESE APPEALS ARE BY THE REVENUE DIRECTED AGAINST THE SEPARATE ORDERS, ALL DATED 17.04.2015, OF THE CIT(APPEALS)-1 3, BANGALORE PERTAINING TO ASSESSMENT YEARS 2011-12 TO 2013-14. CROSS OBJ ECTION HAS BEEN FILED BY THE ASSESSEE IN ITA NO.962/BANG/2015. 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED I N THE BUSINESS OF BANKING. THE ASSESSING OFFICER NOTICED THAT THE AS SESSEE HAD NOT DEDUCTED TAX FROM INTEREST PAID TO MEMBERS ON TIME DEPOSITS EVEN THOUGH INTEREST PAID DURING THE FINANCIAL YEAR EXCEEDED RS .10,000 FOR WHICH ASSESSEE WAS REQUIRED TO DEDUCT TAX. THE AO HELD T HAT ASSESSEE WAS REQUIRED TO DEDUCT TAX U/S. 194A(1) FROM INTERESTS PAID TO ALL DEPOSITORS IRRESPECTIVE OF THEIR MEMBERSHIP STATUS. SINCE TH ERE WAS FAILURE ON THE PART OF ASSESSEE TO MAKE TAX DEDUCTION US. 194A(1) IN RESPECT OF ITS MEMBERS, THE AO INVOKED PROVISIONS OF SECTION 201(1 ) TREATING THE ASSESSEE AS AN ASSESSEE IN DEFAULT AND PASSED ORD ER U/S. 201(1) AND 201(1A). 3. ON APPEAL BY THE ASSESSEE, THE LD. CIT(APPEALS) HELD THAT A SIMILAR MATTER ON IDENTICAL ISSUES WAS DECIDED BY THE BANGA LORE BENCH OF THE TRIBUNAL IN ITA NO.1572/BANG/2013 FOR THE AY 2009-10 IN THE CASE OF THE BAGALKOT DISTRICT CENTRAL CO-OPERATIVE BAN K WHEREIN IT WAS HELD THAT AN ITA NOS. 962 TO 964/BANG/2015 & CO NO.196/BANG/2015 PAGE 3 OF 12 ASSESSEE WHICH IS A CO-OPERATIVE SOCIETY CARRYING O N BANKING BUSINESS, WHEN IT PAYS INTEREST INCOME TO A MEMBER BOTH ON TI ME DEPOSITS AND ON DEPOSITS OTHER THAN TIME DEPOSITS, SUCH COOPERATIVE SOCIETY NEED NOT DEDUCT TAX AT SOURCE U/S. 194A BY VIRTUE OF EXEMPTI ON GRANTED VIDE CLAUSE (V) OF SUB-SECTION 3 OF THE SAID SECTION. THE CIT (A) FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL DIRECTED THE AO NOT TREAT THE ASSESSEE AS AN ASSESSEE IN DEFAULT FOR FAILURE TO DEDUCT TAX AT SOURCE ON INTEREST INCOME PAID TO ITS MEMBER DEPOSITORS AND DELETED THE TAX D EMAND. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US FO R ALL THE ASSESSMENT YEARS UNDER APPEAL ON THE FOLLOWING COMM ON GROUNDS OF APPEAL:- 1. THE LD.CIT(A) HAS ERRED IN RELYING ON THE DEC ISION 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. 2. THE LD.CIT(A) OUGHT TO HAVE CONSIDERED THE ORDE RS OF THE HONBLE ITAT, PUNE (857 LTD 569) AND HON. ITAT, PAN AJI BENCH ORDER IN THE CASE OF BAILHONGAL URBAN CO-OPER ATIVE 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). ITA NOS. 962 TO 964/BANG/2015 & CO NO.196/BANG/2015 PAGE 4 OF 12 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. 5. WE FIND THE CIT(APPEALS) HAS FOLLOWED THE DECISI ON OF THE BANGALORE BENCH OF THE TRIBUNAL IN ITA NO.1572/BANG/2013 FOR THE AY 2009-10 IN THE CASE OF THE BAGALKOT DISTRICT CENTRAL CO-OPERATIVE BAN K , WHEREIN IT WAS HELD AT PARAS 15 TO 21 OF THE ORDER AS FOLLOWS:- 15. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. WE ARE OF THE VIEW THAT THE SUBMISSIO NS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE DESERVES TO BE ACCEPTED. AS RIGHTLY CONTENDED BY HIM SEC.194A(3)(I)(B) OF THE A CT IS A PROVISION WHICH MANDATES DEDUCTION OF TAX AT SOURCE BY A CO- OPERATIVE SOCIETY CARRYING ON THE BUSINESS OF BANKI NG, WHERE THE INCOME IN THE FORM OF INTEREST WHICH IS PAID BY SUC H SOCIETY IS IN EXCESS OF TEN THOUSAND RUPEES. SEC.194A(3)(V) OF T HE ACT PROVIDES THAT TAX NEED NOT BE DEDUCTED AT SOURCE WH ERE THE INCOME IN THE FORM OF INTEREST IS CREDITED OR PAID BY A CO- OPERATIVE SOCIETY TO A MEMBER THEREOF OR TO ANY OTH ER CO- OPERATIVE SOCIETY. THIS PROVISION THEREFORE APPLIE S TO ALL CO- OPERATIVE SOCIETIES INCLUDING CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING. IT IS NOT POSSIBLE TO EXCLUDE CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING FROM THE PROVISIONS OF SEC.194A(3)(V) OF THE ACT ON THE GROUND THAT THE SA ME IS COVERED BY THE PROVISIONS OF SEC.194A(3)(I)(B) OF THE ACT. SEC.194A(3)(V) OF THE ACT REFERS TO PAYMENT BY A CO -OPERATIVE SOCIETY TO A MEMBER AND PAYMENT BY A CO-OPERATIVE S OCIETY TO NON-MEMBER WOULD CONTINUE TO BE GOVERNED BY THE PRO VISIONS OF SEC.194A(3)(I)(B) OF THE ACT. SIMILARLY U/S.194A(3 )(VIIA)(B) INTEREST ON DEPOSITS OTHER THAN TIME DEPOSITS EVEN IF THE PAYMENT IS MADE TO A NON-MEMBER BY A CO-OPERATIVE SOCIETY, THE CO- OPERATIVE SOCIETY NEED NOT DEDUCT TAX AT SOURCE. T HUS THIS SECTION CARVES OUT ANOTHER EXCEPTION TO SEC.194A(3)(I)(B) O F THE ACT. WE ITA NOS. 962 TO 964/BANG/2015 & CO NO.196/BANG/2015 PAGE 5 OF 12 DO NOT THINK THAT ANY OF THE ABOVE PROVISIONS CAN B E CALLED A GENERAL PROVISION AND OTHER PROVISIONS CALLED SPECI FIC PROVISIONS. EACH PROVISION OVER-LAP AND IF READ IN THE MANNER A S INDICATED ABOVE, THERE IS PERFECT HARMONY TO THE VARIOUS PROV ISIONS. WE DO NOT AGREE WITH THE VIEW EXPRESSED BY THE PUNE ITAT SMC IN THE CASE OF BHAGANI NIVEDITA SAHAKARI BANK LTD. (SUPRA) WHEN IT SAYS THAT CO-OPERATIVE SOCIETY AS MENTIONED IN CL. (V) I S A GENERAL SPECIES, WHEREAS THE OTHER FIVE CATEGORIES OF CO-OP ERATIVE SOCIETIES WHICH ARE SPECIFICALLY REFERRED TO IN OTH ER PROVISIONS ARE SPECIFIC CO-OPERATIVE SOCIETIES. THE FURTHER CONCL USION IN THE SAID DECISION THAT THE TERM CO-OPERATIVE SOCIETY IN CL . (V) OF S. 194A(3) HAS TO BE INTERPRETED AS CO-OPERATIVE SOCIE TY OTHER THAN CO-OPERATIVE BANK, IS AGAIN UNSUSTAINABLE. THE LAW IS WELL SETTLED THAT BY A PROCESS OF INTERPRETATION ONE CANNOT ADD ON WORDS THAT ARE NOT FOUND IN THE TEXT OF THE STATUTE. SUCH A C OURSE IS PERMITTED ONLY WHEN THERE IS CAUSUS OMISUS. WE DO NOT THIN K THAT THE PROVISIONS OF SEC.194A(3)(V) SUFFERS FROM ANY CAUSU S OMISUS AS HAS BEEN INTERPRETED BY THE ITAT PUNE BENCH SMC. 16. WE ARE ALSO OF THE VIEW THAT THE DECISION OF TH E HONBLE KERALA HIGH COURT IN THE CASE OF MOOLAMATTOM ELECTR ICITY BOARD EMPLOYEES CO-OP BANK LTD. (SUPRA) SUPPORTS THE PLEA OF THE ASSESSEE BEFORE US. THE PETITIONERS IN THAT CASE WERE PRIMARY CREDIT SOCIETIES REGISTERED UNDER THE KERALA CO-OPE RATIVE SOCIETIES ACT. IN VIEW OF THE SPECIFIC PROVISIONS OF SEC.19 4A(3(VIIA) OF THE ACT, THEY CLAIMED THAT THEY NEED NOT DEDUCT TAX AT SOURCE ON INTEREST PAID. IT WAS SUBMITTED BY THE PETITIONER THAT SUB- S.194A(3)(V) DEALS WITH SUCH INCOME CREDITED OR PAI D BY A CO- OPERATIVE SOCIETY TO A MEMBER WHEREAS SUB-S. (3)(VI IA)(A) PROVIDES A TOTAL EXEMPTION TO DEPOSITS WITH THE PRI MARY CREDIT SOCIETY. THE HONBLE KERALA HIGH COURT ACCEPTED THE IR PLEA AND IN THEIR JUDGMENT HAVE OBSERVED THAT SEC.194A (3)(I ) EXEMPTION LIMIT OF RS. 10,000 TO INTEREST PAID ON TIME DEPOSI TS WITH CO- OPERATIVE SOCIETIES ENGAGED IN CARRYING ON BUSINESS OF BANKING IS ALLOWED BUT THAT DOES NOT MEAN THAT ALL CO-OPERATIV E SOCIETIES WHO HAVE CREDITED OR PAID EXCEEDING RS. 10,000 ARE LIAB LE TO DEDUCT TAX AT SOURCE. THE COURT HELD THAT CO-OPERATIVE SO CIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING AND PRIMARY CRED IT SOCIETIES STAND ON DIFFERENT FOOTING AND BELONG TO DIFFERENT CLASS. THAT DOES NOT MEAN THAT SEC.194A(3)(V) OF THE ACT IS APPLICAB LE ONLY TO CO- OPERATIVE SOCIETIES OTHER THAN CO-OPERATIVE SOCIETI ES CARRYING ON THE BUSINESS OF BANKING AS OBSERVED IN PARA-37 OF I TS JUDGMENT ITA NOS. 962 TO 964/BANG/2015 & CO NO.196/BANG/2015 PAGE 6 OF 12 THE PUNE ITAT IN THE CASE OF BHAGANI NIVEDITA SAH B ANK LTD. (SUPRA). IN FACT IN PARA-2 OF CIRCULAR NO.9 DATED 11.9.2002, THE CBDT HAS VERY CLEARLY LAID DOWN THAT CO-OPERATIVE S OCIETIES CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST ON DEPOSITS BY ITS MEMBERS NEED NOT DEDUCT TAX AT SOURCE IN VIEW O F THE PROVISIONS OF SEC.194A(3)(V) OF THE ACT. 17. WE ALSO FIND THAT THE CBDT IN CIRCULAR NO.9 DAT ED 11.9.2002 CLARIFIED CERTAIN ASPECTS WHICH ARE RELEV ANT TO THE PRESENT CASE. THE SAME READS THUS: CIRCULAR NO.9 OF 2002 SUB : TAX DEDUCTION AT SOURCE UNDER SECTION 194A O F THE INCOME-TAX ACT, 1961 APPLICABILITY OF THE PROVISIO NS IN RESPECT OF INCOME PAID OR CREDITED TO A MEMBER OF C O- OPERATIVE BANKREG. 11/09/2002 TDS 194A UNDER SECTION 194A OF THE INCOME-TAX ACT, 1961, TAX IS DEDUCTIBLE AT SOURCE FROM ANY PAYMENT OF INCOME BY WAY OF INTEREST OTHER THAN INCOME BY WAY OF INTEREST ON SECURITIES. CLAUSE (V) OF SUB-SECTION (3) OF SECTIO N 194A EXEMPTS SUCH INCOME CREDITED OR PAID BY A CO-OPERAT IVE SOCIETY TO A MEMBER THEREOF FROM THE REQUIREMENT OF TDS. ON THE OTHER HAND, CLAUSE (VIIA) OF SUB-SECTION (3) OF SECTION 194A EXEMPTS FROM THE REQUIREMENT OF TDS SU CH INCOME CREDITED OR PAID IN RESPECT OF DEPOSITS (OTH ER THAN TIME-DEPOSITS MADE ON OR AFTER 1ST JULY, 1995) WITH A CO- OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINE SS OF BANKING. 2. REPRESENTATIONS HAVE BEEN RECEIVED IN THE BOARD SEEKING CLARIFICATION AS TO WHETHER A MEMBER OF A C O- OPERATIVE BANK MAY RECEIVE WITHOUT TDS INTEREST ON TIME DEPOSIT MADE WITH THE CO-OPERATIVE BANK ON OR AFTER 1ST JULY, 1995. THE BOARD HAS CONSIDERED THE MATTER AND IT IS CLARIFIED THAT A MEMBER OF A CO-OPERATIVE BANK SHAL L RECEIVE INTEREST ON BOTH TIME DEPOSITS AND DEPOSITS OTHER THAN TIME DEPOSITS WITH SUCH CO-OPERATIVE BANK WITH OUT TDS UNDER SECTION 194A BY VIRTUE OF THE EXEMPTION ITA NOS. 962 TO 964/BANG/2015 & CO NO.196/BANG/2015 PAGE 7 OF 12 GRANTED VIDE CLAUSE (V) OF SUB-SECTION (3) OF THE S AID SECTION. THE PROVISIONS OF CLAUSE (VIIA) OF THE SAI D SUB- SECTION ARE APPLICABLE ONLY IN CASE OF A NON-MEMBER DEPOSITOR OF THE CO-OPERATIVE BANK, WHO SHALL RECEI VE INTEREST ONLY ON DEPOSITS OTHER THAN TIME DEPOSITS MADE ON OR AFTER 1ST JULY, 1995 WITHOUT TDS UNDER SECTIO N 194A. 3. A QUESTION HAS ALSO BEEN RAISED AS TO WHETHER NO RMAL MEMBERS, ASSOCIATE MEMBERS AND SYMPATHIZER MEMBERS ARE ALSO COVERED BY THE EXEMPTION UNDER SECTION 194A(3)(V). IT IS HEREBY CLARIFIED THAT THE EXEMPTI ON IS AVAILABLE ONLY TO SUCH MEMBERS WHO HAVE JOINED IN APPLICATION FOR THE REGISTRATION OF THE CO-OPERATIV E SOCIETY AND THOSE WHO ARE ADMITTED TO MEMBERSHIP AFTER REGISTRATION IN ACCORDANCE WITH THE BYE-LAWS AND RU LES. A MEMBER ELIGIBLE FOR EXEMPTION UNDER SECTION 194A(3) (V) MUST HAVE SUBSCRIBED TO AND FULLY PAID FOR AT LEAST ONE SHARE OF THE CO-OPERATIVE BANK, MUST BE ENTITLED TO PARTICIPATE AND VOTE IN THE GENERAL BODY MEETINGS A ND/OR SPECIAL GENERAL BODY MEETINGS OF THE CO-OPERATIVE B ANK AND MUST BE ENTITLED TO RECEIVE SHARE FROM THE PROF ITS OF THE CO-OPERATIVE BANK. [F. NO. 275/106/2000-IT(B)] (2002) 177 CTR (ST) 1 18. IT CAN BE SEEN FROM PARA-2 OF THE CIRCULAR REFE RRED TO ABOVE THAT THE CBDT HAS VERY CLEARLY LAID DOWN THAT CO-OP ERATIVE SOCIETIES CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST ON DEPOSITS BY ITS MEMBERS NEED NOT DEDUCT TAX AT SOUR CE. THE ABOVE INTERPRETATION OF THE PROVISIONS BY THE CBDT WHICH IS IN FAVOUR OF THE ASSESSEE, IN OUR VIEW IS BINDING ON T HE TAX AUTHORITIES. 19. IN THE CASE DECIDED BY ITAT PANAJI BENCH IN ITA NO.85/PN/2013 FOR AY 09-10 IN THE CASE OF THE BAILH ONGAL URBAN CO-OP BANK LTD. VS. JCIT ORDER DATED 28.8.201 3, THE TRIBUNAL PROCEEDED ON THE FOOTING THAT THE AFORESAI D CIRCULAR HAS BEEN QUASHED BY THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF THE JALGAON DISTRICT CENTRAL CO-OPERATIVE BANK LTD. VS. UNION OF INDIA 265 ITR 423 (BOM) AND THEREFORE CHOSE TO F OLLOW THE DECISION RENDERED BY PUNE ITAT SMC IN THE CASE OF B HAGANI NIVEDITA SAHAKARI BANK LTD. (SUPRA). IN OUR VIEW T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF JALGAON DISTRICT C ENTRAL CO- ITA NOS. 962 TO 964/BANG/2015 & CO NO.196/BANG/2015 PAGE 8 OF 12 OPERATIVE BANK LTD.S CASE WAS DEALING WITH A CASE OF CHALLENGE TO PARA-3 OF CBDT CIRCULAR NO.9 DATED 11.9.2002 WHI CH 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 HONBLE BOMBAY HIGH COURT AND THE OTHER PARAGRA PHS OF THE CIRCULAR HAD NO CONNECTION WITH THE ISSUE BEFORE TH E HONBLE BOMBAY HIGH COURT. HOW COULD IT BE SAID THAT THE E NTIRE CIRCULAR HAS BEEN QUASHED BY THE HONBLE BOMBAY HIGH COURT? IN OUR VIEW PARA-2 OF THE CIRCULAR STILL HOLDS GOOD AND TH E CONCLUSION OF THE ITAT PUNE BENCH IN THE CASE OF THE BAILHONGAL U RBAN CO-OP BANK LTD.(SUPRA) ARE NOT FACTUALLY CORRECT. CONSEQ UENTLY, THE CONCLUSIONS DRAWN IN THE AFORESAID DECISION ALSO CO NTRARY TO FACTS AND HENCE CANNOT BE CONSIDERED AS PRECEDENT. 20. THE LEARNED COUNSEL FOR THE ASSESSEE HAS BROUGH T TO OUR NOTICE THAT THE ITAT VISHAKAPATNAM BENCH IN THE CAS E OF THE VISAKHAPATNAM CO-OPERATIVE BANK ITA NO.5 AND 19 OF 2011 ORDER DATED 29.8.2011 HAS HELD THAT CO-OPERATIVE SO CIETIES CARRYING ON BANKING BUSINESS WHEN IT PAYS INTEREST TO ITS MEMBERS ON DEPOSITS IT NEED NOT DEDUCT TAX AT SOURCE IN VIE W OF THE PROVISIONS OF SEC.194A(3)(V) OF THE ACT. SIMILAR V IEW HAS ALSO BEEN EXPRESSED BY THE PUNE BENCH OF THE ITAT IN THE CASE OF OZER MERCHANT CO-OPERATIVE BANK ITA NO.1588/PN/2012 ORDER DATED 30.10.2013. WE MAY ADD THAT IN BOTH THESE DE CISIONS THE DISCUSSION DID NOT TURN ON THE INTERPRETATION OF SE C.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 WH EN 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 A SSESSEE 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 UNDER SECTION 194A BY VIRTUE OF THE EXEMPTION GRANTED VIDE CLAUSE (V) OF SUB-SECTION (3) OF THE SAID SECTION. ITA NOS. 962 TO 964/BANG/2015 & CO NO.196/BANG/2015 PAGE 9 OF 12 6. SINCE THE FACTS IN THE PRESENT CASE ARE SIMILAR TO THAT OF THE DECISION RENDERED IN THE CASE OF THE BAGALKOT DISTRICT CENTRAL CO-OPERATIVE BAN K ( SUPRA ), RESPECTFULLY FOLLOWING THIS DECISION, WE HOLD TH AT THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(APPEALS) AND DISMISS THE GR OUNDS RAISED BY THE REVENUE. 7. THE APPEALS BY THE REVENUE ARE DISMISSED. CO NO.196/BANG/2015 8. THE GROUNDS OF APPEAL RAISED IN THE CO BY THE AS SESSEE ARE AS FOLLOWS:- 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) FAILED TO APPRECIATE THAT IN VIEW OF SECTION 201(3) OF THE ACT, THE ORDER U/S 201(1) HOLDING THE RESPONDENT/CROSS-OBJECTOR AS AN ASSESSEE IN DEFAULT IS BARRED BY LIMITATION INSOFAR AS THE F IRST THREE QUARTERS OF THE IMPUGNED F.Y.2010-11 ARE CONCERNED AND ACCOR DINGLY THE ORDER OF ASSESSING OFFICER IS NOT SUSTAINABLE IN LA W AND REQUIRES TO BE CANCELLED TO THAT EXTENT. 3. THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE ADJUSTMENT CONTEMPLATED UNDER SECTION 194A(4) OF TH E ACT HAS NOTHING TO DO WITH LIMITATION PRESCRIBED UNDER SECT ION 201(3) OF THE ACT AND CONSEQUENTLY THE ORDER PASSED BEYOND TH E LIMITATION PRESCRIBED UNDER SECTION 201(3) IS BARRED BY LIMITA TION AND LEARNED CIT(A) OUGHT TO HAVE CANCELLED THE ORDER FO R SUCH PERIOD ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE INTERPRETATION ON LIMITATION MUST BE STRICTLY CONST RUED AND CONSEQUENTLY IN THE INSTANT CASE THE ORDER IS CLEAR LY BARRED BY LIMITATION ON THE FACTS AND CIRCUMSTANCES OF THE CA SE. ITA NOS. 962 TO 964/BANG/2015 & CO NO.196/BANG/2015 PAGE 10 OF 12 9. WE FIND THAT SIMILAR ISSUE HAS BEEN DEALT WITH B Y THE COORDINATE BENCH OF THIS TRIBUNAL IN CO NOS.48 TO 62/BANG/2015 IN ITA NO.1408 TO 1427/BANG/2014 BY ORDER DATED 30.04.2015 IN THE CAS E OF KARNATAKA STATE APEX COOPERATIVE BANK LTD., MAGADI ROAD BRANCH, BA NGALORE. THE RELEVANT PARAGRAPHS 15 TO 18 ARE REPRODUCED BELOW:- 15. AS FAR AS CROSS-OBJECTIONS OF THE ASSESSEE AR E CONCERNED, THEY RELATE TO TIME LIMIT FOR PASSING OF ORDER U/S. 201(1) OF THE ACT. A CHART SHOWING THE DATES ON WHICH THE AO OUGHT TO HAVE PASSED THE ORDER ULS.201(1) & 201(1A) OF THE ACT AND THE A PPEALS IN WHICH THE ASSESSEE HAS RAISED THE OBJECTION OF LIMI TATION IS ANNEXED TO THIS ORDER. THE PROVISIONS OF SEC.20 1(3 ) PROVIDE FOR A OF LIMITATION FOR PASSING ORDERS U/S.201(1) OF THE ACT. SUB-SECTION (3), BY THE FINANCE ACT, 2012, W.R.E.F 1-4-2010, RE AD AS UNDER: (3) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) D EEMING A PERSON TO BE AN ASSESSEE IN DEFAULT FOR FAILURE T O DEDUCT THE WHOLE OR ANY PART OF THE TAX FROM A PERSON RESI DENT IN INDIA AT ANY TIME AFTER THE EXPIRY OF (I) TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE STATEMENT IS FILED IN A CASE WHERE THE STATEMEN T REFERRED TO IN SECTION 200 HAS BEEN FILED; (II) SIX YEARS FROM THE END OF THE FINANCIAL YEAR I N WHICH PAYMENT IS MADE OR CREDIT IS GIVEN, IN ANY OTHER CA SE: PROVIDED THAT SUCH ORDER FOR A FINANCIAL YEAR COMMENCING ON OR BEFORE THE 1ST DAY OF APRIL, 2007 MAY BE PASSED AT ANY TUNE ON OR BEFORE THE 31 ST DAY OF MARCH, 2011. 16. ACCORDING TO THE ASSESSEE THE TIME LIMIT FOR F ILING STATEMENT REFERRED TO IN SEC.200 IS LAID DOWN IN 31 -A OF THE INCOME TAX RULES 1962 (RULES). AS PER THE SAID RULE S THE TIME LIMIT IS LAID DOWN FOR FURNISHING TDS RETURNS FOR E ACH QUARTER IN A FINANCIAL YEAR. THE ASSESSEE HAS IN THE CHART ENCLO SED GIVEN THE DATES ON WHICH THE STATEMENT WAS FILED U/S.200(3) O F THE ACT FOR EACH OF THE QUARTER IN THE FINANCIAL YEAR 2010- 11 OF THE VARIOUS BRANCHES IN COLUMN 4,7,10 & 13. THE ASSESSEE HAS AL SO GIVEN THE ITA NOS. 962 TO 964/BANG/2015 & CO NO.196/BANG/2015 PAGE 11 OF 12 END OF THE FINANCIAL YEAR IN WHICH THE ORDER U/S.20 1(L) HAD TO BE PASSED IN TERMS OF SEC.201(3) OF THE ACT IN COLUMN 6,9 AND 12 OF THE CHART AS PER THIS CHART THE ORDERS FOR 1ST 2ND AND 3 QUARTER OF FINANCIAL YEAR 2010-11 OUGHT TO HAVE BEEN PASSED ON OR BEFORE 31-3-2013 BUT THE ORDERS HAVE BEEN PASSED ONLY ON 3 1.3.2014 AND THEREFORE THE SAME HAVE TO BE HELD AS BAD IN LAW. T HE ORDERS IN SO FAR AS THEY ARE BAD, HAVING BEEN PASSED BEYOND THE PERIOD OF LIMITATION IS GIVEN IN COLUMN 16 OF THE CHART. 17. ON THE PLEA OF THE ASSESSEE THAT THE ORDERS AR E BARRED BY TIME, THE REVENUE AUTHORITIES HELD THAT SINCE U/S. 194A OF THE ACT THE PERSON MAKING PAYMENT WHO HAS AN OBLIGATION TO DEDUCT TAX AT SOURCE HAS TIME TO DEDUCT TAX AT SOURCE AT ANY T IME DURING THE FINANCIAL YEAR, THOUGH IT MIGHT RELATE TO ANY OF TH E 1 ST THREE QUARTERS OF THE FINANCIAL YEAR. THEREFORE THE FAILU RE TO DEDUCT TAX AT SOURCE HAS TO BE RECKONED ONLY FROM 31.3.2011 TH E END OF THE FINANCIAL YEAR. THIS EXPLANATION GIVEN BY THE REVEN UE DOES NOT APPEAR TO BE IN TUNE WITH THE EXPRESS LANGUAGE OF S EC.201(3) OF THE ACT. THIS ARGUMENT IS OPEN WHEN THE PERSON RESP ONSIBLE FOR DEDUCTING TAX AT SOURCE DOES NOT FILE THE RETURN OF TDS. IN SUCH AN EVENT THE TIME LIMIT CONTEMPLATED U/S.201(3)(II) IS THE END OF THE FINANCIAL YEAR IN WHICH PAYMENT IS MADE OR CREDIT I S GIVEN. WHEN A RETURN OF TDS IS FILED CAN SUCH AN ARGUMENT BE RA ISED BY THE REVENUE? 18. IN OUR OPINION THIS QUESTION IS ONLY ACADEMIC A ND THEREFORE DOES NOT REQUIRE ADJUDICATION IN THE PRESENT CROSS OBJECTION AS THE REVENUES APPEALS ARE BEING DECIDED AGAINST THE REV ENUE ON MERITS. THE CROSS-OBJECTIONS ARE THEREFORE DISMISS ED AS NOT REQUIRING ADJUDICATION. 10. RESPECTFULLY FOLLOWING THE AFORESAID DECISION I N THE CASE OF THE KARNATAKA STATE APEX CO-OPERATIVE BANK LTD. (SUPRA) AND SINCE IN THE PRESENT CASE THE APPEALS BY THE REVENUE HAVE BEEN D ISMISSED ON MERITS, WE ARE OF THE VIEW THAT THE ISSUE RAISED IN THE CO BY THE ASSESSEE ARE ONLY ACADEMIC REQUIRING NO ADJUDICATION. THUS, THE CROS S OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ITA NOS. 962 TO 964/BANG/2015 & CO NO.196/BANG/2015 PAGE 12 OF 12 11. IN THE RESULT, THE APPEALS BY THE REVENUE AND C O BY THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF NOVEMBER, 2015. SD/- SD/- ( JASON P. BOAZ ) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 4 TH NOVEMBER, 2015. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.