By Sri. A Shankar, Sr. Counsel For Sri v. Chandrashekar & Shashank Hegde, Advocates

IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 05 DAY OF JULY, 2019 PRESENT THE HON’BLE MR.JUSTICE ARAVIND KUMAR AND THE HON’BLE MR.JUSTICE BELLUNKE A.S. INCOME TAX APPEAL Nos.100040/2018C/W 100041/2018, 100042/2018 & 100043/2018 IN ITA NO.100040/2018 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX, PUNDALIKA NIWAS, RUA DE OUREM, PANAJI, GOA-403001. PUNDALIKA NIWAS, RUA DE OUREM, PANAJI, GOA-403001. 2. INCOME TAX OFFICER TDS WARD-1, HUBBALLI-580025. TDS WARD-1, HUBBALLI-580025. (BY SRI. Y.V. RAVIRAJ, ADVOCATE) …APPELLANTS AND: KARNATAKA VIKAS GRAMEEN BANK P.B. NO.111, BELGAUM ROAD, DHARWAD-580008. ... RESPONDENT (BY SRI. A SHANKAR, SR. COUNSEL FOR SRI. V. CHANDRASHEKAR & SHASHANK HEGDE, ADVOCATES) THIS APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED ABOVE AND ALLOW THE APPEAL AND SET-ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE BENCH ‘C’ IN ITA NO.1692/BANG/2017, DATED 28.02.2018 AND CONFIRM THE ORDER PASSED BY THE ITO, TDS WARD-1, HUBBALLI FOR THE ASSESSMENT YEAR 2008-09. IN ITA NO.100041/2018 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX, PUNDALIKA NIWAS, RUA DE OUREM, PANAJI, GOA-403001. PUNDALIKA NIWAS, RUA DE OUREM, PANAJI, GOA-403001. 2. INCOME TAX OFFICER TDS WARD-1, HUBBALLI-580025. TDS WARD-1, HUBBALLI-580025. (BY SRI. Y.V. RAVIRAJ, ADVOCATE) …APPELLANTS AND: KARNATAKA VIKAS GRAMEEN BANK P.B. NO.111, BELGAUM ROAD, DHARWAD-580008. ... RESPONDENT (BY SRI. A SHANKAR, SR. COUNSEL FOR SRI. V. CHANDRASHEKAR & SHASHANK HEGDE, ADVOCATES) THIS APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED ABOVE AND ALLOW THE APPEAL AND SET-ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE BENCH ‘C’ IN ITA NO.1693/BANG/2017, DATED 28.02.2018 AND CONFIRM THE ORDER PASSED BY THE ITO, TDS WARD-1, HUBBALLI FOR THE ASSESSMENT YEAR 2009-10. IN ITA NO.100042/2018 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX, PUNDALIKA NIWAS, RUA DE OUREM, PANAJI, GOA-403001. PUNDALIKA NIWAS, RUA DE OUREM, PANAJI, GOA-403001. 2. INCOME TAX OFFICER TDS WARD-1, HUBBALLI-580025. TDS WARD-1, HUBBALLI-580025. (BY SRI. Y.V. RAVIRAJ, ADVOCATE) …APPELLANTS AND: KARNATAKA VIKAS GRAMEEN BANK P.B. NO.111, BELGAUM ROAD, DHARWAD-580008. ... RESPONDENT (BY SRI. A SHANKAR, SR. COUNSEL FOR SRI. V. CHANDRASHEKAR & SHASHANK HEGDE, ADVOCATES) THIS APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED ABOVE AND ALLOW THE APPEAL AND SET-ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE BENCH ‘C’ IN ITA NO.1694/BANG/2017, DATED 28.02.2018 AND CONFIRM THE ORDER PASSED BY THE ITO, TDS WARD-1, HUBBALLI FOR THE ASSESSMENT YEAR 2010-11. IN ITA NO.100043/2018 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX, PUNDALIKA NIWAS, RUA DE OUREM, PANAJI, GOA-403001. PUNDALIKA NIWAS, RUA DE OUREM, PANAJI, GOA-403001. 2. ASST. COMMISSIONER OF INCOME TAX TDS CIRCLE, TDS CIRCLE, HUBBALLI-580025. …APPELLANTS (BY SRI. Y.V. RAVIRAJ, ADVOCATE) AND: KARNATAKA VIKAS GRAMEEN BANK P.B. NO.111, BELGAUM ROAD, DHARWAD-580008. ... RESPONDENT (BY SRI. A SHANKAR, SR. COUNSEL FOR SRI. V. CHANDRASHEKAR & SHASHANK HEGDE, ADVOCATES) THIS APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED ABOVE AND ALLOW THE APPEAL AND SET-ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE BENCH ‘C’ IN ITA NO.1695/BANG/2017, DATED 28.02.2018 AND CONFIRM THE ORDER PASSED BY THE ITO, TDS WARD-1, HUBBALLI FOR THE ASSESSMENT YEAR 2011-12. THESE APPEALS COMING ON FOR ADMISSION, THIS DAY, ARAVIND KUMARJ., DELIVERED THE FOLLOWING: JUDGMENT HUBBALLI-580025. …APPELLANTS (BY SRI. Y.V. RAVIRAJ, ADVOCATE) AND: KARNATAKA VIKAS GRAMEEN BANK P.B. NO.111, BELGAUM ROAD, DHARWAD-580008. ... RESPONDENT (BY SRI. A SHANKAR, SR. COUNSEL FOR SRI. V. CHANDRASHEKAR & SHASHANK HEGDE, ADVOCATES) THIS APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED ABOVE AND ALLOW THE APPEAL AND SET-ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE BENCH ‘C’ IN ITA NO.1695/BANG/2017, DATED 28.02.2018 AND CONFIRM THE ORDER PASSED BY THE ITO, TDS WARD-1, HUBBALLI FOR THE ASSESSMENT YEAR 2011-12. THESE APPEALS COMING ON FOR ADMISSION, THIS DAY, ARAVIND KUMARJ., DELIVERED THE FOLLOWING: JUDGMENT Revenue has preferred these appeals calling in question order of Income Tax Appellate Tribunal (hereinafter referred to as ‘ITAT’, for short) Bengaluru Bench “C” passed in ITA Nos.1692 to 1695/Bang/2017 relating to Assessment Years 2008-09 to 2011-12. 2.We have heard Sri. Y.V. Raviraj, learned counsel appearing for Revenue and Sri. A. Shankar, learned Senior Counsel appearing on behalf of V. Chandrashekar for Assessee. [ 3.Assessee is a Regional Rural Bank having more than 451 branches spread over 9 districts of Karnataka. A survey under Section 133A of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’ for short) was conducted at the premises of Assessee to ascertain whether there has been compliance of Section 194A of the Act relating to credit/payment of interest made in excess of Rs.10,000/- and it was found that assessee bank had failed to comply with the provisions of the Act and had not deducted tax at source (TDS). After affording opportunity to the assessee, assessment orders came to be passed on 31.07.2012 under Sections 201(1) of the Act relating to 451 branches. Being aggrieved by the same, assessee filed appeals before Commissioner of Income Tax (Appeals) (hereinafter referred to as ‘CIT(A)’ for short) which came to be dismissed confirming the order dated 9.1.2013 passed by Assessing Officer (for short, ‘AO’). Being aggrieved by said order, assessee filed appeals before the ITAT in ITA Nos.1172-1175/Bang/2013. Tribunal allowed the appeals holding that Assessing Officer, TDS, Ward-1, Hubballi did not have territorial jurisdiction over branches other than head office and its branches if any situated at Hubballi and to said extent, orders passed by the Assessing Officers relating to default committed by the branches situated beyond jurisdiction of Assessing Officer was held to be unsustainable for want of jurisdiction. It was held by the Tribunal that in the teeth of Section 194A of the Act, the income credited or interest paid in respect of term deposit by the bank shall be computed with reference to the income credited or paid by the branch of banking company. It was also held that each and every branch is recognized as a separate assessee responsible for TDS under Section 194A of the Act and assessing officer had taken the composite amount of interest paid or credited by all branches of the assessee bank and therefore, the Assessing Officer has exceeded its jurisdiction insofar as order which touches the interest paid by the branches which are situated beyond the jurisdiction of Assessing Officer. However, in the facts and circumstances of the case, Tribunal noticed that Assessing Officer had not given separate amount of the interest credited/paid by each branch of the assessee as well as by the head office. As such, ITAT remitted the matter back to the jurisdictional CIT(A) for adjudication afresh and directed said authority to verify facts including issue of jurisdiction, validity of the orders passed under Sections 201(1) and 201(1A) of the Act by the Assessing Officer. Assessing Officer has exceeded its jurisdiction insofar as order which touches the interest paid by the branches which are situated beyond the jurisdiction of Assessing Officer. However, in the facts and circumstances of the case, Tribunal noticed that Assessing Officer had not given separate amount of the interest credited/paid by each branch of the assessee as well as by the head office. As such, ITAT remitted the matter back to the jurisdictional CIT(A) for adjudication afresh and directed said authority to verify facts including issue of jurisdiction, validity of the orders passed under Sections 201(1) and 201(1A) of the Act by the Assessing Officer. 4.It is pursuant to said directions issued by the ITAT, CIT(A) in ITA Nos.74, 80, 81 and 82/CIT(A)/HBL/2016-17, dated 5.5.2017 allowed the appeals filed by the Assessee in part and held there are total 451 number of branches of the assessee bank and all branches have their own Drawing and Disbursing Officer (DDOs) and each DDO has separate TAN number. It was further held that out of 451 branches, only 118 branches are situated within the jurisdictional area of ITO, TDS, ward-1, Hubballi and as regards other branches, it was held that ITO, TDS, ward-1, Hubballi had no jurisdiction and directed the Assessing Officer to treat appellant/assessee as deemed to be in default only in respect of interest paid without TDS by the said 118 branches. Appellant/bank was also directed to furnish relevant details to the Assessing Officer, who in turn was directed to consider same at the time of giving effect to said order. Further direction was issued to the Assessing Officer to reduce the demand raised in respect of interest paid by the DDOs of other branches. Insofar as other grounds are concerned, contention of the assessee raised was rejected. 5.Being aggrieved by the same, Revenue had pursued its grievance before Tribunal in ITA Nos.1692 to 1695/Bang/2017 raising two grounds namely (a) CIT(A) directing the Assessing Officer to treat only 118 branches out of 451 branches of the assessee in default for non-deduction of tax at source on interest paid is erroneous; and (b) decision of the High Court of Delhi in the case of Principal CIT-06 Vs. Mega Corporation Ltd. was not considered by CIT(A). 6.Insofar as first contention is concerned, Tribunal has examined the same and held that on this issue of restricting the order under Section 201(1) of the Act to only 118 branches (out of 451 branches) was in consonance with the directions issued by co-ordinate bench of Tribunal in the order passed on ITA Nos.1172 to 1175/Bang/2015 on 25.05.2016 relating to same assessee whereunder the Tribunal had categorically held or opined that Assessing Officer, TDS ward-1, Hubballi would not have jurisdiction other than Head office and branches office if any situated at Hubballi and as such to the extent of orders of Assessing Officer determining TDS by treating bank as assessee in default in respect of branches other than the 118 branches were held to be not in consonance with Section 194A of the Act. This finding of the Tribunal having not been challenged by the Revenue which related to same assessee and as such it cannot be re-agitated. Tribunal has rightly dismissed the appeals insofar as ground No.1 is concerned. 7.Reasoning adopted for rejecting ground No.2 is on account of judgment of Delhi High Court having not been either cited or urged before the Assessing Officer or CIT(A). In these circumstances, the Tribunal has rightly rejected the second ground also. Though Mr. Y.V. Raviraj, learned counsel appearing for the appellant would contend that issue relating to restricting to 118 branches instead of 451 branches was still at large before the Tribunal is erroneous and requires to be considered for purpose of rejection, inasmuch as when Revenue was conscious of finding of fact having been recorded in ITA Nos.1172-75/Bang/2013 dated 25.05.2016 had not been challenged and same had 7.Reasoning adopted for rejecting ground No.2 is on account of judgment of Delhi High Court having not been either cited or urged before the Assessing Officer or CIT(A). In these circumstances, the Tribunal has rightly rejected the second ground also. Though Mr. Y.V. Raviraj, learned counsel appearing for the appellant would contend that issue relating to restricting to 118 branches instead of 451 branches was still at large before the Tribunal is erroneous and requires to be considered for purpose of rejection, inasmuch as when Revenue was conscious of finding of fact having been recorded in ITA Nos.1172-75/Bang/2013 dated 25.05.2016 had not been challenged and same had reached finality, it would not be apt and appropriate for the Revenue to re-agitate same issue. As such, we find there is no Substantial Question of Law involved in these appeals to be framed, adjudicated and answered by us. Consequently, these appeals fail and they stand dismissed. Sd/- JUDGE Sd/- JUDGE JTR