Ii)Whether The Itat Was Legally Justified In Not Following The Judgment Of Hon'ble Bombayhigh Court Given In Case Of Jalgaon District Central Cooperative Bank v. Union Of Indiareported In (2004) 265 Itr Page 423 Which Interprets The Provisions Of Section 194A(3) (V)Of The Income Tax Act?

Court No. - 35Case :- INCOME TAX APPEAL No. - 237 of 2015Appellant :- M/S Noida Commercial Cooperative Bank Ltd.Respondent :- Commissioner Of Income TaxCounsel for Appellant :- Nikhil Agrawal,Dhruv AgrawalCounsel for Respondent :- C.S.C. It,Ashok KumarHon'ble Bharati Sapru,J.Hon'ble Rohit Ranjan Agarwal,J. Heard learned counsel for the appellant Sri NikhilAgrawal and learned counsel for the department SriAshish Agarwal. This appeal has been filed under section 260A of theIncome Tax Act, 1961 by the appellant assessee for theassessment year 2013-14 against the order of thetribunal dated 31.7.2015. The questions of law sought to be answered arehereinbelow: "(i)Whether the ITAT was legally justified in upholding the order of the Income Tax Officer(TDS) passed under section 201/201(1A) of the Income Tax Act and the order of theCommissioner (Appeals), even though there is no liability of TDS deduction on payment ofinterest to its members by a co-operative society on deposits made by its members, which isexempted in view of section 194A (3) (V) of the Act, in the case of the assessee? (ii)Whether the ITAT was legally justified in not following the judgment of Hon'ble BombayHigh Court given in case of Jalgaon District Central Cooperative Bank versus Union of Indiareported in (2004) 265 ITR page 423 which interprets the provisions of section 194A(3) (V)of the Income Tax Act? (iii)Whether ITAT has failed to appreciate that even otherwise as per clarification mentionedin paragraph 2 of the Circular No.9/2002 dated 11.9.2002 issued by the Central Board ofDirect Taxes, the appellant was not liable to deduct tax at source on payment of interest to itsmembers on deposits made by them? (iv)Whether in view of the matter, the ITAT was legally justified in upholding the liability ofdeduction of tax at source under section 194A of the Act? (v) Whether the liability of payment of tax upon the appellant can be legally justified inabsence of a finding by the authorities below that the recipient-members have not paid the taxon the amount of interest received by them?" Subsequently the department has issued a circularno.19/2015 dated 27.11.2015 and paragraph 42.5 of thesaid circular reads as under: "42.5 In view of this, the provisions of section 194A(3)(v) of the Income Tax Act have beenamended so as to expressly provide that the exemption provided from deduction of tax from payment of interest to members by a co-operative society under section 194A(3)(v of theIncome Tax Act, shall not apply to the payment of interest on time deposits by the co-operative banks to its members. As this amendment is effective from the prospective date of1st June, 2015, the co-operative bank shall be required to deduct tax from the payment ofinterest on time deposits of its members, on or after the 1st June, 2015. Hence a cooperativebank was not required to deduct tax from the payment of interest on time deposits of itsmembers paid or credited before 1st June, 2015." This particular circular has been interpreted by theMadras High Court in the case of Coimbatore DistrictCentral Co-operative Bank Ltd. versus Income TaxOfficer, reported in (2016) 382 ITR 266 (Mad). In view of the above, the circular no.19/2015 dated27.11.2015 as issued by the Government of India,Ministry of Finance, Department of Revenue, (CBDT),have application to the case of the appellant. The questions of law are, therefore, answered in favourof the appellant and against the department. The appeal is allowed as above. Order Date :- 19.8.2019rk