Ita/100129/2014 Of The Commissioner Of Income Tax v. Shri Basaveshwara Sahakari Bank Niyamith

IN THR HIGH COURT OF KARNATAKA DHARWAD BENCH DATEHKD THIS THE DAY OF DECEMBER, 2015 PRESENT THE HON’BLE MR.JUSTICE S. ABDUL NAZEER AND THE HON’BLE MR.JUSTICE P.S.DINESH KUMARITA No. J1GQ129 OF 20 BRIWEHEN ITHERE COMMISSIONER OF [INCTAX, DR. B.R.AMBEDKAR ROAD,BBELGAUMTAX, DR. B.R.AMBEDKAR ROAD,BBELGAUM ~THE ASSISTANT COMMISSIONER OFINCOME TAX, BIJAPUR RANGE,INCOME TAX, BIJAPUR RANGE, BIJAPUR.(BY SRI Y.V.RAVIRAJ, ADV.)(BY SRI Y.V.RAVIRAJ, ADV.) ... APPBLLAN ANT M/S. BASAVESHWARA SAHAKARI BANKNIYAMITH, SECTOR NO.25,BASAVESHWARA CIRCLE]NAVANAGAR, BAGALKOT,PAN: AAAAS1703 _.. RESPONDE (BY SRI A.SHANKAR, ADV.) THIS ITA IS FILED UNDER SECTION QJ600A OF THE INCOTAX ACT, 1961 TO SET ASIDE THE ORDER PASSED BY THEINCOME TAX APPELLATE TRIBUNAL, B-BENCH, BANGALORE, INITA|NO.275/BANG/2012, DATED27 06.2014|KORTHRASSESSMENT YEAR 2OO8-09 AND EITC THISITA|COMINGON|FORORDERS.THIS|DAY,P.S.DINESH KUMAR, J.IDHLIVERE]THE FOLLOWING: JUDGMENT InthisappealbyRevenue,following.-;:substantial questions of law are raised; 1.Whether.the|Tribunal|1Sright/,concluding that provisions of section194A(3)(v) of the Income Tax Act, 1961applies to all co-operative|0:A/3-/30including co-operative society engaged inthe business of banking? ? Whether the Tribunal is right in law andon fact in deleting the additions onaccount of accrued interest on loanswhich are classified as “Non-perftorminAssets” relying on the Karnataka HighCourt decision in Canfin Homes Ltd.,(2011) 5 Tax Corp (DT) 49593, ignoringthe provisions of section 43D of the a2ori A.Shankar, Learned counsel appearingfor the Assessee submits that in ITA No.471/2013disposed of on 30.06.2014, a Division Bench of thisCourt has answered the substantial questions of law infavour of the Assessee by following the earlier judgmentin the case oftCommuisstoner of Income Tax, CentraCircle, Bangalore /vs./ Canfin Homes Limited ((2011)201 TAXMAN 273/13 taxmann.Com 43(Karnataka} 3.Learned counsel for the appellants andrespondent agree that the issue involved in this appealandITA.No.471/2013)arc.OTIEandtheSal IAccordingly, this appeal is disposed off in like terms. 4In so far as the substantial question of lawwith regard to Section 194A, it is brought to the noticeof this Court by the learned counsel appearing for theAssesseethat.videCircularNo.19/2015—/,F.No.142/14/2015-TPL, theMinistry|oT|Finance,Government of India, has clarified as under: "42.9 In view of this, the provisions of thesection 194A(3)(v) of the Income-tax Act havebeen amended so as to expressly provide thatthe exemption provided from deduction of taxfrom payment of interest to members by a co-operative society under section 194A(38)(v) othe Income-tax Act shall not apply to thepayment of interest on time deposits by the co-operative banks to itS members.As thisamendment is effective from the prospectivedate of 1[0-]June, 2015,the co-operative bankshall be required to deduct tax from thepayment of interest on time deposits of itsmembers, on or after the l[0-]June, 2015.Hence, a cooperative bank was not required todeduct tax from the payment of interest on time deposits of its members paid or creditedbefore l[0-]June, 2015.” Consequently, the finding of the Tribunal that the Co- operative banks were required to deduct tax at source is unsustainable. Accordingly, this appeal filed by therevenue stands dismissed. Sd/- JUDGE. Sd/- JUDGE. KLY/