Ita/100130/2014 Of The Commissioner Of Income Tax v. Shri Basaveshwara Sahakari Bank Niyamith

IN THB HIGH COURT OF KARNATAKA DHARWAD BENCH DATEBD THIS THE 1 DAY OF DECEMBER, 2015 PRESENT THE HON’BLE MR.JUSTICE S. ABDUL NAZEER AND THE HON’BLE MR.JUSTICE P.S.DINESH KUMAR ITA No. JGQ13O OF 201 BRIWEHEN 1.THE COMMIssIONER OF INCOME TAX,DR B.R.AMBEDKAR ROAD,BBELGAUMDR B.R.AMBEDKAR ROAD,BBELGAUM 2.THE ASSISTANT COMMISSIONER OFINCOME TAX, CIRCLE-I,VIJAYAPURA.(BY SRI Y.V.RAVIRAJ, ADV.) _. APPBLLANTS ANT M/S.BASAVESHWARA SAHAKARI BANKNIYAMITH, SECTOR NO.25,BASAVESHWARA CIRCLE]NAVANAGAR, BAGALKOT,PAN AAAAS 17/703 _.. RESPONDE (BY SRI Y.V.RAVIRAJ, ADV.) THIS ITA IS FILED UNDER SECTION QJ6O0A OF TINCOME TAX ACT, 1961 AGAINST ORDER PASSED IN ITANO.797/BANG/2013 DATED 27.06.2014 ON THE FILE OF THEINCOME TAX APPELLATE TRIBUNAL, “B’ BENCH, BANGALORE,DISMISSING THER APPBAL OF THR REVENUE THIS ITA COMING ON FOR ORDERS THIS DAY,P.S.DINESH KUMAR, J.IDHLIVERE]THE FOLLOWING: JUDGMENT In this appeal by Revenue, following.<;substantial questions of law are raised; 1.Whether the Tribunal is right inconcluding that provisions of section194A(3)(v) of the Income Tax Act, 1961applies to all co-operative societiesincluding co-operative society engagedin the business of banking?? Whether the Tribunal is right in lawand on fact in deleting the additionson account of accrued interest onloans which are classified as “Non-performing Assets” relying on theKarnataka High Court decision inCantin Homes Ltd., (2011) 5 Tax Corp(DT) 49593, ignoring the provisions of section 43D of the I.T.Act, 1961amended w.e.f. 01.04.2000?” 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 lawin favour of the Assessee by following the earlierjudgment in the case ofCommissioner of IncomeTax, Central Circle, Bangalore /vs./ Canfin HomesLimited((2011)201 TAXMAN273/13taxmann.Com 43(Karnataka) 3.Learned counsel for the appellants andrespondent agree that the issue involved in thisappeal and ITA No.471/2013 are one and the same.Accordingly, 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—0-F.No.142/14/2015-TPL, the Ministry of Finance,Government of India, has clarified as under: “42.95 In view of this, the provisions of thsection 194A(3)(v) of the Income-tax Act havebeen amended so as to expressly providethat the exemption provided from deductionof tax from payment of interest to membersby a co-operative society under section194A(3)(v) of the Income-tax Act shall notapply to the payment of interest on timedeposits by the co-operative banks to itsmembers.As this amendment is ettfectivfrom the prospective date of l[1.]June, 2015,the co-operative bank shall be required todeduct tax from the payment of interest ontime deposits of its members, on or after the1[1.]June, 2015. Hence, a cooperative bankwas not required to deduct tax from the payment of interest on time deposits of itsmembers paid or credited before l[1.]June,2015.” Consequently, the finding of the Tribunal that the Co-operative banks were required to deduct tax at sourceis unsustainable. Accordingly, this appeal filed by therevenue stands dismissed. Sd/-Sd/-JUDGE. JUDGE. KLY/