Ita/100182/2015 Of Shree Basaveswwar Co-Op. Bank Ltd v. The Commissioner Of Income-Tax (Appeals)

IN THE HIGH COURT OF KARNATAKADHARWAD BENCH DATED THIS THE 17[th]DAY OF AUGUST 2016 PRESENT THE HON’BLE MR. JUSTICE H.BILLAPPA AN THE HON’BLE MR. JUSTICE K.N.PHANEENDRA BBRTWEE L.T.A. No.100182/2015 SHRBBE BASAVBSWWAR CO-OP. BANK LTRAVIWAR PETH, BELAGAVI.REP BY ITS GENERAL MANAGER,PAN-AAAAB3041MoORI.VEERAPPA S/O CHANNBASAPPA KHANAPUAGE: 55 YBARS _. APPKELLANT (BY SRI.: H.R.KAMBIYAVAR, ADV. &OMT. PATRI SHASHIKALA K.ADV.) AN 1.THE COMMISSIONER OF INCOME-TAX (APPEALS)DR.B.R.AMBEDKAR ROAD,BBELAGAVIDR.B.R.AMBEDKAR ROAD,BBELAGAVI 2.THERE ASSISTANT COMMISSIONBR I.T. CIRCLE, 1,BELAGAV II.T. CIRCLE, 1,BELAGAV I _ RESPONDENTS (BY SRLY.V.RAVIRAJ, ADV) THIS ITA IS FILED UNDER SECTION J6O0A OF THINCOME-TAX ACT, 1961, PRAYING TO (A) FORMULATETHE SUBSTANTIAL QUESTION OF LAW (B) ALLOW THEAPPEALBY|DELETING THEADDITION.OHRS.70,92,023/- AND SUITABLY MODIFY THE ORDEROF THR INCOME TAX APPELLATE TRIBUNAL IN [TTNO.346/PNJ/2014 DTD:5/1/2015, ORDER OF THECOMMISSIONERORINCOMETAX|(APPEALS),BELAGAVI IN ITA NO.436/BGM/2013-14 DTD:1/8/2014AND ASESSMENT ORDER DATED 11/2/2014 ASSOUGHT IN THE APEPAL. THISITA.COMING|ON|HORHHARINGONINTBRLOCUTORYAPPLICATIONTHISDAY,H.BILLAPPA, J., DELIVERED THE FOLLOWING: JUDGMENT The appellant has filed this appeal challenging theorder dated 59.01.2015 passed by the ITAT, Panaji BenchPanaji, in ITA No.346/PNJ /2014 ? By the impugned order, the Appellate Tribunalhas remanded the matter directing the Assessing Officerto verify whether the recipient has accounted for theinterest under the provision of Section 201(1) of the Actor not, by giving the assessee adequate opportunity ofbeing heard. 3.Agegrieved by that, the appellant-assessee hafiled this appeal. 4The learned counsel for the parties submit that1n VIEW|oT the circularbearingNo.19/201574F.No.142/14/2015 TPL, issued by the Ministry ofFinance, Government of India, the Co-operative Banksare not required to deduct the tax from the payment ofinterest on time deposits of its members paid or creditedon or before 1/6/2015, 5.The question of law involved is in this appeal is,Whether the Co-operative Bank was required to deductthe tax while paying interest to its members on timedeposits under Section 194A of the Income Tax Act.? 6.The learned counsel for the parties submits thatin view of the clarification issued by the Ministry ofFinance, Government of India vide circular No.19/2015in F.No.142/14/2015 TPL, the Cooperative Banks arenot required to deduct the tax at source on time depositsof its members paid or credited on or before 1/6/2015. T.The relevant portion of the circular reads as follows:- “495.InVIEW|ot this,theprovisions of the section 194(3)(v) ofthe Income-tax Act have been amendedso as to expressly provide that theexemption provided from deduction ofTAX|frompaymentot interestTOmembers by a co-operative societyunder Section 194A(3)(v) of the Income-tax Act shall not apply to the paymentof interest on time deposits by the co-operative banks to its members. Asthis amendment is effective from theprospective date of 1[St]June, 2015, theco-operative bank shall be required todeduct.taxfromthe|paymentofinterestOT]TimedepositsoT|1tsmembers, on or after the 1[St]June2015. Hence, a cooperative bank wasnot required to deduct tax from thepayment of interest on time deposits ofits members paid or credited before I[St]June 2015.” 8.It is clear, the circular clarifies that a Co-operative Bank was not required to deduct the tax fromthe payment of interest on time deposits of its memberspaid or credited before 1/60/2019 QOTherefore, the direction issued by the ITATcannot be sustained in law. 8.It is clear, the circular clarifies that a Co-operative Bank was not required to deduct the tax fromthe payment of interest on time deposits of its memberspaid or credited before 1/60/2019 QOTherefore, the direction issued by the ITATcannot be sustained in law. 10,Accordingly, the appeal is allowed and theimpugned order passed by the Income Tax AppellateTribunal Panaji Bench, Panaji, in ITA No.346/PNJ/2014is hereby set aside. The Assessing officer is directed toconsider the matter in the lght of the circular bearingNo.19/2015 in F.NO.142/14/2015 TPL issued by theMinistry of Finance, Government of India and passappropriate orders in accordance with law, Sd/-JUDGE Vmb Sd/-JUDGE