Ita/481/2015 Of The Commissioner Of Income Tax v. The Hubli Urban Co Operative Bank Ltd

IN THE HIGH COURT OF KARNATAKADHARWAD BENCH DATLBD THIS THE 1 DAY OF SEPTEMBER, 2016 PRESENT THE HON’BLE MR.JUSTICE ASHOK B.HINCHIGERI AN [I THE HON’BLE MR. JUSTICE P.S.DINESH KUMAR LT.A. NO.481 /2015 BETWEEN: 1.THER COMMISSIONER OF INCOME TATDs, C R BUIDLINGNAVANAGAR, HUBLI 580025 2.THE INCOME TAX OFFICER (TDS)& FLOOR, C R BUILDING ANNEXE, NAVANAGAR, HUBLI 580025, (BY SRI Y.V.RAVIRAJ, ADVOCATE) .. APPELLANTS AND: THER HUBLI URBAN CO-OPERATIVBANK LID. GF, URBAN BANK BUILDING1SIR SIDDAPP KAMBLI ROADHUBLI 580020, PAN: AAAAH 0120P. .. RESPONDENT THIS INCOME TAX APPEAL IS FILED UNDER SKCTION 260AOF THE INCOME TAX ACT, 1961, PRAYING TO SET ASIDE THEORDERS DATED 20.3.2015, PASSED BY THE INCOME TA APPELLATE TRIBUNAL, BANGALORE, IN ITA NO.1192/BANG/2014,CONFIRMING THER ORDER OF THER APPEKELLATEK COMMISSAND CONFIRM THR ORDER PASSED BY THR INCOME TAXOFFICER (TDs), HUBLI, ETC... THIS APPEAL COMING ON FOR ADMISSION, THIS DAY,P.S.DINESH KUMAR J,.DEBLIVEBERED THE RFOLLOWI JUDGMENT Revenue, with a question of law as to whether Tribunal wascorrect 1n holding that a Co-operative Bank was not required todeduct tax on the interest paid to the members on the ground thatthey were exempt under Section 194A(3)(v) of the Income Tax Act,1961 (for brevity, “the Act’) has presented this appeal. A DivisionBench of this Court in L.T.A. No.100180/2015 vide its judgmentdated 17.08.2016 by placing reliance on the circular bearingNo.19/2015 in F. No.142/14/2015 TPL issued by the Ministry ofFinance, Government of India, has held that the Co-operative Bankwas not required to deduct tax from the payment of interest onTime Deposits of its members paid or credited on or before01.06.2015. The relevant portion of the circular reads as follows : “42.5 In view of this, the provisions ofthe section 194(3)(v) of the Income-tax Act havebeen amended so as to expressly provide that the exemption provided from deduction of taxfrom payment of interest to members by a co-operative society under Section 194A(3)(v) of theIncome-tax Act shall not apply to the paymentof interest on time deposits by the co-operativebanks to its members. As this amendment iseffective from the prospective date of 1[sf]June,2015, the co-operative bank shall be required todeduct tax from the payment of interest on timedeposits of its members, on or aiter the 1[st]June2015. Hence, a cooperative bank was notrequired to deduct tax from the payment ofinterest on time deposits of its members paid orcredited before 1[St]June 2015.” 2. The grievance of the revenue is with regard to a findingrecotded by the Tribunal that the Co-operative Banks were neverrequired to deduct tax on the interest paid. ‘The said issue is noIMNOTres integra-and settled in the aforementioned judgment dated17.8.2016 in ITA No.100180/2015. Therefore, this appeal fails andis accordinglydismissed._ No costs Sd/-JUDGE Sd/-JUDGE