Ita/483/2015 Of The Commissioner Of Income Tax v. The Hubli Urban Co Operative Bank Ltd

IN THE HIGH COURT OF KARNATAKADHARWAD BENCH ON THE 05[th]DAY OF OCTOBER, 2016 BEEBEO THE HON’BLE MR.JUSTICE RAVI MALIMATH AND THE HON’BLE MR.JUSTICE P.s. DINESH KUMA INCOME TAX APPEAL No.483 OF 2015 BETWEEN: 1.THE COMMISSIONER OF INCOME TAX, TDSC R BUILDING, NAVANAGARHUBLI 580025C R BUILDING, NAVANAGARHUBLI 580025 2.THE INCOME TAX OFFICER (TDS)3RD FLOOR, C R BUILDINGANNEXE, NAVANAGARHUBLI 580025.. APPELLANTS (By Sri. Y.V-RAVIRA] ADV.) AND: THE HUBLI URBAN CO-OPERATIVE BANK LTD.,GF, URBAN BANK BUILDING1SIR SIDDAPPA KAMBLI ROA)HUBLI 580020, PAN: AAAAH 0120P — RESPONDENT THIS INCOME TAX APPEAL IS FILED UNDER SHKCTIO260A OF THE INCOME TAX ACT, 1961, PRAYING TO SET ASIDETHE ORDERS DATED 20.3.2015, PASSED BY THE INCOME TAXAPPELLATETRIBUNAL,BANGALORE,IN|ITANO.1194/BANG/2014, CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THR ORDERPASSED BY THE INCOME TAX OFFICER (TDS), HUBBALLI, ETC.,, THIS ITA COMING ON FORORDERSTHIS DAY,RAV]MALIMATH, J.DEBELIVERED THE FOLLOWING JUDGMENT Revenue, with a question of law as to whether Tribunal wascorrect in 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 TaxAct, 1961 (for brevity, ‘the Act’) has presented this appeal. ADivision Bench of this Court in I.T.A. No.100180/2015 vide itsjudgement dated 17.08.2016 by placing reliance on the circulabearing No.19/2015 in F. No.142/14/2015 TPL issued by theMinistry of Finance, Government of India, has held that the Co-operative Bank was not required to deduct tax from the paymentof interest on Time Deposits of 1ts members paid or credited onot before 01.06.2015. The relevant portion of the circular readsas follows : “42.5 In view of this, the provisions ofthe section 194(3)(v) of the Income-tax Acthave been amended so as to expresslyprovide that the exemption provided fromdeduction of tax from payment of interest tomembers by a co-operative society underthe section 194(3)(v) of the Income-tax Acthave been amended so as to expresslyprovide that the exemption provided fromdeduction of tax from payment of interest tomembers by a co-operative society under section 194A(3)(v) of the Income-tax Act shallnot apply to the payment of interest on timedeposits by the co-operative banks to itsmembers. As this amendment is effectivefrom the prospective date of 1[st]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[st]June 2015. Hence, a cooperative bankwas not required to deduct tax from thepayment of interest on time deposits of itsmembers paid or credited before 1[st]June2015.” 2. The grievance of the revenue is with regard to a findingrecorded by the Tribunal that the Co-operative Banks were neverrequired to deduct tax on the interest paid. The said issue is noMOTE res integraand settled in the aforementioned judgment dated|17.8.2016 in ITA No.100180/2015. Therefore, this appeal failsand is accordingly dismissed. No costs, !=0.JUDGE RK/- Sd/-JUDGE