Ita/486/2015 Of The Commissioner Of Income-Tax v. The Hubli Urban Co Operative Bank Ltd

IN THER HIGH COURT OF KARNATAKDHARWAD BENCH ON THER DAY OF OCTOBER, 2016 PRESENT THE HON’BLE MR.JUSTICE RAVI MALIMATH AND THE HON’BLE MR. JUSTICE P.s.DINESH KUMAR LT.A. NO.486/2015 BETWEEN: 1.THER COMMISSIONER OF INCOME TATDS, C R BUIDLINGNAVANAGAR, HUBLI 580025.TDS, C R BUIDLINGNAVANAGAR, HUBLI 580025. 2.THE INCOME TAX OFFICER (TDS)( FLOOR, C R BUILDINGANNEXE, NAVANAGAR,( FLOOR, C R BUILDINGANNEXE, NAVANAGAR, HUBLI 580025. (BY SRI Y.V.RAVIRAJ, ADVOCATE) .. APPELLANTS AND: THER HUBLI URBAN CO-OPERATIVBANK LTD.)GF, URBAN BANK BUILDING1 SIR SIDDAPPA KAMBLI ROADHUBLI 580020, PAN: AAAAH O0120P .. RESPONDENT THIS INCOME TAX APPEAL IS FILED UNDER SKCTION 260AOF THE INCOME TAX ACT, 1961, PRAYING TO SET ASIDE THE ORDERS DATED 20.3.2015, PASSED BY THE INCOME TAXAPPELLATE TRIBUNAL, BANGALORE, IN C.O. NO.27/BANG/2015,CONFIRMING THR ORDER OF THER APPBLLATE COMMISSIONEAND CONFIRM THR ORDER PASSED BY THERE INCOME TOFFICER (TDS), HUBLI. THIS APPEAL COMING ON FOR ADMISSION, THIS DAY,RAVI MALIMATH J.,DELIVERED THR FOLLOWING: JUDGMENT Revenue, with a question of law as to whetherTribunal was correct in holding that a Co-operative Bankwas not required to deduct tax on the interest paid to themembers on the ground that they were exempt underSection 194A(3)(v) of the Income Tax Act, 1961 (forbrevity, ‘the Act’) has presented this appeal. A DivisionBench of this Court in I.T.A. No.100180/2015 vide itsjudgment dated 17.08.2016 by placing reliance on thecircular bearing No.19/2015 in F. No.142/14/2015 TPLissued by the Ministry of Finance, Government of India,has held that the Co-operative Bank was not required todeduct tax from the payment of interest on Time Deposits of its members paid or credited on or before 01.06.2015. The relevant portion of the circular reads as follows : “42.5 In view of this, the provisionsof the section 194(3)(v) of the Income-taxAct have been amended so as to expresslyprovide that the exemption provided fromdeduction of tax from payment of interestto members by a co-operative societyunder Section 194A(3)(v) of the Income-tax Act shall not apply to the payment ofinterest on time deposits by the co-operative banks to its members. As thisamendment1S”effective|from23,prospective date of 1[62]June, 2015, the co-operative bank shall be required to deducttax from the payment of interest on timedeposits of its members, on or after the 1[62]June 2015. Hence, a co-operative bankwas not required to deduct tax from thepayment of interest on time deposits of itsmembers paid or credited before 1[62]june2015.” 2. The grievance of the revenue is with regard to afinding recorded by the Tribunal that the Co-operative Banks were never required to deduct tax on the interestpaid. The said issue is no moreres integraand settled inthe aforementioned judgment dated 17.8.2016 in ITANo.100180/2015. Therefore, this appeal fails and isaccordinglydismissed_No costs. Sd/-JUDGE 3.B Sd/-JUDGE