Ita/604/2015 Of The Commissioner Of Income Tax v. The National Co-Operative Bank Ltd

IN THR HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21 DAY OF JUNE 2016 PRESENT THR HON’BLE MR.JUSTICE JAYANT PATEL AND THR HON’BLE MR.JUSTICE B.SRBBNIVASKH GOWDA ITA No.604/2015 C/W ITA Nos.606/2015, 607/2015, 608/2015,6099/2015, 610/2015, 6112/2015, 613/201614/2015, 6115/2015. IN ITA NO.604/20158 BETWEEN: 1.THR COMMISSIONER OF INCOME-TAXTDs,TDs, NO.59, HMT BHAVAN, 4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032 2.THR ASST.COMMISSIONBR OF INCOME -TAX(IDS), —(IDS), — CIRCLE-16(2)NO.59, HMT BHAVAN,NO.59, HMT BHAVAN, 4TH FLOOR, BELLARY ROAD, GANGANAGAR,BANGALORE-560 032 _APPBLLANTS (BY SRI.K.V.ARAVIND, ADVOCATE) AND: THR NATIONAL CO-OPBRATIVE BANK LTDBANASHANKARI 2ND STAGE BRANCH,BANGALORE |PAN:BLRTO 3232623 _ RBSPONDENT THIS JTA IS FILED UNDER SEC.260-A OFINCOME TAX ACT 1961, ARISING OUT OF ORDER)DATED:08 /05/2015PASSEDIN|ITANO.1402/BANG/2014, FOR THE ASSESSMENT YEAR2011-3012PRAYINGTO.FORMULATE.THESUSTANTIAL QUESTIONS OF LAW STATED ABOVE)AND ALLOW THR APPKAL AND SBT ASIDBK THEORDERS PASSED BY THE ITAT, BENGALURU IN ITA)NO.1402 /BANG/2014DATED:08/05/2015CONFIRMINGTHERORDERORTHE.APPBRLLATECOMMISSIONBR AND CONFIRM THR ORDER PASSED|BY THE ASST. COMMISSIONER OF INCOME TAX(TDS),CIRCLE-16(2), BENGALURU. IN ITA NO.606/2015 BETWEEN: | 1.THE COMMISSIONER OF INCOME-TAX CIT(A)TDS, NO.59, HMT BHAVAN, 4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032 2.THER ASST.COMMISSIONBR OF INCOME -TAX(TDS)CIRCLE-16(2)NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032 |_APPBLLANTS (BY SRI.K.V.ARAVIND, ADVOCATE)| AND: THR NATIONAL CO-OPBRATIVE BANK LTDGANDHI BAZAR BRANCH,BANGALOREPAN: BLRTO 396020 _ RBSPONDENT THIS JTA IS FILED UNDER SEC.260-A OFINCOME TAX ACT 1961, ARISING OUT OF ORDER)DATED:08/05/2015PASSEDIN|ITA|NO.1404/BANG/2014, FOR THE ASSESSMENT YEAR2011-3012PRAYINGTO.FORMULATE.THESUBSTANTIAL QUESTIONS OF LAW STATED ABOVE)AND ALLOW THR APPKAL AND SBT ASIDBK THEORDER PASSED BY THE ITAT, BANGALORE IN ITA)NO.1404/BANG/2014DATED:08/05/2019—CONFIRMINGTHERORDERORTHE.APPBRLLATECOMMISSIONBR AND CONFIRM THR ORDER PASSED| BY THE ASST. COMMISSIONER OF INCOME TAX(TDS),CIRCLE-16(2), BANGALORE. IN ITA NO.607/2015 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX CIT(A)TDS,NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032| 2.THE ASST.COMMISSIONBR OF INCOME -TAX.(TDS) CIRCLE-16(2)NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032_APPBLLANTS (BY SRI.K.V.ARAVIND, ADVOCATE) AND: THR NATIONAL CO-OPBERATIVE BANK LIDKORAMANGALA BRANCH,BANGALOREPAN:BLRTO 32020A _ RBSPONDENT THIS JTA IS FILED UNDER SEC.260-A OFINCOME TAX ACT 1961, ARISING OUT OF ORDER)DATED:08 /05/2015PASSEDIN|ITANO.1405/BANG/2014, FOR THE ASSESSMENT YEARYA2OQLLTQOPRAYINGTO.RORMULATE.THESUBSTANTIAL QUESTIONS OF LAW STATED ABOVE)AND ALLOW THR APPKAL AND SBT ASIDBK THEORDERS PASSED BY THE ITAT, BENGALURU IN ITA)NO.1405/BANG/2014DATED:08/05/2015CONFIRMINGTH EORDERORTHEAPPBRLLATECOMMISSIONER AND CONFIRM THE ORDER PASSED|BY THE ASST. COMMISSIONER OF INCOME TAX(TDS),CIRCLE-16(2), BENGALURU. IN ITA NO.608/2015 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX CIT(A)TDS,NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032| 2.THE ASST.COMMISSIONBR OF INCOME-TAX(TDS), CIRCLE-16(2)NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 O32.. APPELLANTS (BY SRI.K.V.ARAVIND, ADVOCATE) AND: THR NATIONAL CO-OPBRATIVE BANK LTDSADASHIVA NAGAR BRANCH, BANGALOREPAN:BLRTO 3262A. .. RESPONDENT IN ITA NO.608/2015 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX CIT(A)TDS,NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032| 2.THE ASST.COMMISSIONBR OF INCOME-TAX(TDS), CIRCLE-16(2)NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 O32.. APPELLANTS (BY SRI.K.V.ARAVIND, ADVOCATE) AND: THR NATIONAL CO-OPBRATIVE BANK LTDSADASHIVA NAGAR BRANCH, BANGALOREPAN:BLRTO 3262A. .. RESPONDENT THIS JTA IS FILED UNDER SEC.260-A OFINCOME TAX ACT 1961, ARISING OUT OF ORDER)DATED:08/05/2015PASSEDIN|ITANO.1406/BANG/2014, FOR THE ASSESSMENT YEAR)YA2OQLLTQOPRAYINGTO.RORMULATE.THESUBSTANTIAL QUESTIONS OF LAW STATED ABOVE)AND ALLOW THR APPKAL AND SBT ASIDBK THEORDER PASSED BY THE ITAT, BANGALORE IN ITA)NO.1406/BANG/2014DATED:08/05/2019—CONFIRMINGTHERORDERORTHE.APPBRLLATECOMMISSIONBR AND CONFIRM THR ORDER PASSED|BY THE ASST. COMMISSIONER OF INCOME TAX(TDS),CIRCLE-16(2), BENGALURU. IN ITA NO.609/2015 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX CIT(A)TDS,NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032) 2.THERE ASST.COMMISSIONBER OF INCOME-T(TDS)CIRCLE-16(2)(TDS)CIRCLE-16(2) NO.59, HMT BHAVAN, 4TH FLOOR, BELLARY ROAD,GANGANAGAR,GANGANAGAR, BANGALORE-560 032 |_APPBLLANTS (BY SRI.K.V.ARAVIND, ADVOCATE)| AND: THR NATIONAL CO-OPBERATIVE BANK LIDVIJAYNAGAR BRANCH,BANGALOREPAN: BLTRO 3202A _ RBSPONDENT THIS JTA IS FILED UNDER SEC.260-A OFINCOME TAX ACT 1961, ARISING OUT OF ORDER)DATED:08/05/20109PASSEDIN|ITANO.1407/BANG/2014, FOR THE ASSESSMENT YEARYA2OQLLTQOPRAYINGTO.RORMULATE.THESUBSTANTIAL QUESTIONS OF LAW STATED ABOVE)AND ALLOW THR APPKAL AND SBT ASIDBK THEORDER PASSED BY THE ITAT, BANGALORE IN ITA)NO.1407/BANG/2014DATED:08/05/2015CONFIRMINGTH EORDERORTHEAPPBRLLATECOMMISSIONER AND CONFIRM THE ORDER PASSED|BY THE ASST. COMMISSIONER OF INCOME TAX!(TDS), CIRCLE-16(2), BANGALORE. IN ITA NO.610/2015BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX CIT(A)TDS,TDS, NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032) 2.THERE ASST.COMMISSIONBER OF INCOME-T(TDS)(TDS) CIRCLE-16(2)NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032 |_APPBLLANTS (BY SRILK.V.ARAVIND, ADVOCATE) AND: THR NATIONAL CO-OPBERATIVE BANK LIDBANASHANKARI 2ND STAGE BRANCH,BANGALOREPAN: BLRTO 326020 _ RBSPONDENT THIS JTA IS FILED UNDER SEC.260-A OFINCOME TAX ACT 1961, ARISING OUT OF ORDER)DATED:08 /05/2015PASSEDIN|C.O.NO.63/BANG/2014 IN ITA NO.1402/BANG/2014,.FOR THE ASSBSSMENT YEAR 2011-2012 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED ABOVE AND ALLOW THR APPRAL AND SBHKASIDE;THEORDER|PASSEDBY|THEITAT,BANGALORE IN C.O.NO. 63/BANG/2014 IN ITA NO.1402 /BANG/2014 DATED: 08/05/2015 AND CONFIRMTHR ORDER OF THR APPBELLAITKE COMMISSIONCONFIRMING THR ORDBR PASSHD BY THE ASST.|COMMISSIONER OF INCOME TAX(TDS), CIRCLE-16(2),.BANGALORE. IN ITA NO.612/2015 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX CIT{(A)TDs,NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032 2.THERE ASST.COMMISSIONBER OF INCOME-T(TDS) CIRCLE-16(2)NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 O32.. APPELLANTS (BY SRI.K.V.ARAVIND, ADVOCATE) AND: THR NATIONAL CO-OPBRATIVE BANK LTDGANDHI BAZAR BRANCH,BANGALOREPAN:BLRTO 3262A. ~_ RBSPONDENT| THIS ITA [S FILED UNDBR SBCVJ60-A OFINCOME TAX ACT 1961, ARISING OUT OF ORDER)DATED:08/05/2015PASSEDIN|C.O.NO.65/BANG/2014 IN ITA NO. 1404/BANG/2014, FOR:THR ASSESSMENT YRBAR 2011-2012 PRAYING TOFORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED ABOVE AND ALLOW THR APPRAL AND SBHKASIDE,THEORDER|PASSEDBY|THEITAT,BANGALORE IN C.O.NO. 65/BANG/2014 IN ITA NO.1404/BANG/2014 DATED:08/05/2015 AND CONFIRMTHR ORDBR OF THR APPBLLATR COMMISSIONER|CONFIRMING THR ORDBR PASSHD BY THE ASST.|COMMISSIONER OF INCOME TAX (TDS), CIRCLE-16(2), BANGALORE. IN ITA NO.613/2015 BETWEEN: (BY SRI.K.V.ARAVIND, ADVOCATE) AND: THR NATIONAL CO-OPBRATIVE BANK LTDGANDHI BAZAR BRANCH,BANGALOREPAN:BLRTO 3262A. ~_ RBSPONDENT| THIS ITA [S FILED UNDBR SBCVJ60-A OFINCOME TAX ACT 1961, ARISING OUT OF ORDER)DATED:08/05/2015PASSEDIN|C.O.NO.65/BANG/2014 IN ITA NO. 1404/BANG/2014, FOR:THR ASSESSMENT YRBAR 2011-2012 PRAYING TOFORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED ABOVE AND ALLOW THR APPRAL AND SBHKASIDE,THEORDER|PASSEDBY|THEITAT,BANGALORE IN C.O.NO. 65/BANG/2014 IN ITA NO.1404/BANG/2014 DATED:08/05/2015 AND CONFIRMTHR ORDBR OF THR APPBLLATR COMMISSIONER|CONFIRMING THR ORDBR PASSHD BY THE ASST.|COMMISSIONER OF INCOME TAX (TDS), CIRCLE-16(2), BANGALORE. IN ITA NO.613/2015 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX CIT{(A)TDs,NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032 2.THERE ASST.COMMISSIONBER OF INCOME-T(TDS) CIRCLE-16(2) NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032_APPBLLANTS (BY SRI.K.V.ARAVIND, ADVOCATE) AND: THR NATIONAL CO-OPBERATIVE BANK LIDKORAMANGALA BRANCH,BANGALOREPAN:BLRTO 32020A _ RBSPONDENT THIS JIA IS FILED UNDER SBKC260-A OFINCOME TAX ACT 1961, ARISING OUT OF ORDER)DATED:08/05/2015PASSEDIN|C.O.NO.66/BANG/2014 IN ITA NO.1405/BANG/2014, FOR:THR ASSESSMENT YBAR 2011-2012 PRAYING TO,FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED ABOVE AND ALLOW THE APPBKAL AND SETASIDE,THEORDERSPASSEDBY|THEITAT,BENGALURU IN C.O.NO. 66/BANG/2014 IN ITA NO.1405/BANG/2014 DATED:08/05/2015 AND CONFIRMTHR ORDER PASSED BY THE ASST. COMMISSIONER|OF INCOME TAX (TDS), CIRCLE-16(2), BENGALURU. IN ITA NO.614/2015 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX CIT{(A)TDS,NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032| 2.THERE ASST.COMMISSIONBER OF INCOME-T(TDS) CIRCLE-16(2)NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032_APPBLLANTS (BY SRILK.V.ARAVIND, ADVOCATE) AND: THR NATIONAL CO-OPBRATIVE BANK LTDSADASHIVANAGAR BRANCH,BANGALOREPAN:BLRTO 329602 _ RBSPONDENT THIS JIA IS FILED UNDER SBKC260-A OFINCOME TAX ACT 1961, ARISING OUT OF ORDER)DATED:08/05/20109PASSEDIN|C.O.NO. 67/BANG/2014 IN ITA NO. 1406/BANG/2014, FORTHR ASSBSSMBNT YRAR 2011-2012 PRAYING TO)FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED ABOVE AND ALLOW THR APPRAL AND SBHKASIDE,THEORDERSPASSEDBY|THEITAT,BENGALURU IN C.O.NO. 67/BANG/2014 IN ITA NO.1406/BANG/2014 DATED:08/05/2015 AND CONFIRM|THR ORDER OF THR APPBELLAITKE COMMISSIONCONFIRMING THR ORDER PASSHD BY THE ASS].|COMMISSIONER OF INCOME TAX(TDS), CIRCLE-16(2),BENGALURU.. IN ITA NO.615/2015 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX CIT{(A)TDS,NO.59,HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032 2.THE ASST.COMMISSIONBR OF INCOME-TAX(TDS)CIRCLE-16(2)NO.59, HMT BHAVAN,4TH FLOOR, BELLARY ROAD,GANGANAGAR,BANGALORE-560 032 |_APPBLLANTS (BY SRI.K.V.ARAVIND, ADVOCATE)| AND: THR NATIONAL CO-OPBRATIVE BANK LTDVIJAYANAGAR BRANCH,BANGALOREPAN:BLRTO 3262A. THIS JIA IS FILED UNDER SBKC260-A OFINCOME TAX ACT 1961, ARISING OUT OF ORDER)DATED:08/05/2015PASSEDIN|C.O.NO.68/BANG/2014 IN ITA NO.1407/BANG/2014, FORTHR ASSBSSMBNT YRAR 2011-2012 PRAYING TO)FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED ABOVE AND ALLOW THR APPRAL AND SBHKASIDE;THEORDER|PASSEDBY|THEITAT,BENGALURU IN C.O.NO. 68/BANG/2014 IN ITA NO.1407 /BANG/2014 DATED:08/05/2015 AND CONFIRMTHR ORDBR OF THR APPBLLATR COMMISSIONER|CONFIRMING THR ORDBR PASSHD BY THE ASST.|COMMISSIONER OF INCOME TAX (TDS), CIRCLE-16(2), BENGALURU. THRSK APPKBALS COMING ON FOR ADMISSIONTHIS DAY,JAYANT PATEL J©, DELIVERED THE)ROLLOWING: JUDGMENT In all matters, the appellants-Revenue haspreferred the appeals by raising following substantialquestions of law: “1. Whether the Tribunal is right in law inrelying on Circular No.9/2002 when thesame has been quashed by the Hon. MumbaiHigh Court in the case of Jalgaon DistrictCentral Co-Operative Bank Ltd.,? THRSK APPKBALS COMING ON FOR ADMISSIONTHIS DAY,JAYANT PATEL J©, DELIVERED THE)ROLLOWING: JUDGMENT In all matters, the appellants-Revenue haspreferred the appeals by raising following substantialquestions of law: “1. Whether the Tribunal is right in law inrelying on Circular No.9/2002 when thesame has been quashed by the Hon. MumbaiHigh Court in the case of Jalgaon DistrictCentral Co-Operative Bank Ltd.,? 2. Whether the Tribunal was correct in/holding that Co-Operative Bank are notliable to deduct tax on the interest paid to itsmembers on the ground that they areexempt U/s 194A(3)(v) of the IT Act 1961? 3. Whether the Tribunal is right in law inoverlooking the established principle of‘generalia specialibus non derogant’ vis-a-visthe specific provisions of sec.194A(3)(viia)(b)_and general provisions of 194A(3)(v) of theAct? 4 Whether the Tribunal was correct in not|appreciating the fact that the provision ofsection 194A(3)(v) is a general provisioneranting benefit to all co-operative societies,whereas, theprovisionsoT|section194A(3)(i)(b) deals with co-operative society|carrying on the business of banking, hence Specific provisions in any case overrides thegeneral provisions?”| 2. We have heard Mr.Aravind K.V., learnedcounsel appearing for the appellants. As such, if we seethe observations of the Tribunal in this regard, theconsiderations are at paragraphs 12 to 14 which read as under: “12. We have heard the rival submissions. Atthe time of hearing of the appeal, it wasbrought to our notice by the learned counselfor the assessee that the Bangalore Bench ofITAT in the case of Bagalkot District CentralCo-opBank,VsJICIT(2014)48|taxmann.com 11/(Bangalore-Trib) held thatCo-Operative Societies carrying on bankingbusiness while paying interest to members.on time deposit and deposits other than timedeposits need not deduct tax at source U/S|194-A of the Act by virtue of exemption|eranted U/s 194-A(3)(v) of the Act. Thelearned DR relied on the stand taken by therevenue in the grounds of appeal filed beforethe Tribunal. 13.)WehaveconsideredtheTival|submissions. This tribunal in the case ot|Bagalkot District Central Co-operative Bank (Supra)dealtwithidenticalissueandidentical stand taken by the revenue and theAssessee in the case of co-operative societyengaged in banking business and haveupheld identical order of CIT(A). The relevantobservations of the Tribunal in this regardwere as follows: “15. We have given a very careful|considerationTO therival submissions. We are oft the view|that the submissions made by)thelearnedcounselfor.theAssessee deserves to be accepted.As rightly contended by him)sec. 194A(3)(i)(b) of the Act is aprovisionwhichmandatesdeduction of tax at source by a)co-operative Society carrying on)the business of banking, where|the income in the torm of interest|which is paid by such society is in excess of ten thousand rupees. |sec. 194A(3)(v) of the Act providesthat tax need not be deducted at source where the income in the|form of interest is) credited orpaid by a co-operative society to a\member thereof or to any other)co-operativesociety.Thisprovision therefore applies to all)co-operative societies including)co-operative society engaged in)the business of banking. It is not) possible to exclude co-operative|society engaged in the business|of banking from the provisions of|sec. 194A(3)(v) of the Act on the)sround that the same is covered|bytheprovisionsoT|SEC,194A(3)(1i)(b)ot the Act.sec. 194A(3)(v) of the Act refers topayment by a co-operative society|to a member and payment by a)co-operativesocietyTO nonimember continue to be governed|bytheprovisionsoT|sec. 194A(3)(1)(b)oT the.Act.similarlyU/s|194A(3)(viia)(b) interest on deposits other than)time deposits even if the payment|is made to a non-member by a)co-operativesociety,the.CO-operative society need not deduct)tax at source. Thus this section|carves out another exception to.sec. 194A(3)(i)(b) of the Act. We,do not think that any of the)above provisions can be called a.generalprovisionallother|provisioncalled|specificprovisions. Each provision over-lap and if read in the manner as)indicated above, there is perfect)harmony.CO thevariousprovisions. We do not agree with|the view expressed by the Pune)ITAT SMC in the case of Bhagani| NiveditaSahakariBankLtd(supra) when it says that co-operative society as mentioned in|CL. (v)1S.ageneralspecies,whereas the other five categories|of co-operative societies which)are specifically refered to in other|provisionsare|specificCO-operative societies. The further|conclusion in the said decision|that|theTerm‘co-operativesociety’ in CL.(v) of S.194A(3) as)to be interpreted as co-operative|society other than co-operative|bank, iS again unsustainable.The law is well settled that by a)PIOCess|ot interpretation OTIEcannot add on words that are notfound in the text of the statute.such a course is permitted only|when there is “causes omislusg”.We,do|notthinkthat|the.provisionsoT|sec. 194A(3)(v)suffers from any causes omisus|as has been interpreted by the)ITAT Pune Bench SMC. 16. We are also oft the view thatthe decision otf the Hon’ble KeralaHigh|Courtin.theCa SEoT|Moolamattom Electricity Board|EmployeesCo-op|BankLtd(supra) supports the plea ofthe Assessee before us. The! petitioners in that case were,primary credit societies registered|under the Kerala Co-operative|Societies Act. In view of thespecificprovisions ot sec. 194A(3)(viia) of the Act, theyclaimedthat|theyneednotdeduct tax at source on interest|paid. It was submitted by the)petitioner that sub-s.194A(3)(v)|deals with such income credited|or paid by a co-operative society|TOamember.whereassub.s(3)(viia)(a) provides a_ totalexemption to deposits with theprimarycreditsociety.TheHon ’bleKeralaHigh|Courtaccepted their plea and in their)judgmenthaveobservedthat|sec. 194A(3)(1) exemption limit ofRs.10,000/- to interest paid on)time deposits with co-operative|societies engaged in carrying on)in business of banking is allowed|but that does not mean that all|co-operative societies who have)creditedOTpaidexceedingRs.10,000/- are liable to deduct)tax at source. The Court held /that co-operative society engaged|1nNcarryingOTlbDUSINESSOT banking|andprimarycreditsocietiesstandOTldifferentfooting and belong to different class. That does not mean that§sec. 194A(3)(v)oT the.Act1S.applicable only to co-operative|societies other than co-operative|societies carrying on the business|of banking as observed in para)37 of its judgment the Pune ITATin the case of Bhagani Nivedita|sah Bank Ltd(supra). In fact in|para 2 of Circular No.9 dated:11.09.2002, the CBDT has very|Clearlylaiddownthat|CO-Operative societies carrying on)banking business when it pays)interestOT]deposits|by|1tsmembers need not deduct tax atsource in view of the provisions of|sec. 194A(3)(v) of the Act. 17. We also find that the CBDT in.Circular No.9 dated 11.09.2002|clarified certain aspects which)are relevant to the present case. |The same reads thus: CCircular No.9 of 2002“Sub: Tax deduction at§source Under Section 194A of.the [Income Tax Act 196l1Applicability of the provisionsin respect of income paid orcredited to a member of co-operative bank - Reg. 11.09.2002 TDS |194A| 17. We also find that the CBDT in.Circular No.9 dated 11.09.2002|clarified certain aspects which)are relevant to the present case. |The same reads thus: CCircular No.9 of 2002“Sub: Tax deduction at§source Under Section 194A of.the [Income Tax Act 196l1Applicability of the provisionsin respect of income paid orcredited to a member of co-operative bank - Reg. 11.09.2002 TDS |194A| UnderSection19Q4AoT the.Income Tax Act, 1961, Tax is)deductible at source from any)payment of income by way of)interest other than income by)way of interest on _ securities.Clause (V) of Sub Section (3) of|Section. 194Aexempts suchincome credited or paid by a co-operative society to a member)thereof from the requirement of)TDS..On|the.otherhand,Clause(viia) of Sub Section(3) of|section 194A exempts from the,requirement of TDS such income|credited or paid in respect ofdeposits(otherthantime-deposits made on or alter l[52]July, 1995) with a co-operative|society engaged in carrying on)the business of banking. 2. Representations have been)received in the Board seeking)clarification as to whether asmember of a co-operative bank)may receive without TDS interest|on time deposit made with the co-operative bank on or after l[52]July, 1995. The Board has|considered the matter and it is clarified that a member of a co-operativebankshallreceiveinterest on both time deposits.and deposits other than time)deposits with such co-operative|bank without TDS Under Section194A by virtue of exemption|eranted vide clause (v) of Sub)section (3) of the said section.The provisions of clause (viia) of|thesaid|SubSection|aI €applicable only in case of a non-member depositor of the _ coperative bank, who shall receive|interest only on deposits other|than time deposits made on or)atter 1[52]July, 1995 without TDS|Under Section 194A. 3. A question has also been)raised as to whether normal|members,associatemembersand sympathizer members are)also covered by the exemptions|Under Section 194A(3)(v). It is)herebyclarifiedthat|the exemption is available only to)such members who have joined|in application for the registration|of the co-operative society and)thosewho|alteadmitted|TO membership alter registration in|accordance with the bye-laws and|rules. A member eligible for)exemptionUnderSection|194A(3)(v) must have subscribed|to and fully paid for at least one)share of the co-operative bank,|must be entitled to participate)and vote in the General Body|Meetings and/or Special General|Body Meetings of the co-operative|bank and must be entitled toreceive share from the profits of)the co-operative bank. 1F.No.2795/ 106/2000-IT(B)(2002) 177 CTR (St) 1°|18. It can be seen from para 2 of|the Circular referred to above§that the CBDT has very clearly|laiddownthat.co-operativesocieties carrying on banking)business when it pays interest on|deposits by its members need not)deduct tax at source. The above|interpretation of the provision by|the CBDT which is in favour otthe Assessee, in our view isbinding on the tax authorities. 19. In the case decided by ITAT|Panajl1Bench1nNITA.No.85/PN/2013 for AY.O9-10 in) 1F.No.2795/ 106/2000-IT(B)(2002) 177 CTR (St) 1°|18. It can be seen from para 2 of|the Circular referred to above§that the CBDT has very clearly|laiddownthat.co-operativesocieties carrying on banking)business when it pays interest on|deposits by its members need not)deduct tax at source. The above|interpretation of the provision by|the CBDT which is in favour otthe Assessee, in our view isbinding on the tax authorities. 19. In the case decided by ITAT|Panajl1Bench1nNITA.No.85/PN/2013 for AY.O9-10 in) theCaSCoT|theBailhongalUraban Co-op Bank Ltd Vs. JCITOrderdated|28.08.2018,theTribunal proceeded on the footing|that the aforesaid Circular as)been quashed by the Hon'ble)Bombay High Court in the case of|The Jalgaon District Central Co-Operative Bank Ltd. Vs. Union of|India 269 ITR 423(Bom) and)therefore choose to follow the'decision rendered by Pune ITAT)SMC in the case of Bhagani)NiveditaSahakariBankLtd(supra). In our view the)Hon’ble Bombay High Court in)theCASEoT JalgaonDistrict.Central Co-Operative Bank Ltds_case was dealing with a case of)Challenge to para 3 of CBDT)Circular No.9 dated: 11.09.2002|which tried to interpret the word|“member”aS|givenInsec. 194A(3)(v) of the Act. It is)only that part of the Circular that had been quashed by the Hon'ble|Bombay High Court and the)other paragraphs of the Circular|had no connection with the issuebefore the Hon’ble Bombay High|Court. How could it be said that|the entire Circular has been quashed by the Hon’ble Bombay|High Court? In our view para 2) of the Circular still holds good)and the conclusion of the [TAT|Pune Bench in the case of the'Bailhongal Uraban Co-op Bank|Ltd(supra) are not factually)COrrect. Consequently,theconclusionsdrawn1n the aforesaid decision also contrary|to facts and hence cannot be!considered as precedent. |2O. The learned counsel for theAssessee as brought to our notice|that the ITAT Vishakapatnam|Benchin.theCaSE€oT|TheVishakapatnamCo-operativeBank ITA No.d and 19 ot 2011/order dated: 29.08.2011 as held§that|co-operativesocietiescarrying on banking business)when it pays interest to its)members on deposits it need not,deduct tax at source in view otfthe provisions of Sec.194A(3)(v) of|the Act. Similar view has also!been expressed by the Pune)Bench of the ITAT in the case otfOzerMerchantCo-operativeBank|ITA.No.1588/PN/2012order dated 30.10.2013. We may)add that in both these decisions|the discussion did not turn on'theinterpretation|oT sec. 194A(3)(i)(b) of the Act vis-a vis Sec. 194A(3)(v) of the Act. It is)thusclear.that|the.preponderance of judicial opinion|on this issue is that co-operative|societies carrying on banking)business when it pays interest to)its members on deposits need not)deduct tax at source in view otfthe provisions of Sec.194A(3)(v) of|the Act. 21. For the reasons given above,|we hold that the Assessee which|is a co-operative society carrying|on banking business when it)pays interest income to a member|both on time deposits and on)deposits other than the deposits|with such co-operative society|need not deduct tax at source|Under Section 194A by virtue of)theexemptioneranted|videClause (V) of Sub Section (3) of|the said section”| 14. In our view the above decision renderedbytheco-ordinatebench1Ssquarelyapplicable to the facts of the present case. —In facts the CIT (A) in cancelling the order ofthe AO has placed reliance on the aforesaid|decision. Respectfully following the decisionof the co-ordinate bench referred to above,we uphold the order of the CIT (A).” 21. For the reasons given above,|we hold that the Assessee which|is a co-operative society carrying|on banking business when it)pays interest income to a member|both on time deposits and on)deposits other than the deposits|with such co-operative society|need not deduct tax at source|Under Section 194A by virtue of)theexemptioneranted|videClause (V) of Sub Section (3) of|the said section”| 14. In our view the above decision renderedbytheco-ordinatebench1Ssquarelyapplicable to the facts of the present case. —In facts the CIT (A) in cancelling the order ofthe AO has placed reliance on the aforesaid|decision. Respectfully following the decisionof the co-ordinate bench referred to above,we uphold the order of the CIT (A).” 3. The aforesaid shows that the Tribunal wasbound by its earlier decision in case of Bagalkot DistrictCentral Co-operative vs. JCIT (2014) 48 Taxmann.com117. When we further enquired from the learned)counsel for the Revenue as to whether the decision ofthe Tribunal was carried by the Department before this_Court or not and in response thereto, the learnedcounsel for the appellants has brought to our notice thedecision of this Court dated 16.12.2015 in ITA!100116/2014 whereby, the view taken by the Tribunalhas not been interfered with. We may record that thisCourt in the above referred decision observed thus: “In this appeal by the Revenue, the issueinvolved is for consideration whether the Co-operative Bank was required to deduct taxwhile paying interest to its members on timedeposits under Section 194-A of the IncomeTax Act. 2. The Ministry of Finance, Government ofIndia|videCircularNo.19/20151n F.No.142/14/2015- TPL, has held that the|Co-operative Banks are not required todeduct tax at source on time deposits of itsmembers paid or credited on or before|1.7.2015. The relevant portion of the circular|reads as under: — “42.9. In view of this, the provisions of the|section 194A(3)(v) of the Income-Tax Act.have been amended so as to expresslyprovide that the exemption provided from|deduction of tax from payment of interest tomembers by a co-operative society undersection 194A(3)(v) of the Income-Tax Act.shall not apply to the payment of interest ontime deposits by the co-operative banks toits members.As this amendment is effectivefrom the prospective date of l[52]June, 2015,the co-operative bank shall be required todeduct tax from the payment of interest ontime deposits of its members, on or after theIst June, 2015. Hence, a cooperative bank|was not required to deduct tax from the|payment of interest on time deposits of itsmembers paid or credited before l[52]June,|2015.” 3. In view of the aforesaid circular, thisappeal does not survive for considerationand is accordingly dismissed. No costs.” 4. As such, in view of the referred decision of thisCourt in case of Bagalkot District Central Co-operativeBank referred supra, when the question is alreadycovered by the decision of this Court, it cannot be saidthat any substantial question of law would arise forconsideration. — Oo. However, the learned counsel appearing for theappellants-Revenue made an attempt to contend andreiterate the same contention that in view of specialprovision Section 194A(3) (b), the general exemption asprovided under 194A(3) (v), would not be applicable forthe Co-operative Banks and he contended that the viewtaken by the Tribunal cannot be said as correct viewand this Court may independently consider the matterand may hold that in view of specific provision, generalexemption would not be available to co-operative bank.Hence the TDS from the interest exceeding the amount of Rs.10,0O00/- was required to be deducted by therespondent-assessee in the present case which is a co-operative bank. 6. As such, we are not impressed by thesubmission that there is any specific provision andtherefore general exemption would not apply for thesimple reason that the word ‘Members’ is missing inClause (b). Further, in Circular No.19/2015 dated27.11.2015 at paragraph 42.5 it has been)inter aliamentioned as under: of Rs.10,0O00/- was required to be deducted by therespondent-assessee in the present case which is a co-operative bank. 6. As such, we are not impressed by thesubmission that there is any specific provision andtherefore general exemption would not apply for thesimple reason that the word ‘Members’ is missing inClause (b). Further, in Circular No.19/2015 dated27.11.2015 at paragraph 42.5 it has been)inter aliamentioned as under: “.........4ence, the Co-operativewas not required to deduct tax from thepayment of interest on the time deposits ofits members paid or credited before firstJune 2O1)D’. 7. 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