Ita/632/2015 Of The Commissioner Of Income Tax v. M/S The Shamrao Vithal

“1.4 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.632 OF 2015 BETWEEN: 1.THE COMMISSIONER OF INCOME TAXTDs, GROUND FLOOR,PUNDALIK NIWAS,RUA-DE-OUREM,PANAJI-GAO-403 O01TDs, GROUND FLOOR,PUNDALIK NIWAS,RUA-DE-OUREM,PANAJI-GAO-403 O01 2.THER INCOME -TAX OFFICETDs WARD (1), C.R BUILDGINGANNEXE,P.B.ROAD, NAVANAGAR,HUBBALLI-580 025TDs WARD (1), C.R BUILDGINGANNEXE,P.B.ROAD, NAVANAGAR,HUBBALLI-580 025 .. APPELLANTS (By Sr. Y.V.RAVIRAJ ADV.) AND: M/S THE SHAMRAO VITHALCO-OPERATIVE BANK LTD.,GROUND FLOOR,SATELLITE SPACE AGE COMPLEX,KOPPIKAR ROAD, HUBLIPAN:AAAA 0177C — RESPONDENT THIS INCOME TAX APPEAL IS FILED UNDER SECTION260A OF THE INCOME TAX ACT, 1961, PRAYING TO SET ASIDETHE ORDERS DATED 30.06.2015, PASSED BY THE INCOME TAX APPELLATETRIBUNAL,BANGALORE,IN|ITANO.676/BANG/2015,CONFIRMINGTHEORDER.OFITHEAPPELLATE COMMISSIONBKR AND CONFIRM THR ORDEPASSED 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 reads|as follows : “42.5 In view of this, the provisions ofthe section 194(3)(v) of the Income-tax Acthave been amended so as to expresslythe section 194(3)(v) of the Income-tax Acthave been amended so as to expressly provide that the exemption provided fromdeduction of tax from payment of interest tomembers by a co-operative society undersection 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 aiter theI[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, !>/'JUDGE RK/- Sd/-JUDGE