Wp/14991/2014 Of Sree Subramanyeswara Co Operative Bank Ltd v. The Commissioner Of Income Tax (Tds)

IN THE HIGH COURT OF KARNATAKA AT BANGALOREDATED THIS THE 26 DAY OF MARCH 2014 BEFORE THE HON’BLE Dr.JUSTICE JAWAD RAHIM| ##W.P. Nos. 1499114996/2014 (TIT) BETWEEN 1.SREE SUBRAMANYESWARA CO OPERATIVE BANK LTD.VISVESWARAPURAM BRANCHREP. BY MANAGER-SHRI K.V.RAVIPRASAD|AGED ABOUT 55 YEARS.NO.106, RAJATHA BAHVANA, R.V.ROADV V PRUAM, BANGALORE-560004. 2.SREE SUBRAMANYESWARA CO-OPERATIVE BANK LTDVIJAYANAGARA BRANCHREP, BY MANAGER-NARASIMHA MURTHY|AGED ABOUT 53 YEARS.CA 10, NO.14, MAIN SERVICE ROAD, VIJAYANAGAR|BANGALORE-560040. 3.SREE SUBRAMANYESWARA CO-OPERATIVE BANK LIDSUBRAMANYANAGAR BRANCHREP, BY MANAGER-R P VENKATESH KIRANAGED ABOUT 44 YEARS.NO.156/33, MAIN, MARUTHI EXTENSION.SRIRAMPURAM, BANGALORE-560021. 4SREE SUBRAMANYESWARA CO-OPERATIVE BANK LIDAVENUE ROAD BRANCHREP. BY MANAGER-B.R.NAGARAJAAGED ABOUT 52 YEARS.NO.565, I FLOOR, ANANDARAM COMPLEX, OPPOSITEINDIAN BANK, AVENUE ROADBANGALORE-560097. 5 SREE SUBRAMANYESWARA CO-OPERATIVE BANK LTDPADMANABHANAGAR BRANCHREP, BY MANAGER- K N KRISHNAIAH SETTY|AGED ABOUT 4/7 YEARSNO.44, 100 FT ROAD, OPP, BUS DEPOTBSK III STAGE, BANGALORE-560021. PADMANABHANAGAR BRANCHREP, BY MANAGER- K N KRISHNAIAH SETTY|AGED ABOUT 4/7 YEARSNO.44, 100 FT ROAD, OPP, BUS DEPOTBSK III STAGE, BANGALORE-560021. 6.SREE SUBRAMANYESWARA CO-OPERATIVE BANK LIDREP, BY MANAGER-M KRISHNA|AGED ABOUT 46 YEARS.NO.12, JAI GANESHA PLAZA, KAMMANAHALLI MAIN.ROADREP, BY MANAGER-M KRISHNA|AGED ABOUT 46 YEARS.NO.12, JAI GANESHA PLAZA, KAMMANAHALLI MAIN.ROAD RS PALYA, BANGALORE-560021 .» PETITIONERS (BY SRI. SHANKAR.A, ADV., ) AND 1)THE COMMISSIONER OF INCOME TAX (TDS) OFFICE OF THE COMMISSIONER OF INCOME-TAX(TDS),4TH FLOOR, HMT BHAVAN, NO.59BELALRY ROAD,(TDS),4TH FLOOR, HMT BHAVAN, NO.59BELALRY ROAD, 2.THE ADDITIONAL COMMISSIONER OF INCOME-TAX(TDS)RANGE, 18, NO.59, HMT BHAVAN, 4TH FLOORBELLARY ROADBANGALORE-5600 32.(TDS)RANGE, 18, NO.59, HMT BHAVAN, 4TH FLOORBELLARY ROADBANGALORE-5600 32. 3.THE DEPUTY COMMISSIONER OF INCOME-TAXCIRCEL-16(2),CIRCEL-16(2), 4TH FLOOR, HMT BHAVAN59, BELLARY ROAD.BANGALORE-5600 32. 4THE COMMISSIONER OF INCOME-TAX (APPEALS)-V|NO.59, HMT BHAVAN, BELLARY ROADBANGALORE-5600327. —_ RESPONDENTSNO.59, HMT BHAVAN, BELLARY ROADBANGALORE-5600327. —_ RESPONDENTS THESE W.Ps. ARE FILED PRAYING TO STAY THE.RECOVERY OF DISPUTED TAXES AND INTEREST AS THEAMOUNT MENTIONED IN THE NOTICE OF DEMAND ISSUEDUNDER SECTION 156 OF THE ACT TO THE PETITIONERNO.1L TO 6 VIDE DATED 19.03.2014 BY THE R-3 ASREFERRED AS ANN-AL TO A6 TILL DIPOSAL OF THEAPPEALS FILED BY THE PETITIONERS NO.1 TO 6 BEFORETHE RESPONDENT NO.4 FOR THE ASSESSMENT YEAR ZJOLL12 PURSUANT TO THE ORDER PASSED UNDER SECTION201(1) AND 201(1A) OF THE ACT DATED 19.03.2014 BY|THE R-3. THESE PETITIONS COMING ON FOR ORDERS THIS)DAY, THE COURT MADE THE FOLLOWING ORDER Petitioners who are co-operative societies in banking.business are in joint writ action seeking writ in the nature of direction/stay of recovery of tax liability and _ interescommunicated in the demand notices issued separately by the assessing officer under Section 156 of the Income Tax|Act, 1961, (hereinafter referred to as the Act, for brevity)|On|thefile|Of|the+[ra]respondent-Deputy |Commissioner of Income Tax, Ci8rcle 16(2), all dated19.3.2014 marked as Annexures-Al to A6. They also seeka declaration to quash the approval granted by the 2[4A]respondent to the 3[rd]respondent to reduce the time in terms of proviso to Section 220(1) of the Act dated19.3.2014 vide Annexure-B respectively. 2).On preliminary nearing, notice was ordered to tnerespondents in response to wnich learned standing counsel,Mr.Jeevan Neeralgi nas taken notice. The matter is listed at2.30 p.m. to near further regarding preliminary nearing andinterim relief. 3.From tne contentions of the learned counsel] on potn|sides, it could be noticed that the issues raised forconsideration and ultimate relief sougnt falis in a narrowcompass. In the circumstances, I nave taken their consent|for final disposal. terms of proviso to Section 220(1) of the Act dated19.3.2014 vide Annexure-B respectively. 2).On preliminary nearing, notice was ordered to tnerespondents in response to wnich learned standing counsel,Mr.Jeevan Neeralgi nas taken notice. The matter is listed at2.30 p.m. to near further regarding preliminary nearing andinterim relief. 3.From tne contentions of the learned counsel] on potn|sides, it could be noticed that the issues raised forconsideration and ultimate relief sougnt falis in a narrowcompass. In the circumstances, I nave taken their consent|for final disposal. 4The contextual facts needing reference would show,|petitioners 1 to 6 which are branches of Karnataka StateCo-operative Apex Bank Limited registered under the Co-operative Societies Act were establisned in the year 1914and hold certificates of registration to carry on bankingbusiness. Tney are licensed py the Reserve Bank of Indiaunder Section 22(1) read with Section 56(0) of the Banking Regulation Act, 1949, to run the said business, and claimthey have tneir own by-laws. The primary object of thepetitioner is banking business as defined in clause (b) ofSection 5 of the Banking Regulation Act is not applicable toco-operative societies. 5.Petitioners’ grievance is, they have received notices|dated 20.2.2014 served separately by the 3[rd]respondentcalling upon them to show cause why they snould not beheld as assessee in default in view of his opinion that no taxnas been deducted at source on payment of interest by tnepetitioners to their members under the provisions of Section194A of the Act. One of the copy of the notice is producedand marked as Annexure-C. Petitioners claim to nave senttheir reply on 17.3.2014 questioning his jurisdiction toinitiate proceedings as aforesaid on the ground that it doescome within the mischief of Section 194A as bankinginstitution run by a society is exempt from deducting tax atsource on payment of interest by the petitioners to theirmembers. This is the issue Inlimineraised by the)petitioners. 6.Mr.Snankar|forthe.petitioners.would.submit,petitioners have filed objections which has not beenconsidered by the 3[ra]respondent in the correct perspective|resulting in unjustifiable conclusion rejected their objectionsas untenable, which the petitioners have assailed before theCommissioner of Income Tax (Appeals), Bangalore. /.Petitioners have approached this court witn a limited|relief, viz., a direction to stay operation of the assessmentOrder and demand notice vide Annexures Al to A6 pendingdisposal of the appeals before the appellate authority. — 8.Mr.Jeevan Neeralgi for the Department would submit, |the very admission by the petitioners that appeals arepending before the appellate authority non-suits them fromwrit action, as the issues canvassed aresub Judiceand thepetitioners can well seek the same relief in thoseproceedings rather than approaching this court. However,|Mr.Shankar would submit, petitioners have approached this.courtfirstlyquestioningthejurisdiction Of|the+[ra]respondent to initiate such action and secondly, on the| ground that the statutory period of 30 days is availablewhich unjustifiably has been curtailed to 7 days. — QO.In the circumstances, to balance the equation and|Safeguard the interest of the petitioners and the Revenue, itis desirable to dispose of the writ petitions, permitting thepetitioners to move the appellate authority for stay of tnedemand notice, and to enable the petitioners to avail suchbenefit, till then proceedings pursuant to impugned demandnotices needs to be stayed. 10.In the result, the petitions are disposed of with thefollowing order: | I)Petitioners are permitted to move the appellate5authority within three weeks from today in allthe appeals filed by it seeking stay of theimpugned demand notice at Annexures-Al toA6.5authority within three weeks from today in allthe appeals filed by it seeking stay of theimpugned demand notice at Annexures-Al toA6. QO.In the circumstances, to balance the equation and|Safeguard the interest of the petitioners and the Revenue, itis desirable to dispose of the writ petitions, permitting thepetitioners to move the appellate authority for stay of tnedemand notice, and to enable the petitioners to avail suchbenefit, till then proceedings pursuant to impugned demandnotices needs to be stayed. 10.In the result, the petitions are disposed of with thefollowing order: | I)Petitioners are permitted to move the appellate5authority within three weeks from today in allthe appeals filed by it seeking stay of theimpugned demand notice at Annexures-Al toA6.5authority within three weeks from today in allthe appeals filed by it seeking stay of theimpugned demand notice at Annexures-Al toA6. IT)The Commissioner of Income Tax (Appeals) isfurther directed to dispose of the appeals filedby the petitioners on merit, preferably within anouter limit of three months from the date ofreceipt of a copy of this order.further directed to dispose of the appeals filedby the petitioners on merit, preferably within anouter limit of three months from the date ofreceipt of a copy of this order. ITT)In the meantime, there shall be stay of recovery|proceedings in pursuance to the demand noticesat Annexures-Al to A 6. Mr.Jeevan Neeraigi, standing counsel, is permitted to. file memo of appearance within three weeks. vgn* Sd/- | JUDGE|