SARASWAT CO-OPERATIVE BANK LTD. THROUGH ITS MANAGING DIRECTOR MR. SAMIR KUMAR BANERJI. vs. INCOME TAX OFFICER, TDS WARD AND ANR.

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TXA/11/2015HC BombayHCBM05003310201407 March 2017Author: ANOOP V. MOHTA,HON'BLE SHRI JUSTICE C. V. BHADANG5 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the appeals. It held that the Explanatory Notes to the Finance Act, 2015, clarified the position of law, specifically paragraph 42.5, which stated that the amendment to Section 194A(3)(v) was prospective from June 1, 2015. Therefore, co-operative banks were not required to deduct tax from the payment of interest on time deposits to their members paid or credited before June 1, 2015. The Court followed the reasoning in The Bailhongal Urban Cooperative Bank Ltd. case, which also relied on the Explanatory Notes. Consequently, the appellant co-operative bank was not under an obligation to deduct TDS for the assessment years prior to June 1, 2015 (i.e., 2010-11 to 2013-14). The impugned judgments of the respective Tribunals were set aside. The substantial question of law was answered in favour of the assessee. No costs were awarded.

What were the facts?

The appeals were filed by Saraswat Co-operative Bank Ltd. against orders of the Income Tax Appellate Tribunal (ITAT) for assessment years 2010-11 to 2013-14. The ITAT had held that the appellant bank was obligated to deduct tax at source (TDS) on income credited or paid in respect of deposits exceeding a described limit, based on the interpretation of Section 194A(3)(v) and 194A(3)(va) of the Income Tax Act, 1961. The bank's appeals before the ITAT were dismissed. The High Court admitted the appeals on substantial questions of law. Both parties consented to a common disposal of these appeals due to common issues.

What were the issues?

1. Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in holding that the appellant was not entitled to the benefit of S.194A(3)(v) of the Income Tax Act, 1961? Assessee's Contention: The appellant bank argued that it was entitled to the benefit of Section 194A(3)(v) of the Income Tax Act, 1961. They relied on the Explanatory Notes to the Finance Act, 2015, and a supporting judgment of a Division Bench in The Bailhongal Urban Cooperative Bank Ltd. v. The Commissioner of Income Tax & Anr. Revenue's Contention: The judgment does not record specific contentions for the revenue, other than their appearance through Junior Standing Counsel.

Which sections of the Income-tax Act were involved?

Section 194A(3)(v),Section 194A(3)(va)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, the

(a) All appeals are allowed. (b) The substantial question of law by the assesse is answered in its favour. (c) The impugned judgments of the respective Tribunals are set aside. (d) No costs. C. V. BHADANG, J. ANOOP V. MOHTA, J. NH

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