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Income Tax Appellate Tribunal, HYDERABAD ‘A’ BENCH, HYDERABAD.
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD ‘A’ BENCH, HYDERABAD.
BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L. P. SAHU, ACCOUNTANT MEMBER ITA No.473/Hyd/2020 (Assessment Year : 2012-13)
M/s. Warangal Urban Co-operative Bank Ltd., Warangal. PAN AAAAW0651J …..Appellant. Vs. Asst. Commissioner of Income Tax, Circle 1, Warangal. …..Respondent. Appellant By : Shri P. Murali Mohan Rao, C.A. Respondent By : Shri Rajendra Kumar, CIT-D.R. Date of Hearing : 16.03.2022. Date of Pronouncement : 29.03.2022.
O R D E R Per Shri S.S. Godara, J.M. : This assessee’s appeal for Asst. Year 2012-13 arises from the Principal Commissioner of Income Tax (Appeals)- 3, Hyderabad’s order dt.30.03.2020 passed in case No. ITBA/ REV/ F/ REV5/ 2019-20/1026899847(1) in proceedings under Section 143(3) of Income Tax Act, 1961 (‘the Act’ in short).
2 ITA No.473/Hyd/2020 Heard both the parties. Case file perused.
It transpires at the outset that the PCIT has termed the Assessing Officer’s corresponding assessment dt.22.12.2017 as an erroneous one causing prejudice to the interest of revenue as under :
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Both the learned representatives vehemently reiterate their respective stands against and in support of the PCIT’s foregoing revision directions. The assessee's case before us is that it is a co-operative bank who had paid interest to its
7 ITA No.473/Hyd/2020 members exceeding Rs.10,000/- which nowhere require any TDS deduction u/s.194A(3)(v) of the Act. We note in this factual backdrop that the legislature has mandated a co-operative bank from not being treated as a co-operative society vide Finance Act, 2015 w.e.f. 1.6.2015 whereas the assessment year before us is 2012-13 only. This tribunal's co-ordinate bench order in ACIT Vs. The Tirupati Co- operative Bank Limited in 482 & 483/Hyd/2018 dt.25.06.2021 has decided the very issue against the department as follows :
“ 4. We have given our thoughtful consideration to rival pleadings against and in support of the impugned Section 40(a)(ia) disallowance pertaining to the assessee a co-operative bank having not deducted TDS whilst making interest payments exceeding Rs.10,000/- each to its members. The Revenue’s case in light of its pleadings is that the CIT(A) has erred in law and on facts in making the assessee’s act of nondeduction of TDS as covered u/s.194A(3)(v) than u/s.194A(3)(i)(b) for the reason that the same are general and specific provisions; respectively wherein the latter prevails over the former “generalia specialibus non derogant”. We find no merit in Revenue’s foregoing arguments. This is for the reason that although Section 194A3(i)(b) prescribes the threshold limit of TDS deduction as Rs.10,000/- in the impugned assessment year(s), section also contains sub clause-(v) that this mechanism does not come into play in case of payments made by a co-operative society to its members. We make it clear that we are dealing with AYs.2013-14 and 2014-15 whereas the legislature has excluded a co-operative bank vide Finance Act, 2015 w.e.f.01-06-2015 only. It further transpires that the Hon'ble President of the tribunal had also constituted a Special Bench in ITA Nos.2055 & 2056/Chny/2014 in The Virudhunagar District Central Co- operative Bank Ltd. Vs. ITO u/s.255(4) of the Act to this effect. The said learned Special ITA Nos. 482 & 483/Hyd/2018 :- 4 -: Bench’s order dt.09-10-2018 has decided the very issue in assessee’s favour and against the department by following hon'ble Madras high court’s judgement (supra) mutatis mutandis. Their lordships have also considered the explanatory Memorandum to the Finance Bill 2015 to hold that the foregoing amendment in Section 194A(3)(i)(v) of the Act excluding a co-operative bank from a co-operative society; applies with prospective effect only. It has been further emphasized in para 53 of the said hon'ble
8 ITA No.473/Hyd/2020 high court’s detailed discussion that “if a taxing statute and an exclusion clause contained in a taxing statute are to be construed strictly, the provisions themselves should make it clear as to who are to be charged or exempted and what are the circumstances under which they are charged or excluded”. We adopt the very analogy herein as well to hold that the exclusion clause herein is section 194A(3)(v) of the Act. We reject Revenue’s substantive grounds raised in the instant appeal in light thereof. The CIT(A)’s identical action deleting Section 40(a)(ia) disallowance in both these years stands upheld. ” We accordingly adopt the foregoing detailed reasoning mutatis mutandis to reverse the PCIT’s impugned directions on this former issue as not sustainable in law.
Next comes the latter issue of assessee's interest payments of Rs.20,50,008/- to its non-members. The PCIT admittedly takes note of hon'ble apex court's decision in M/s. Palem Gas Service 81 taxmann.com (SC) which hold that section 40A(i)(a) disallowance is applicable to both paid as well as payable sums as on the closing day of relevant accounting period. A perusal of the case file suggest that the tribunal's first round remand directions had restored the issue back to the assessing authority with a stipulation that the assessee had to file Form 15G in consequential proceedings which has nowhere been complied with. We thus find no fault in the PCIT’s revision proceedings in light of hon'ble apex court's decision. The same stand upheld.
9 ITA No.473/Hyd/2020 4. This assessee's appeal is partly allowed in above terms.
Order pronounced in the open court on 29th Mar., 2022.
Sd/- Sd/- (L.P. SAHU) (S.S. GODARA) Accountant Member Judicial Member Hyderabad, Dt. 29.03.2022. * Reddy gp Copy to : 1. M/s. Warangal Urban Co-operative Bank Ltd., C/o P Murali & Co., Cas, 6-3-655/2/3, Somajiguda, Hyderabad- 500 082 2. ACIT, Circle 1, Warangal. 3. Pr. C I T-3, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard File. By Order Sr. Pvt. Secretary, ITAT, Hyderabad.