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Income Tax Appellate Tribunal, BANGALORE BENCHES “A”, BANGALORE
Before: Shri Chandra Poojari, AM & Shri George George K, JM
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “A”, BANGALORE Before Shri Chandra Poojari, AM & Shri George George K, JM ITA No.1594/Bang/2018 : Asst.Year 2012-2013 M/s.Navanagara Urban Co- The Asst.Commissioner of operative Bank Limited Income-tax, Circle 1(2) v. C.M.Nagara, K.R.Road Mysuru. Mysuru District – 571 602. PAN : AAAAB3087D. (Appellant) (Respondent) Appellant by : Smt.Prathisha R., Advocate Respondent by : Sri.Kannan Narayanan, JCIT-DR Date of Date of Hearing : 17.03.2021 Pronouncement : 18.03.2021 O R D E R Per George George K, JM : This appeal at the instance of the assessee is directed against CIT(A)’s order dated 28.02.2018. The relevant assessment year is 2012-2013.
Two effective grounds are raised, namely, ground Nos. 2and 3, which read as follows:- “2. The learned CIT(A) erred in confirming the addition of Rs.9,99,439/- with regard to accrued interest on standard assets without appreciating the submission of the Appellant. 3. The ld.CIT(A) erred in confirming the addition of Rs.1,03,98,959/- towards interest paid to its members in excess of Rs.10000/- without appreciating the submissions of the appellant.” I shall adjudicate the above issues as under:
2 ITA No.1594/Bang/2018 M/s.Navanagara Urban Co-operative Bank Ltd. Addition of Rs.9,99,439 (Ground No.2)
The Assessing Officer has made the above addition by observing as under:-
“5.1 It is seen from the balance sheet of the assessee bank that Rs.66,24,000/- is shown as loan interest receivable on both the sides of balance sheet. The authorized representative was asked to comment on the same. In response, the AR has stated that, depending on the performance of loans they are classified as performing or non-performing asset (NPA) assets according to the norms provided by Reserve Bank of India. Interest on the same is not offered to income tax as income accrued on Bad debts is taxable in the year in which it is actually received under section 43D of the Income Tax Act. However assessee was asked for breakup of Rs.66,24,000/-. In his reply dated 08/07/2014 Assessee bank furnished the details. On perusal of the reply it is seen that total overdue of interest on bad and doubtful debt amounts to Rs.56,24,561/- for the previous year relevant to the assessment year 2012-13. Also authorized representative stated that remaining amount would be accrued interest on standard asset and agreed for the addition. Therefore Rs.9,99,439/- accrued interest on standard asset has to be added back to the total income of the assessee.”
3.1 Aggrieved by the addition, the assessee preferred an appeal to the first appellate authority. The CIT(A) confirmed the addition made by the Assessing Officer.
3.2 Aggrieved by the order of the CIT(A), the assessee has preferred this appeal before the Tribunal. The learned AR reiterated the submissions made before the Income Tax Authorities.
3.3 The learned Departmental Representative supported the order of assessment and the CIT(A).
3 ITA No.1594/Bang/2018 M/s.Navanagara Urban Co-operative Bank Ltd. 3.4 I have heard rival submissions and perused the material on record. The learned AR before the Assessing Officer had agreed to the addition stating that accrued interest to the extent of Rs.9,90,000 is on standard assets and not on non- performing assets (NPA’s). Therefore, I see no reason to interfere with the orders of the Income Tax Authorities and I confirm the addition. It is ordered accordingly.
3.5 In the result, Ground No.2 is dismissed.
Addition of Rs.1,03,98,959 (Ground No.3) 4. The above ground is regarding disallowance of Rs.1,03,98,959 by invoking the provisions of section 40(a)(ia) of the I.T.Act on account of failure on the part of the assessee to deduct tax at source with regard to interest payment to the assessee’s members and cooperative societies. The assessee contended that it is not liable for TDS since interest was paid to its members and other cooperative societies. Therefore, by virtue of section 194A(3)(v) of the I.T.Act, the assessee was not liable for TDS. The Assessing Officer held that section 194A(3)(i)(b) of the I.T.Act is specific provision and have application and not section 194A(3)(v) of the I.T.Act, as contended by the assessee.
4.1 Aggrieved, the assessee preferred an appeal to the first appellate authority. The CIT(A) confirmed the assessment order.
4 ITA No.1594/Bang/2018 M/s.Navanagara Urban Co-operative Bank Ltd. 4.2 Aggrieved, the assessee has filed this appeal before the Tribunal. The learned AR submitted that the issue in question is squarely covered by the order of the Tribunal in the case of M/s.Chikmangalur Jilla Mahila Sahakara Bank Niyamitha v. ACIT in ITA No.1384/Bang/2018 (order dated 4th July, 2018).
4.3 The learned Standing Counsel relied on the orders passed by the Income Tax Authorities.
4.4 I have heard rival submissions and perused the material on record. The issue raised in this appeal is squarely covered by the order of the Bangalore Bench of the Tribunal in the case of M/s.Chikmangalur Jilla Mahila Sahakara Bank Niyamitha v. ACIT (supra). The relevant finding of the Tribunal reads as follow:-
“07. The present case before us pertains to the payments made by way of interest by the assessee society to its members would attracts the deduction of tax or not. In this regard, if we look into the language used in the above provisions more particularly 194A(3)(v), then it is clear that the case of assessee shall squarely fall within this provision, being specific provision, irrespective whether Rs.10,000/- or more is paid by the assessee to its member or not and therefore in the considered opinion of the bench the other provision relied upon by the Ld. DR i.e., 194A(3)(i)(b) shall not beapplicable being general in nature. It is settled proposition of law that the specific provision {i.e 194A(3)(v)} , shall override the general provision, { i.e 194A(3)(i) (b)} , in case of over lapping or conflict , hence the section 194A(3)(v)} is applicable to the facts of the present case . Therefore the contention of ld DR is not correct. Further the case is also covered in favour of assessee by the decision of the coordinate bench in the matter of Vasavamba Cooperative Bank Ltd (supra), further there is no reason for this bench to take a contrary view, as the facts are similar to the facts of present case. Following the same we allow the appeal of the assessee.”
5 ITA No.1594/Bang/2018 M/s.Navanagara Urban Co-operative Bank Ltd.
4.5 However, no details with regard to payment of interest whether it is to members or to other cooperative societies have been furnished. Therefore, I am of the view that the matter needs to be examined by the A.O. de novo. The assessee is directed to furnish the necessary details with regard to the payment of interest whether it is paid to the members / other cooperative societies or to non-members. The A.O. is directed not to make disallowance with regard to the interest paid to assessee’s members and other cooperative societies. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on this 18th day of March, 2021. Sd/- Sd/- (Chandra Poojari) (George George K) ACCOUNTANT MEMBER JUDICIAL MEMBER Bangalore; Dated : 18th March, 2021. Devadas G*
Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-Mysore. 4. The Pr.CIT - Mysore. 5. The DR, ITAT, Bengaluru. 6. Guard File. Asst.Registrar/ITAT, Bangalore