ACIT, JAIPUR vs. MALVIYA URBAN CO-OPERATIVE BANK LTD., JAIPUR

PER SHRI KUL BHARAT, JM.

This Appeal by the Revenue is directed against the order of Ld. CIT (A)-I,

Jaipur dated 19.12.2016 pertaining to assessment year 2014-15.

The Revenue has raised the following grounds of appeal :-

.”1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 4,82,85,223/- made u/s 40(a)(ia) of the IT Act on account of interest paid by the assessee without making TDS thereon. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that interest paid by the assessee is governed by clause (v) of Sub-Section (3) of section 194A of the Act and not by sub-clause (b) of clause (i) of subsection (3) of section 194A of the Act. 3. The appellant craves its right to add, amend or alter any of the grounds on or before the hearing.”

2 ITA No. 175/JP/2017. M/s Malviya Urban Co-operative Bank, Ltd., Jaipur.

scrutiny assessment and assessment u/s 143 of the Income Tax Act, 1961

(hereinafter referred to as the Act). While framing the assessment the Assessing

Officer Assessing Officer observed that the assessee had made payment of Rs.

70040830/- on account of interest other than interest on securities, whereas shown

only Rs. 5127604/- as liable for TDS deduction. The Assessing Officer proceeded to

make addition by making disallowance u/s 40(ia), for non-deduction of Tax at

source.

after considering submission deleted the disallowance. Ld. Departmental

Representatives vehemently argued that Ld. CIT(A) was not justified in deleting the

disallowance. He submitted that the Assessing Officer had rightly made

disallowance.

as made in the written submissions. Ld. Counsel for the assessee submitted that the

issue deductibility of tax has been decided by the Hon. Karnataka High Court

rendered in the case of CIT, TDS, Banglore Vs National Co-operative Bank Ltd.

(2016) 71 taxmann.com 352 (Karnataka) and reliance is also placed upon the

decision of the Hon’ble Madras High Court rendered in the case of Coimbatore

District Central Co-operative Bank Ltd. Vs. ITO, TDS-Ward I(5), Coimbatore. The

Ld. Counsel for the asseessee placed reliance on other judgment of the Hon’ble

Karnataka High Court rendered in the case of Commissioner of Income Tax Vs. Shri

Basaveshwara Sahakari Bank (2016) 74 taxmann.com 21 (Karnataka) and the other

3 ITA No. 175/JP/2017. M/s Malviya Urban Co-operative Bank, Ltd., Jaipur.

decisions of the Co-ordinate Bench rendered in the case of Bagalkot District Central

Co-operative Bank Ltd. Vs. Joint Commissioner of Income Tax, ITA No.

1572(Bang)2013. The decision of the Co-ordinate Bench in the case of ACIT, Circle-

1(1), Visakhapatnam Vs. Visakhapatnam Co-operative Bank Ltd ITA No. 5 & 9

(Vizag.) 2011.

and gone through; the Judicial pronouncement has relied by the Ld. Counsel for the

assessee. The Hon’ble Karnataka High Court under the identical facts in the case of

Commissioner of Income Tax, Bangalore Vs. National Co-operative Bank Ltd. (Supra)

has held as under:-

“3. The aforesaid shows that the Tribunal was bound by its earlier decision in case of Bagalkot District Central Co-op. Bank v. Jt. CIT [2014] 48 taxmann.com 117 (Bang). When we further enquired from the learned counsel for the Revenue as to whether the decision of the Tribunal was carried by the Department before this Court or not and in response thereto, the learned counsel for the appellants has brought to our notice the decision of this Court dated 16.12.2015 in ITA 100116/2014 whereby, the view taken by the Tribunal has not been interfered with. We may record that this Court in the above referred decision observed thus: 'In this appeal by the Revenue, the issued involved is for consideration whether the Co-operative Bank was required to deduct tax while paying interest to its members on time-deposits under Section 194-A of the Income-Tax Act. 2. The Ministry of Finance, Government of India vide Circular No. 19/2015 in F. No. 142/14/2015-TPL, has held that the Co-operative Banks are not required to deduct tax at source on time deposits of its members paid or credited on or before 01.07.2015. The relevant portion of the circular reads as under: "42.5. In view of this, the provisions of the section 194A(3) (v) of the Income- tax Act have been amended so as to expressly provide that the exemption provided from deduction of tax from payment of interest to members by a co- operative society under section 194 A (3)(v) of the Income-Tax Act shall not apply to the payment of interest on time-deposits by the co-operative banks to its members. As this amendment is effective from the prospective date of

4 ITA No. 175/JP/2017. M/s Malviya Urban Co-operative Bank, Ltd., Jaipur.

1st June, 2015, the co-operative bank shall be required to deduct tax from the payment of interest on time deposits of its members, on or after the 1st June, 2015. Hence, a co-operative bank was not required to deduct tax from the payment of interest on time deposits of its members paid or credited before 1st June 2015" 3. In view of the aforesaid circular, this appeal does not survive for consideration and is accordingly dismissed. No costs.’

5.1 In the light of the above judgment of the Hon’ble Karnataka High Court, we

do not see any merit into the contention of the Ld. Departmental Representatives.

Therefore, the ground raised in this appeal is dismissed.

5 ITA No. 175/JP/2017. M/s Malviya Urban Co-operative Bank, Ltd., Jaipur.

Order pronounced in the open court on Monday, the 29th day of May 2017.

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Jaipur Dated:- 29 /05/2017. Pooja/

आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

vkns'kkuqlkj@ By order,

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