COMMISSIONER OF INCOME TAX vs. M/S DAVANAGERE URBAN CO OP BANK LTD

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ITA/107/2021HC KarnatakaKAHC01023478202007 December 2021Bench: S.SUJATHA,HANCHATE SANJEEVKUMAR5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue was already settled by previous rulings of the same court and the Supreme Court, which affirmed that such interest payments to members do not require TDS deduction. The Revenue's counsel could not dispute this established position.

What were the facts?

The Revenue appealed against an ITAT order that held the assessee cooperative bank was not required to deduct TDS on interest payments made to its members. The Revenue argued that Section 194A mandates TDS deduction and questioned the Tribunal's reasoning.

What were the issues?

Whether a cooperative bank is obligated to deduct TDS on interest paid to its members, and if the Tribunal's order was justified based on existing legal precedents.

Which sections of the Income-tax Act were involved?

Section 194A,Section 201(1),Section 201(1A),Section 194(3)(v)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 7TH DAY OF DECEMBER, 2021

PRESENT

THE HON’BLE MRS.JUSTICE S.SUJATHA

AND

THE HON’BLE MR. JUSTICE HANCHATE SANJEEVKUMAR

I.T.A.No.107/2021

BETWEEN :

1 . COMMISSIONER OF INCOME TAX (TDS), PANAJI GOA.

2 . THE ASSISTANT COMMISSIONER OF INCOME TAX, TDS CIRCLE, HUBALLI-586501.

...APPELLANTS

(BY SRI JEEVAN J. NEERALGI, ADV.)

AND :

M/s DAVANAGERE URBAN CO-OP BANK LTD., HEAD OFFICE, P.B.ROAD, MOTHI CIRCLE, DAVANAGERE-577101 PAN: BLRT00443C

…RESPONDENT

(BY SRI JINITA CHATARJEE, ADV. FOR SRI S.PARTHASARATHY, ADV.)

THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 13.12.2019 PASSED IN ITA No.1815/BANG/2018, FOR THE ASSESSMENT YEAR 2012-2013 PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON’BLE COURT AS DEEMED FIT AND SET ASIDE THE

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APPELLATE ORDER DATED 13.12.2019 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH, BENGALURU, IN APPEAL PROCEEDINGS IN ITA No.1815/BANG/2018 (ANNEXURE-A) FOR ASSESSMENT YEAR 2012-2013 AS SOUGHT FOR IN THIS APPEAL.

THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:

J U D G M E N T

This appeal is filed by the Revenue under Section 260A of the Income Tax Act, 1961 (‘Act’ for short) challenging the order of the Income Tax Appellate Tribunal, Bangalore Bench “B”, Bengaluru, (‘Tribunal’ for short) dated 13.12.2019 passed in ITA No.1815/Bang/2018 relating to the Assessment Year 2012-13.

2.

The substantial questions of law raised by the Revenue are as follows; “1. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the assessee is not required to deduct TDS on interest payments made to its members by holding that same is

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not required in case of assessee even when section 194A contemplates such action on part of assessee?

2.

Whether on the facts and in the circumstances of the case, the Tribunal is right in confirming the order passed by first appellate authority setting aside the orders passed by assessing authority under section 201(1) and 201(1A) of the Act by holding that there is no obligation to deduction TDS on interest payments made by assessee to its members without verifying that whether interest payments made by respondent included payments to nominal members who are not members as held by the Hon’ble Apex Court in the case of The Citizens Co-operative Society Ltd v/s ACIT (reported in 397 ITR Page 1)?

3.

Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature as orders passed by assessing authority under section 201(1) and 201(1A) of the Act was in

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accordance with parameters of said section and it was rightly held that interest payments made to members does not qualify for exemption under section 194(3)(v) as it was doing the business of banking. Further it was rightly held that deductor was required to deduct tax as required under section 194A?”

3.

Learned counsel appearing for the assessee would submit that the issue involved herein is no more res integra in view of the Coordinate Bench ruling of this court in the case of Commissioner of Income-tax, (Appeals) v. Bijapur District Central, reported in

(2018) 93 taxmann.com 211(Karnataka), which has been affirmed by the Hon’ble Apex Court reported in Commissioner of Income-tax v. Bijapur District Central Co-operative Bank Ltd., reported in (2019) 101 taxmann.com 159 (SC). It is further submitted that the decision of the Tribunal in the Bagalkot District Central Cooperative Bank, relied upon by the

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Tribunal, has been confirmed by the Coordinate Bench of this Court in ITA No.100116/2014 (D.D. 16.12.2015).

4.

Learned counsel appearing for the Revenue could not dispute the same.

5.

Having considered the aforesaid submissions made by the learned counsel appearing for the parties and perusing the Coordinate Bench decision in Bijapur District Central and Bagalkot District Central Cooperative Bank, supra, the substantial questions of law raised herein require to be answered in favour of the assessee and against the Revenue and are answered accordingly.

Resultantly, the appeal stands dismissed.

SD/- JUDGE

SD/- JUDGE nd

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