THE COMMISSIONER OF INCOME TAX vs. M/S CHIKMANGALUR DISTRICT

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ITA/594/2015HC KarnatakaKAHC01044056201511 March 2016Bench: B.V.NAGARATHNA,JAYANT PATEL5 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal upheld the CIT(Appeals) order, stating that co-operative societies are not required to deduct tax at source on interest paid to members, relying on a previous ITAT decision. This decision was subsequently upheld by the High Court.

What were the facts?

The Revenue appealed against an ITAT order that upheld a CIT(Appeals) decision. The CIT(Appeals) had directed the assessing authority to restrict an addition only to the extent of interest paid to non-members.

What were the issues?

Whether a co-operative society is exempt from deducting tax at source on interest paid to its members under Section 194A(3)(v) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 194A

AI-generated summary — verify with the full judgment below

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 11TH DAY OF MARCH, 2016

PRESENT

THE HON'BLE MR. JUSTICE JAYANT PATEL

AND

THE HON’BLE MRS. JUSTICE B.V.NAGARATHNA

I.T.A. No.594/2015

BETWEEN:

1.

THE COMMISSIONER OF INCOME TAX, ATVARA, MYSORE.

2.

THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-(1), HASSAN.

... APPELLANTS

(BY SRI: E.I. SANMATHI, ADVOCATE)

AND:

M/S. CHIKMANGALUR DISTRICT CO-OPERATIVE CENTRAL BANK LTD., RATNAGIRI ROAD, CHIKMANGALUR, PAN: AAATC4078J.

... RESPONDENT

*****

THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:29/05/2015 PASSED IN ITA NO.88/BANG/2015, FOR THE ASSESSMENT YEAR 2007-2008 AND ETC.,

THIS APPEAL COMING ON FOR ADMISSION THIS DAY, JAYANT PATEL J., DELIVERED THE FOLLOWING:-

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J U D G M E N T

The revenue has preferred the present appeal by raising the following substantial question of law: i) “Whether, on the facts and in circumstances of the case, the Tribunal was right in law in dismissing the Revenue’s appeal by upholding the order of CIT directing the assessing authority to restrict the addition only to the extent of interest paid to non-members, by relying upon the interpretation that such co- operative societies need not deduct tax under section 194A by virtue of exemption granted vide clause (v) of sub-section (3) of said section of the Act?”

2.

We have heard Mr.E.I.Sanmathi, learned counsel appearing for the appellants.

3.

It appears that the Tribunal, in the impugned order in ITA.No.88/Bang/2015 passed on 29/5/2015, while considering the aforesaid aspects, has observed thus in paragraph Nos.5 to 7:

“5. On appeal by the assessee, the CIT (Appeals), following the decision of the Hon’ble ITAT Bangalore Bench in the case of Bagalkot District Central Co-operative Bank Ltd., v. Jt.

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CIT, ITA.No.1572/Bang/2013 dated 30.5.2014 wherein it has been held that the assessee which is a co-operative society carrying on banking business, when it pays interest income to a member both on time deposits and on deposits other than time deposits, with such co-operative society, need not deduct tax at source u/s.194A by virtue of exemption granted vide clause (v) of sub-section (3) of the said section, allowed the claim of the assessee. Aggrieved by the order of CIT (Appeals), the Revenue has preferred the present appeal before the Tribunal.

6.

At the time of hearing of the appeal, the ld. DR submitted that the decision rendered by the ITAT Bangalore Bench in the case of Bagalkot District Central Co-operative Bank Ltd., (supra) has not been accepted by the Revenue and further appeal has been preferred.

7.

We have considered the submissions of the ld. DR and are of the view that the same is without any merit. Pendency of an appeal by the Revenue before higher forum cannot be the basis not to follow the decision rendered by this Tribunal. In the light of the aforesaid decision, we are of the view that the CIT

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(Appeals) rightly deleted the disallowance made by the AO. The order of CIT (Appeals) is accordingly upheld and the appeal by the Revenue is dismissed.”

The aforesaid shows that Tribunal has relied upon its earlier decision in the case of Bagalkot District Central Co-operative Bank Ltd., v. Jt. CIT, ITA.No.1572/Bang/2013 dated 30.5.2014. Learned counsel appearing for the appellants/Revenue fairly concedes that the aforesaid decision of the Tribunal in the case of Bagalkot District Central Co-operative Bank Ltd., (supra) was carried in appeal before this Court in ITA.No.100116/2014 and this Court vide order dated 16/12/2015, based on Circular No.19/2015 in F.No.142/14/2015-TPL of the Ministry of Finance, Government of India, has dismissed the appeal.

4.

In view of the aforesaid aspects, when the decision in the case of Bagalkot District Central Co- operative Bank Ltd., (supra) has been relied upon by the Tribunal while passing the impugned order and such decision has not been interfered by this Court, we do not

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find that any substantial question of law would arise for consideration as canvassed. Hence, the appeal deserves to be dismissed.

5.

Hence, the present appeal is dismissed.

Sd/- JUDGE

Sd/-

JUDGE S*

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