THE PRINCIPAL COMMISSIONER OF INCOME TAX vs. BELGAUM DISTRICT CENTRAL CO-OP BANK LTD.

IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 16TH DAY OF DECEMBER, 2015 PRESENT THE HON’BLE MR.JUSTICE S. ABDUL NAZEER AND THE HON’BLE MR.JUSTICE P.S.DINESH KUMAR ITA No.100164 OF 2015 BETWEEN: 1 THE PRINCIPAL COMMISSIONER OF INCOME TAX, DR. B.R.AMBEDKAR ROAD, BELGAUM. 2 ITO, TDS WARD, BELGAUM. … APPELLANTS (BY SRI Y.V.RAVIRAJ, ADV.) AND BELGAUM DISTRICT CENTRAL CO-OP BANK LTD., NEAR CENTRAL BUS STAND BELGAUM. PAN:AAAAB0839M. … RESPONDENT (BY SRI ASHOK KULKARNI AND H.R.KAMBIYAVAR, ADVS.)

2 THIS ITA IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 TO SET ASIDE THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH PANAJI, IN ITA NO.312/PNJ/2014, DTD:16.06.2015 FOR THE ASSESSMENT YEAR 2013-14 AND ETC. THIS ITA COMING ON FOR ORDERS THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT In this appeal by the Revenue, the issue 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

3 members paid or credited on or before 1.7.2015. 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 194A(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 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 cooperative 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.”

4 3. In view of the aforesaid circular, this appeal does not survive for consideration and is accordingly dismissed. No costs. Sd/- JUDGE. Sd/- JUDGE. KLY/