BELGAUM DIST.CENTRAL CO-OP BANK LTD. vs. THE ASSISTANT COMMISSIONER

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.100009 OF 2015 BETWEEN: BELGAUM DIST. CENTRAL CO-OPERATIVE BANK LTD., OLD P.B. ROAD, NEAR CENTRAL BUS STAND, BELGAUM. .. APPELLANT (BY SRI ASHOK KULKARNI AND SRI H.R.KAMBIYAVAR, ADV.) AND 1 THE ASSISTANT COMMISSIONER OF INCOME TAX, RANGE-2, BELGAUM. 2 THE COMMISSIONER OF INCOME TAX (A), BELAGAVI. … RESPONDENTS (BY SRI Y.V.RAVIRAJ, ADV.)

2 THIS ITA IS FILED U/S.EC.260A OF THE INCOME-TAX ACT, 1961 AGAINST ORDER PASSED IN ITA.NO.378/PNJ/2013 DATED 14.11.2014 ON THE FILE OF THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, PANAJI, DISMISSING THE APPEAL FILED BY THE ASSESSE AND REVENUE. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO DISMISSED AGAINST THE ORDER DATED:05.09.2013, PASSED IN ITA.NO.329/BGM/2012-13, ON THE FILE OF THE COMMISSIONER OF INCOME TAX(APPEALS), BELGAUM, PARTLY ALLOWING THE APPEAL FILED BY THE APPELLANT. 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/