The Pr. Commissioner of Income Tax-6 vs. Mrs. Urmila Singh

: 1 : IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH ON THE 5TH DAY OF OCTOBER, 2016 PRESENT THE HON’BLE MR.JUSTICE RAVI MALIMATH A N D THE HON’BLE MR. JUSTICE P.S.DINESH KUMAR I.T.A. NO. 661/2015 & I.T.A. NO. 194/2016 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX TDS, GROUND FLOOR, PUNDALIK NIWAS, RUA – DEFENDANT – OUREM, PANAJI – GOA – 403001. 2. THE INCOME TAX OFFICER (TDS) TDS WARD, C R BUILDING ANNEXE, P.B. ROAD, NAVANAGAR, HUBLI 580025. ... APPELLANTS (BY SRI Y.V.RAVIRAJ, ADVOCATE) AND : M/S. THE RADDI SAHAKARA BANK NIYAMITHA HEAD OFFICE BANK ROAD, DHARWAD – 580 001. PAN : AAAAT 3297K. ... RESPONDENT (BY SRI S. PARTHASARATHI & H.R. KAMBIYAVAR, ADVS.)

: 2 : THESE INCOME TAX APPEALS ARE FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961, PRAYING TO SET ASIDE THE ORDERS DATED 10.07.2015, PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE, IN I.T.A. NO.368/BANG/2015 & SP NO.51/BANG/2015, CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE INCOME TAX OFFICER (TDS), HUBLI. THESE APPEALS COMING ON FOR ADMISSION, THIS DAY, RAVI MALIMATH J., DELIVERED THE FOLLOWING: JUDGMENT Revenue, with a question of law as to whether Tribunal was correct in holding that a Co-operative Bank was not required to deduct tax on the interest paid to the members on the ground that they were exempt under Section 194A(3)(v) of the Income Tax Act, 1961 (for brevity, ‘the Act’) has presented these appeals. A Division Bench of this Court in I.T.A. No.100180/2015 vide its judgment dated 17.08.2016 by placing reliance on the circular bearing No.19/2015 in F. No.142/14/2015 TPL issued by the Ministry of Finance, Government of India, has held that the Co-operative Bank was not required to deduct tax from the payment of interest on Time Deposits

: 3 : of its members paid or credited on or before 01.06.2015. The relevant portion of the circular reads as follows : “42.5 In view of this, the provisions of the section 194(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 : 2. The grievance of the revenue is with regard to a finding recorded by the Tribunal that the Co-operative Banks were never required to deduct tax on the interest paid. The said issue is no more res integra and settled in the aforementioned judgment dated 17.8.2016 in ITA No.100180/2015. Therefore, these appeals fail and are accordingly dismissed. No costs. Sd/- JUDGE Sd/- JUDGE hnm