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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SMT. ASHA VIJAYARAGHAVAN & SHRI ABRAHAM P. GEORGE
Per Bench
These appeals are filed by the Revenue against the separate orders dated 25.02.2015 of the CIT(Appeals)-13, Bangalore passed u/s. 201(1) and 201(1A) of the Income-tax Act, 1961 [“the Act”] in respect of different branches of the Sree Subramanyeshwara Co-op. Bank Ltd.
The assessee is a co-operative society engaged in the business of banking. The AO noticed that the assessee had not deducted tax from interest paid to members on time deposits even though interest paid during the financial year exceeded Rs. 10,000/-. The AO held that the assessee was required to deduct tax on interest payment exceeding Rs. 10,000/-. The AO further held that the assessee was required to deduct tax u/s 194A(1) from interests paid to all depositors irrespective of their membership status. Since the assessee failed to make any deduction u/s 194A(1) in respect of its members, the AO held that provisions of section 201(1) was attracted which provided for treating the assessee as an “assessee in default”. Thereafter based on information available on record, an order u/s 201(1) and 201(1A) was passed since assessee did not avail opportunity of being heard.
On appeal by the assessee, the CIT(Appeals) held as follows:-
“It is seen that a similar matter on identical issues was decided by the Hon’ ITAT Bangalore Bench in Asstt. Year 2009-10 n the case of The Bagalkot District Central Co-operative Bank wherein the Hon’ Bench held that an 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 the exemption granted vide clause (v) of sub section 3 of the said section. Since the case of the appellant is covered by the decision of jurisdictional ITAT and judicial discipline requires that decision of higher judicial authorities prevail, the AO is directed not to hold the appellant as an “assessee in default” u/s 201(1) for failure to deduct tax at source on interest income paid to member depositors of the appellant bank. Hence the tax demand is deleted.”
Aggrieved by the order of the CIT(Appeals), the Revenue is in appeals before the Tribunal on the following common grounds of appeal:-
“1. The ld.CIT(A) has erred in relying on the decision of Hon. ITAT, Bangalore Bench in the case of The Bagalkot District Central Co-op. Bank Vs. JCIT in which is erroneous and against the law.
2. The Ld.CIT(A) ought to have considered the orders of the Hon’ble ITAT, Pune (857 lTD 569) and Hon.ITAT, Panaji Bench order in the case of Bailhongal Urban Co-operative Bank dtd.28.08.2013, which have been decided in favour of the Department.
3. The Ld. CIT(A) erred in relying on the decision of the Hon. ITAT, Bangalore which held that the provisions of sec.194A(3)(v) are applicable to the deposits made with the assessee, the assessee being a co-operative Bank. 4. The Ld.CIT(A) has erred in relying on the decision of the Hon. ITAT, Bangalore which had failed to appreciate the fact that the clause 194A(3)(viia) is a specific provision which has overriding effect on the general provisions of clause 194A(3)(v). 5. The Ld.CIT(A) has erred in relying on the decision of the Hon. ITAT, Bangalore which failed to appreciate that the clause 194A(3)(v) is a general clause applicable to Co-operative Societies in general, it is a normal principle of interpretation of law that in the presence of a specific provision the general provision will not apply. For these and other grounds that may be raised during the course of appeal and actual hearing, the appellant prays that the order of learned Commissioner of Income Tax (Appeals) may be set aside and cancelled.”
We find that the ld. CIT(Appeals) has followed the decision of the coordinate Bench of this Tribunal in the case of Bagalkot District Central Co-operative Bank in for the A.Y. 2009-10 and has directed the AO not hold the assessee as an “assessee in default” u/s. 201(1) and 201(1A) for failure to deduct tax at source on interest income paid to member depositors of the assessee bank and deleting the tax demand.
We have heard both the parties. We are in conformity with the order of the CIT(Appeals) who has followed the decision of the coordinate Bench of the Tribunal in the case of Bagalkot District Central Co-operative Bank (supra). The grounds raised by the department merely stating that the decision of ITAT Pune Bench in 857 ITD 569 and ITAT Panaji Bench in the case of Bailhongal Urban Cooperative Bank by order dated 28.08.2013 are decided in favour of the department and therefore the matter has not reached finality; cannot be an argument by the department to decide the issue against the assessee. We therefore, respectfully following the order of the coordinate Bench of this Tribunal cited supra, dismiss all the appeals filed by the Revenue.
In the result, all the appeals by the Revenue are dismissed.
Pronounced in the open court on this 16th day of October, 2015.