2015 (7) TMI 719 - AT - Income Tax

ITAT allows assessee's appeals, directs deletion of additions under sec. 201(1) & 201(1A)

The ITAT allowed all appeals filed by the assessee, setting aside the findings of the CIT(A) and directing the deletion of the impugned additions made ... Denial of exemption from sec. 194A in respect of payments of interest to Members - assessee is a cooperative bank engaged in the business of banking - Held that:- Considering all the facts in totality in the light of the memorandum explaining the provisions in the Finance Bill 2015 and the clarification by the Board that the Circular has not been withdrawn, makes it ample clear that the impugned provisions relating to the liability of TDS would come with effect from 01/06/2015, we, therefore, set aside the findings of the Ld. CIT(A) and direct the Assessing Officer to delete the impugned additions made in the order u/s. 201(1) & 201(1A) of the Act. - Decided in favour of assessee. Issues:Late filing of appeals by the assessee against CIT(A) orders for A.Ys. 2010-11 to 2013-14. Denial of exemption from sec. 194A for interest payments to Members by the CIT(A). Interpretation of sec. 194A provisions for cooperative banks. Validity of Circular No. 9 of 2002 by CBDT. Applicability of TDS provisions on interest payments by cooperative banks to members.Late Filing of Appeals:The appeals by the assessee were late by 25 days, but the assessee filed an affidavit stating the cause for the delay, which was accepted by the ITAT. The delay was condoned for all the years under consideration.Denial of Exemption from sec. 194A:The grievance of the assessee was that the CIT(A) erred in denying the exemption from sec. 194A for payments of interest to Members. The Assessing Officer found defaults by the assessee for not deducting tax at source on interest payments exceeding Rs. 10,000. The CIT(A) confirmed the order of the Assessing Officer under sec. 201(1) & 201(1A) of the Act.Interpretation of sec. 194A Provisions:The issue revolved around whether cooperative banks could avail the general exemption from tax deduction provided to all cooperative societies for interest payments to members. The Finance Bill 2015 clarified the provisions, emphasizing that cooperative banks were required to deduct tax on interest payments exceeding Rs. 10,000. The ITAT analyzed relevant case laws and circulars to make a decision.Validity of Circular No. 9 of 2002:The circular issued by the CBDT in 2002 was a point of contention, with the assessee and the Revenue presenting contrasting views on its applicability. The ITAT examined the withdrawal of the circular and its implications on the case at hand, considering the Bombay High Court's decision regarding the circular's validity.Applicability of TDS Provisions:The ITAT considered the applicability of TDS provisions on interest payments by cooperative banks to members. Referring to the Finance Bill 2015 and the clarification by the CBDT, the ITAT concluded that the impugned provisions were not applicable during the years under appeal and directed the Assessing Officer to delete the additions made under sec. 201(1) & 201(1A) of the Act.In conclusion, the ITAT allowed all appeals filed by the assessee, setting aside the findings of the CIT(A) and directing the deletion of the impugned additions made under sec. 201(1) & 201(1A) of the Act. The judgment highlighted the importance of understanding the specific provisions of sec. 194A for cooperative banks and the significance of circulars issued by the CBDT in interpreting tax deduction requirements for interest payments to members.