TaxTMI 
TaxTMI 
2015 (8) TMI 169
X X X X Extracts X X X X
X X X X Extracts X X X X
....per provisions of section 194A(3)(i)(b) of the LT. Act which in fact did not apply to the facts of Appellant's case. The Id. CIT(A) is wrong in confirming the order passed by the Ld. ITO (TDS). 3. That the following demand created by the Ld. ITO (TDS) and confirmed by the Ld. CIT(A) against the Appellant is arbitrary, unjust and illegal: a) Rs.36,44,493 on account of alleged short deduction u/s 201 b) Rs.12,57,347 on account of interest on alleged short deduction u/s 201 (1A) Total Rs.49,01,840 Various observations made by the authorities below in their respective orders are either incorrect or are untenable. Written submissions and the case laws relied upon by the Appellant had been completely ignored by not taking them into consideration while deciding the issue. 4. That without prejudice to Ground No. 1 to 3 above, the demand as created by the AO is very excessive. 5. That the Appellant reserves its right to add, amend/modify the grounds of appeal." 3. The grounds of appeal for assessment year 2013-14 are as follows :- "1. That the Appellant was not liable to make TDS on the interest payments made to its members on the deposits made by them in view of pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ordingly had not been deducting the tax at source on interest payment to its members. On 24.02.2014, the ITO (TDS) has passed the order under section 201 of the Act holding that assessee was required to deduct the tax at source relying on the ITAT Panaji (Goa) Bench decision in the case of Bailhongal Urban Cooperative Bank Ltd. V. JCIT and created a demand of Rs. 49,01,840/- as under :- Short Deduction u/s 201 Rs.41,27,401/- Intt. u/s 201 (1A) Rs. 6,81,049/- TOTAL Rs.48,08,420/- 7. Aggrieved, the assessee preferred an appeal before the ld. CIT (A) wherein reliance was placed on CBDT Circular and various case laws. However, the Ld. CIT (A) confirmed the order passed by the ITO (TDS). Aggrieved by the said decision of ld. CIT (A), the assessee is before us. 8. The ld. AR, Shri O.P. Sapra took our attention to the relevant provisions of section 194A of the Act with regard to co-operative societies which are reproduced below:- "194A (3) The provisions of sub-section (1) shall not apply- [(i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase, ITO (TDS) has passed an order u/s 201/201(1A) relying upon the ITAT Panaji (Goa) Bench decision in ITA No. 85/PNJ/2013 dated 28/08/2013 the case of Bailhongal Urban Cooperative Bank Ltd. V. JCIT which distinguished the cooperative bank and cooperative society and also held that Cooperative Bank was liable to deduct the tax at source on interest payments made on deposits by members. According to the ld. AR, the above decision of Panaji ITAT being not of jurisdictional ITAT was not binding on the authorities below. He submitted that in Assessee's case, contrary to the above judgment, there are various other judgments which are in favour of assessee and the same are reproduced below:- (i) In the case of Assistant Commissioner of Income-tax, Circle 1 (1), Visakhapatnam v. Visakhapatnam Cooperative Bank Ltd. reported in [2011] 13 taxmann.com 190 (Visakhapatnam) (copy placed at pages 55-68 of paper book in which it has been held that "Section 194A(3) prescribes the monetary limits and also a list of payments which are exempt from the requirement of complying with the provisions of TDS prescribed under sub-section (1) of that section. Section 194A(3)(v) provides blanket exemptio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) (copy placed at pages 110- 121 of paper book) Hon'ble Bangalore Bench of ITAT has held that :- "18. It can be seen from para-2 of the Circular referred to above that the CBDT has very clearly laid down that Cooperative societies carrying on banking business when it pays interest on deposits by its members need not deduct tax at source. The above interpretation of the provisions by the CBDT, which is in favour of the assessee, in our view is binding on the tax authorities. 19. In the case decided by ITAT Panaji Bench in ITA No.85/PN/2013 for AY 09-10 in the case of the Bailhongal Urban Co-op Bank Ltd. (supra) order dated 28.8.2013, the tribunal proceeded on the footing that the aforesaid circular has been quashed by the Hon'ble Bombay High Court in the case of the Jalgaon District Central Co-operative Bank Ltd. (supra) and therefore chose to follow the decision rendered by Pune ITAT SMC in the case of Bhagani Nivedita Sahakari Bank Ltd. (supra). In our view the Hon'ble Bombay High Court in the case of Jalgaon District Central Co-operative Bank Ltd.'s case (supra) was dealing with a case of challenge to para-3 of CBDT Circular NO.9 dated 11.9.2002 which tried to i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....econd Para CBDT has categorically clarified as follows:- " The Board has considered the matter and it is clarified that a member of a co-operative bank shall receive interest on both time deposits and deposits other than time deposits with such co-operative bank without TDS under section 194A by virtue of the exemption granted vide clause (v) of sub-section (3) of the said section" . The ld. AR took our attention to the Finance Bill 2015 and contended that the above amendment is effective from 1.6.2015 and from 1.6.2015 cooperative Bank shall be liable to deduct the tax at source on interest paid to its members, meaning thereby that earlier Cooperative banks were not liable to deduct the tax at source on interest paid to its members by virtue of section 194A(3)(v) of the Act. He submitted that it has to be noted that the above amendment is prospective and not made retrospective. The ld. AR contended that as mentioned in para 1 at page 1 of the Synopsis, since last 18 years, assessee is doing banking business and it had not been making any TDS on the interest paid/payable to its members keeping in view section 194A(3)(v) of the I.T. Act. According to him, never in the past, the Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....)(v) : Exemption of interest paid by a Co-Operative Society to its members irrespective of the nature of deposit is or amount" "Section 194A(3)(viia) (a): Exemption of interest paid by persons namely. Primary Agriculture credit society . Primary credit society Co- Operative Land Mortgage Bank or a co-operative Land Development bank to members or non-members without any monetary limit." "Section 194A (3) (viia) (b) : Exemption of interest paid by persons namely, Co-Operative society engaged in banking business irrespective of membership of amount only to non-time deposits." A plain reading of the provisions of Section 194A(3)(i)(b) above clearly indicates that exemption for interest paid by co-operative society engaged in banking business is exempt from deduction of tax at source up to an amount of Rs. 10,000/-. Therefore, exemption for interest is up to Rs. 10,000/-. Thus we can see a threshold limit of Rs. 10,000/- has been prescribed by the said provision, meaning any interest disbursal above Rs. 10,000/- attracts TDS. The ld. AR's contention that since section 194A(3)(v) exempt any interest paid by co-operative society to its members irrespective of nature of deposit or amoun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....binding on the court [Young Vs. Bristol Aeroplance Co. Ltd. (194) K.B. at 729 (C.A.)]. The rule apparently applies even though the earlier court knew of the statute in question, if it did not refer to, and had not present to its mind, the precise terms of the statute. Similarly, a court may know of the existence of a statute and yet not appreciate its relevance to the matter in hand; such a mistake is again such incuria, as to vitiate the decision. Even a lower court can impugn a precedent on such grounds. (Salmond on Jurisprudence 12th Edition pages 151 and 152) C.K. Allen, in 'Law in the Making' (page 246) analyses the concept of per incuriam as under: "Incuria means literally 'carelessness', which apparently is considered less uncomplimentary than ignorantia; but in practice per incuriam appears to mean per ignorantiam. It would almost seem that ignorantia juris neminem excusat-except a court of law, ignorance of what? The example given in the actual rules in Young's case [Young Vs. Bristol Aeroplane Co. Ltd. (194) K.B. at 729 (C.A.)] is ignorance of a statute, or of a rule having statutory effect [such as a Rule of the Supreme Court [Lancaster Motor Co. Ltd. Vs. Bremith Ltd. (....