2018 (7) TMI 229

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.... Karnataka State Co-operative Societies Act, 1959 and had also obtained license from the RBI for carrying on banking operations. The assessee filed return of income for the impugned year declaring total income of Rs. 46,78,250/-. The assessee's case was selected for scrutiny. In an assessment u/s.143(3), the AO determined the total income at Rs. 1,58,57,200/-. The AO noticed that the assessee had paid an interest of Rs. 1,09,16,354/- to its members where the individual payment to members exceeded Rs. 10,000/- per annum. As the assessee had not deducted the TDS on the assumption that the assessee was not dedubtible. The AO has disallowed an amount of Rs. 1,09,16,354/- u/s.40(a)(ia) of the Act as the tax was not deducted at source, u/s.194A o....

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....oop. Bank (supra) and it was the case of the AO that the Revenue is in appeal before the Hon'ble jurisdictional High Court on the said matter. However, we notice that the appeal of the Revenue in the matter of The Bagalkot District Central Co-op. Bank (supra) was decided by the Division Bench vide its judgment dt.16.12.2015, which was aptly mentioned by the jurisdictional High Court in the matter of Sri Basaveswara Sahakari Bank Ltd (supra) in para 5, to the following effect : 5. The first question is answered at para 2 as follows:- "2. .................. The point is squarely covered by a Division Bench judgment of this Court in ITA No. 100116/2014 between the Commissioner of Income Tax and another v. The Bagalkot District Cent....

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.... Income Tax and another v. The Ilkal Co-Operative Bank Ltd., The Co ordinate Bench in the said case has held as below: "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 members paid or credited on or before 1.6.2015. 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 Inco....