TaxTMI 
TaxTMI 
2019 (3) TMI 565
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting that TDS was not deductible u/s.194A. 2. The learned Commissioner of Income Tax (Appeal ) er red in disal lowing Rs. 1,15,21,357/- uls.40(a)( ia) without appreciating that the said amount was already paid during the year and therefore the Provision of Section 40(a) ( ia) was not applicable. The Appel lant craves the leave to add, amend, al ter and/or delete any of the above grounds of appeal at/or before the time of hearing." 2. Briefly stated, the assessee which is a Co-operative Bank had filed its return of income for A.Y 2012-13 on 30.06.2013, declaring total income at Rs. 30,07,594/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the IT Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2). 3. During the course of the assessment proceedings it was observed by the A.O that the assessee had debited an amount of Rs. 2,40,06,149/- in its Profit and loss account on account of interest paid on time deposits. As the assessee had failed to deduct tax at source on the interest payments exceeding Rs. 10,000/-, therefore, the A.O called upon it to explain as to why the same may not be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rce under Sec.194A in respect of interest amount of Rs. 1,15,21,357/- on time deposits, therefore, the same was rightly disallowed by the A.O. 5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short 'A.R') for the assessee submitted that the lower authorities had erred in concluding that the assessee had defaulted by failing to deduct tax at source under Sec.194A of the IT Act. In order to buttress his aforesaid contention, it was submitted by the ld. A.R that as per the pre-amended clause (v) of Sec.194A(3) it was not obligatory for a co-operative society to deduct tax at source on interest that was paid or credited on the time deposits of its members. The ld. A.R submitted that it was only by way of an amendment that was made available on the statute vide the Finance Act, 2015 w.e.f 01.06.2015, that the exemption that was earlier available to a co-operative bank in respect of deduction of tax at source on the interest paid or credited on the time deposits of its members was withdrawn. The ld. A.R submitted that as the case of the assessee pertained to A.Y. 2012-13, therefore, as per t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Rs. 10,000/- on time deposits, however, it was nowhere so held that the co-operative society was liable for deduction of tax at source on the interest paid to its members prior to 01.06.2015. In sum and substance, it was the contention of the ld. A.R that as per the exception carved out in clause (v) of Sec. 194A(3) of the IT Act (as was available on the statute prior to its amendment vide the Finance Act, 2015, w.e.f 01.06.2015), it was specifically provided that no tax was required to be deducted at source on the interest paid by a co-operative bank to a member thereof. It was thus the contention of the ld. A.R that as per the law as was then so available on the statute, as no obligation was cast upon the assessee co-operative bank to deduct tax at source on the interest payment of Rs. 1,15,21,357/- that was paid to its members, therefore, the lower authorities had erred in disallowing the said amount under Sec.40(a)(ia) of the IT Act. 6. Per contra, the ld. Departmental Representative (for short 'D.R') submitted that as the assessee which remained under a statutory obligation to have deducted tax at source on interest in excess of Rs. 10,000/- on the time deposits held by it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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." (Emphasis supplied) On a perusal of the aforesaid extract of the CBDT Circular No. 19/2015, dated 27.11.2015, it can safely or rather inescapably be gathered that a cooperative bank was not required to deduct tax at source on the interest that was paid or credited before 1st June, 2015 on the time deposits of its members. In fact, we find that the aforesaid CBDT Circular No. 19/2015 had been deliberated upon by the Hon'ble High Court of Karnataka in certain cases viz. (i) CIT Vs. Vs. Bijapur District Central (2018) 93 taxmann.com 211 (Kar); (ii) CIT Vs. Basaveshwara Shahakari Bank (2016) 74 taxmann.com 21 (Kar); and (iii) CIT, Belgaum Vs. Shri Siddeshwar Cooperative Bank Ltd. (2016) 71 taxmann.com 126 (Kar). In the aforesaid judgmen....