Income Tax Appellate Tribunal - Panji
The Tenali Co-Op Urban Bank Limited., ... vs The Ito (Tds),, Guntur on 8 November, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
VISAKHAPATNAM "SMC" BENCH, VISAKHAPATNAM
BEFORE SHRI V. DURGA RAO, HON'BLE JUDICIAL MEMBER
ITA Nos. 476 to 478/VIZ/2016
(Asst. Year : 2009-10, 2010-11 & 2012-13)
The Tenali Co-operative Urban vs. ITO (TDS), Ward-3(3),
Bank Ltd., T.B. Road, Kothapet, Guntur.
Tenali, Guntur District.
PAN No. AAAJT 1941 M
(Appellant) (Respondent)
Assessee by : Shri G.V.N. Hari - Advocate.
Department By : Shri V. Appala Raju - Sr.DR
Date of hearing : 30/10/2017.
Date of pronouncement : 08/11/2017.
ORDER
PER V. DURGA RAO, JUDICIAL MEMBER
These are the appeals filed by the assessee against the separate orders of Commissioner of Income Tax (Appeals)-2, Guntur, all dated 16/03/2016 for the Assessment Years 2009-10, 2010-11 & 2012-13.
2. There is a delay of 200 days in filing these appeals. The assessee has filed the affidavits wherein he explained the reasons for delay in filing the appeals. For the sake of convenience, the reasons for delay stated in the affidavits are as under:-
"2. The appellant is a co-operative society engaged in the business of banking. A survey u/s 133A was conducted to verify the compliance of TDS provisions on interest payments made on the deposits held by the appellant bank. The appellant submitted that it had no obligation to deduct TDS as its case comes under 2 ITA No. 476-478/VIZ/2016 (The Tenali Co-op Urban Bank Ltd.) the exemption provided under clause (v) of sub sec 3 of S. 194A. The appellant contended that as per the decisions of Hon'ble Courts and Tribunals it is a settled law that the interest payments on deposits made by members is not liable for TDS in terms of S. 194A(3)(v) and that even in the case of non-members, wherever the interest payments exceeded ₹ 10,000/- the appellant had filed Form 15G/15H received by them.
3. However, the assessing officer relied on the decision of Panaji Bench of Hon'ble 1TAT in the case of Bhagani Nivedita Sahakari Bank Ltd. and dismissed the above contentions of the appellant stating that the exemption in S.194A(3)(v) applies only to co-operative society and not to co-operative bank.
4. In the appeal, the learned Commissioner of Income Tax (Appeals) was pleased to hold that the appellant is not liable for deducting tax at source on the interest payments made on the deposits to members. The appellant was directed by this order to submit the details of the deposits collected from the members and die interest payments credited into their accounts to enable the assessing officer to give effect to his order.
5. Whether the learned Commissioner of Income Tax (Appeals) failed to adjudicate the TDS liability in case of interest payments made to non-members or whether he wants to limit the exemption only to members of the appellant bank is not clear from the order passed by him in as much as the ground relating to the aspect of the TDS liability on interest payments to non members was left un-adjudicated,
6. The assessing officer passed the consequential order on 24.10.2016 wherein he granted the benefit of exemption from TDS u/s 194A(3)(v) on interest payments made to members only. Thus, he determined the demand payable at Rs 94,590/-on the balance interest payments. Such orders were passed for A.Y. 2009-10 to A.Y. 2012-13.
7. On receipt of these orders only, the petitioner noticed that the learned Commissioner of Income Tax (Appeals) did not adjudicate the issue of exemption from TDS on the interest payments made to non members.
8. As soon as the appellant came to know this deficiency in the learned Commissioner of Income Tax (Appeals) order, the appellant immediately took steps to file the appeal before the Hon'ble IT AT, Visakhaptnam and the appeal could be filed on 01/12/2016 with a delay of 200 days.
9. The appellant is a cooperative society carrying on the business with the funds of public. The above delay of 200 days in filing the appeal was due to reasons explained above which are beyond the control of the appellant. Therefore, it is humbly prayed before the Hon'ble ITAT, Visakhapatnam to kindly condone 3 ITA No. 476-478/VIZ/2016 (The Tenali Co-op Urban Bank Ltd.) the delay in filing the appeal and pass appropriate orders in furtherance of substantial justice."
3. From the above, it is clear that the assessee came to know that the ld. CIT(A) not considered the issue of TDS in respect of non-members, when Assessing Officer passed a consequential order dated 24/10/2016, these appeals are filed on 01/12/2016. Therefore, I find that there is a sufficient cause to condone the delay, though learned Departmental Representative objected for condonation of delay. Accordingly, I condone the delay.
ITA No. 476/VIZ/2016
4. So far as merits of the case is concerned, the only issue involved in this appeal is in respect of deduction of TDS on interest payments made by the assessee to the members as well as non-members. It is submitted before the ld. CIT(A) that the issue involved in this appeal is squarely covered by the decision the then ld. CIT(A) in assessee's own case for the Assessment Year 2011-12 by order dated 28/02/2014. The ld. CIT(A) by following the same passed the order which is reproduced as under:-
"I have considered the facts of the case carefully as well as the submissions and comments of the Assessing Officer on the written submissions filed by the appellant Firstly, to have a dear picture of the provisions, clause (v) of Section 194A(3)reads as under:
"The provisions of sub section (1) shall not apply - ..........(v) to such income credited or paid by a co-operative society to a member thereof or to any other cooperative society"
From a look at the above, it is understood that the provisions are laid down for the sake of the Co-operative societies. In the present case, the appellant is a co-operative society registered 4 ITA No. 476-478/VIZ/2016 (The Tenali Co-op Urban Bank Ltd.) under the Co-operative Societies Act, 1964 and hence the provisions are aptly applicable to the case of the appellant. I hold that the case law cited by the Assessing Officer is not applicable to the case of the appellant. On the other hand, I place my reliance on the decision in the case of Visakhapatnam Co-operative Bank Limited, Visakhapatnam vide order No. ITA No.5/Vizag/2011, dated 29-08-2011, wherein the Hon'ble ITAT, Visakhapatnam held as under:
",............It can be seen that neither Sec.2(19) nor Sec.l94A(3) makes any discrimination between the cooperative societies carrying on banking business and other co-operative Societies. However, as per Sec. 194(3), the said exemption is available only to the interest payments made to its members or to any other co-operative society. In the instant case, it is the claim of the assessee that all the interest payments have been made only to its members. In that case, the assessee is squarely covered by the exemption provided under section 194(3)(v) of the Act. Accordingly we find no reason with the decision of learned CTTA) on this issue."
Respectfully following the decision as outlined above, I hold that the interest payment made to members of the Co-operative Society is exempt from tax under Clause v of sub section 3 of section 194A of the Act. In other words, the appellant is entitled to the benefit of exemption from the obligation to deduct tax at source in terms of Section 194A(3)(v) of the Act Accordingly, the levy of interest u/s 201(1)/201(1A) of the Act amounting to Rs.10,31,961/- is not tenable."
5. On appeal before the tribunal, learned counsel for the assessee has submitted that though the ld. CIT(A) has followed his own order for the Assessment Year 2011-12, only considered part of the order i.e. deduction in respect of members. The ld. CIT(A) failed to adjudicate deduction in respect of non-members though Form No. 15G/15H were submitted and prayed that the issue may be remitted back to the file of the ld. CIT(A) to adjudicate the issue afresh. 5 ITA No. 476-478/VIZ/2016
(The Tenali Co-op Urban Bank Ltd.)
6. On the other hand, learned Departmental Representative has not raised any serious objection.
7. I have heard both the sides, perused the material available on record and orders of the authorities below.
8. I find that the ld. CIT(A) has adjudicated only in respect of non- deduction of TDS paid to the members and failed to adjudicate interest on TDS paid to the non-members. Therefore, I remit the matter back to the file of the ld. CIT(A) to adjudicate the limited issue afresh according to law. Thus, this appeal filed by the assessee is allowed for statistical purpose.
ITA Nos. 477 & 478/VIZ/2016
9. The facts involved in these appeals are similar to the facts of ITA No. 476/VIZ/2016. Therefore, the decision in ITA No. 476/VIZ/2016 shall apply mutatis mutandis to these appeals also.
10. In the result, appeals filed by the assessee are allowed for statistical purpose.
Order Pronounced in the open Court on this 08th day of Nov., 2017.
Sd/-
(V. DURGA RAO) Judicial Member Dated : 08 t h November, 2017.
vr/-
6 ITA No. 476-478/VIZ/2016
(The Tenali Co-op Urban Bank Ltd.) Copy to:
1. The Assessee - The Tenali Co-operative Urban Bank Ltd., T.B. Road, Kothapet, Tenali, Guntur District.
2. The Revenue - ITO (TDS), Ward -3(3), Guntur.
3. The CIT (TDS), Vijayawada.
4. The CIT(A)-2, Guntur.
5. The D.R., Visakhapatnam.
6. Guard file.
By order (VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.