Amendment under Finance Act 2015 with regards to TDS on Interest Paid by  Cooperative Banks applies Prospectively from 1 june 2015 : ITAT Remands Matter to AO for Re-adjudication [Read Order]

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) held that amendment made by the Finance Act 2015 is prospective in nature and applicable only from 1 June 2015, and thus remitted the matter to the file of Assessing Officer(AO) for re-adjudication.

The assessee in the present case is Raddi Sahakara Bank is a cooperative bank. Dissatisfied by the assessment order the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] regarding the Tax Deducted at Source (TDS) on interest Paid by  Cooperative Banks, which decided the matter ex-parte against the assessee, further aggrieved the assessee filed an appeal before the Tribunal.

The Authorised Representative of the assessee (AR) submitted that the assessee did not receive any notice issued by the First Appellate Authority. Moreso, the impugned ex-parte order was passed without considering the evidences/materials furnished before the respective appellate authority physically before transfer of the matter to the National, Faceless Assessment Centre.

The AR further submitted  that the issue involved in this particular case as to whether the assessee has deducted tax at source on payment made to members as already been duly considered by the co-ordinate bench of this Tribunal in assessee’s own case for the assessment year 2010-11 and 2011-12.

The Departmental Representative (DR) submitted that the notices fixing the date of hearing were duly issued to the assessee on 4 occasions as mentioned in the order passed by the CIT(A) but without any result. Hence, having no other alternative, the CIT(A) proceeded with the matter ex-parte and decided the issue by confirming the order of addition made by the AO in the absence of any assistance rendered by the appellant.

The Bench observed that upon perusal of the entire set of documents, we find that the impugned order is ultimately an ex-parte one. The documents furnished before First Appellate Authority physically were also not taken into consideration by the CIT(A). This is clearly a violation of the principle of natural justice.

It was further pointed out by the AR that amendment to the Rule though has been made by the Finance Act, 2015 to this effect that no such deduction would be required for interest paid by a cooperative society to its members in terms of the provision of Section 194A(3)(v) of the Income Tax Act, he has relied upon the order passed by the Chennai Tribunal in ITA No.1111/Chen/2016 for Assessment Year 2012-13 in the case of Dharmapuri District Central Cooperative Bank Ltd, wherein the amendment has been held to be prospective in nature.

The Bench comprising of Laxmi Prasad Sahu, Accountant Member and Ms. Madhumita Roy, Judicial Member held that so far as the amendment made by the Finance Act 2015 is concerned, the Chennai Bench has been pleased to observe that the amendment is prospective in nature and applicable only from 01/06/2015 though amendment has been made by the Finance Act 2015, the same is not applicable to the instant case.

Therefore the Tribunal remitted the issue to the file of the AO for fresh adjudication of the same on merit upon giving an opportunity of being heard to the assessee and to consider the evidence in support of the case made out by the assessee.

Hence, the appeal of the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates