TMI Blog2017 (9) TMI 2016X X X X Extracts X X X X X X X X Extracts X X X X ..... eld to Maturity (HTM) - whether allowable expenditure? - HELD THAT:- Following the decision of Sir M. Visweswaraya Co-operative Bank Ltd [ 2012 (9) TMI 774 - ITAT, BANGALORE ] we hold and direct that the assessee's claim for amortization of premium on investments in Govt. Securities is to be allowed. Decided in favour of assessee. - Shri Vijay Pal Rao, Judicial Member And Shri Inturi Rama Rao, Accountant Member For the Appellant : Shri Pramod Singh, CIT (DR) For the Respondent : Smt. Sheetal, Advocate. ORDER PER SHRI VIJAY PAL RAO, J.M. : This appeal by the revenue is directed against the order dt.29.2.2016 of Commissioner of Income Tax (Appeals) for the Assessment Year 2013- 14. 2. The revenue has raised the following grounds : 1. The order of the CIT (A) is opposed to law and facts of the case. 2. Whether on the facts and circumstances of the case, the learned CIT(APPEALS) has erred by deleting the entire disallowance made U/s.40(a)(1a)} for non deduction of tax on interest paid to members and non members of Rs.26,19,16,167/- instead of restricting the relief to payment to members to the extent of Rs.19,86,39,236/- only. - 3. on the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided by the Tribunal in assessee's own case for the Assessment Years 2010-11 2011-12. 7. Having considered the rival submissions as well as the relevant material on record, we note that co-ordinate Bench of this Tribunal in assessee's own case for the Assessment Years 2010-11 2011-12 in ITA Nos.368 369/Bang/2015 vide order dt.10.07.2015 has considered and decided this issue in paras 13 to 15 as under : 13. We have heard the rival submissions. At the time of hearing of the appeal, it was brought to our notice by the learned counsel for the Assessee that the Bangalore Bench of ITAT in the case of Bagalkot District Central Co-op Bank, Vs. JCIT (2014) 48 Taxmann.com 117 (Bangalore-Trib) held that co-operative societies carrying on banking business while paying interest to members on time deposits and deposits other than time deposits need not deduct tax at source u/s.194-A of the Act by virtue of exemption granted u/s.194A(3)(v) of the Act. The learned DR relied on the orders of the revenue authorities. 14. We have considered the rival submissions. This tribunal in the case of Bagalkot District Central Co-operative Bank (supra) dealt with identical issue and id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her provisions are specific cooperative societies. The further conclusion in the said decision that the term 'co-operative society' in cl. (v) of s. 194A(3) has to be interpreted as cooperative society other than co-operative bank, is again unsustainable. The law is well settled that by a process of interpretation one cannot add on words that are not found in the text of the statute. Such a course is permitted only when there is causus omisus . We do not think that the provisions of Sec.194A(3)(v) suffers from any causus omisus as has been interpreted by the ITAT Pune Bench SMC. 16. We are also of the view that the decision of the Hon'ble Kerala High Court in the case of Moolamattom Electricity Board Employees Co-op Bank Ltd. (supra) supports the plea of the Assessee before us. The petitioners in that case were primary credit societies registered under the Kerala Cooperative Societies Act. In view of the specific provisions of Sec.194A(3(viia) of the Act, they claimed that they need not deduct tax at source on interest paid. It was submitted by the petitioner that subs. 194A(3)(v) deals with such income credited or paid by a co- operative society to a member whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank may receive without TDS interest on time deposit made with the co-operative bank on or after 1st July, 1995. 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 provisions of clause (viia) of the said sub- section are applicable only in case of a non-member depositor of the co-operative bank, who shall receive interest only on deposits other than time deposits made on or after 1st July, 1995 without TDS under section 194A. 3. A question has also been raised as to whether normal members, associate members and sympathizer members are also covered by the exemption undersection 194A(3)(v). It is hereby clarified that the exemption is available only to such members who have joined in application for the registration of the co- operative society and those who are admitted to membership after registration in accordance with the bye-laws and rules. A member eligible for exemption under section 194A(3)(v) mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 order dated 29.8.2011 has held that co-operative societies carrying on banking business when it pays interest to its members on deposits it need not deduct tax at source in view of the provisions of Sec.194A(3)(v) of the Act. Similar view has also been expressed by the Pune Bench of the ITAT in the case of Ozer Merchant Cooperative Bank ITA No.1588/PN/2012 order dated 30.10.2013. We may add that in both these decisions the discussion did not turn on the interpretation of Sec.194A(3)(i)(b) of the Act vis-a-vis Sec.194A(3)(v) of the Act. It is thus clear that the preponderance of judicial opinion on this issue is that co- operative societies carrying on banking business when it pays interest to its members on deposits need not deduct tax at source in view of the provisions of Sec.194A(3)(v) of the Act. 21. For the reasons given above, we hold that the Assessee which is a cooperative society carrying on banking business when it pays interest income to a member both on time deposits and on deposits other than time deposits with such co-operative society need not deduct tax at source under section 194A by virtue of the exemption granted vide clause (v) of sub-section (3) of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial question of law does not survive for consideration. Following the earlier order of this Tribunal in assessee's own case, we do not find any error or illegality in the impugned order of the CIT (Appeals) on this issue. 8. Ground No.3 is regarding the addition made on account of amortization of premium/depreciation provided in respect of investment in Government securities. 9. We have heard the learned DR as well as learned AR and considered the relevant material on record. At the outset we note that this issue has been consistently decided by this Tribunal in favour of the assessee in a series of decisions. The CIT (Appeals) has allowed the claim of the assessee by following various decisions as referred in the impugned order. We further note that the co-ordinate Bench of this Tribunal vide order dt.26.05.2015 in the case of ACIT Vs. Sri Gokarnath Co-operative Bank Ltd in ITA Nos.40 41/Bang/2015 in para 5 as under : 5. Grounds No. 2 3 : Amortisation of Premium on investment in Government Securities Held to Maturity (HTM) 5.1 For Assessment Years 2010-11 and 2011-12, the only issue is with respect to whether the amortization of premium paid on Govt. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of premium on investment in Govt. Securities is allowable expenditure. The operative portion of this order in ITA No.1122/Bang/2010 dt.11.5.2012 at para 8 thereof is extracted hereunder :- 08. We have carefully considered the rival submissions and perused the relevant facts and materials on record. We have also considered the findings of the various benches of the Tribunal, as under : (i) Catholic Syrian Bank Ltd v. ACIT (2010) 38 SOT 553 (Coch) : An identical issue to that of the subject matter under consideration had arisen before the Cochin Bench. After analyzing the issue in depth, the bench has observed that with regard to amortization of premium on purchase of Government securities, it was clarified that this was made as per the prudential norms of the RBI. Following the Tribunal decision in the assessee's own case and considering that the assessee bank is following consistent and regular method of accounting system, there is no justification in interfering with the order of the Commissioner of Income-tax (Appeals) on this issue of amortization of premium on government securities. United Commercial Bank v. CIT (1999) 156 CTR (SC) 380 ; (1999) 240 ITR 355 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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