The assessee is a Regional Rural Bank having Head Office in district of Hubbali and had more than 451 branches over 9 districts of Karnataka. Out of 451 branches 118 were situated in Hubbali. A survey conducted under section 133A at the premises of assessee to ascertain as to whether there had been compliance of section 194A relating to credit payment of interest made in excess of Rs. 10,000.The AO found that the assessee bank had failed to comply with the provisions of the Act and had not deducted tax at source(TDS). Hence, the bank was held to be an assessee-in-default. The assessment orders came to be passed by the Assessing Officer, TDS, Ward I, Hubbali under section 201(1) relating to all 451 branches. CIT (A) affirmed the order of the AO. The Tribunal held that in the teeth of section 194A, the income credited or interest paid in respect of term deposit by the bank would be computed with reference to the income credited or paid by the branch of banking company. It was also held that each and every branch was recognized as a separate assessee responsible for TDS under section 194A and the Assessing Officer had taken the composite amount of interest paid or credited by all branches of the assessee bank and, therefore, the Assessing Officer had exceeded its jurisdiction insofar as order which touched the interest paid by the branches which were situated beyond the jurisdiction of the Assessing Officer.On remand, the Commissioner (Appeals) held that all branches had their own Drawing and Disbursing Officer (DDOs) and each DDO had separate TAN number. It was further held that ITO-TDS, Ward-1, Hubbali had jurisdiction over 118 branches only. On further appeal, the Tribunal relying on the direction issued by the co-ordinate bench of the Tribunal in the order passed in ITA Nos. 1172 to 1175/Bang/2015 on 25-5-2016 relating to same assessee restricted the order under section 201(1) to only 118 branches only. On the revenue’s appeal to the High Court, the finding of the co-ordinate Bench of the Tribunal had not been challenged by the revenue which was related to same assessee and as such it cannot be re-agitated. The Tribunal has rightly dismissed the appeals. (AY. 2008 -09 2011-12 )
CIT v. Karnataka Vikas Grameen Bank (2019) 266 Taxman 78 (Karn) (HC)
S. 194A : Deduction at source – Interest other than interest on securities – Branches of Bank -Deduction of tax at source- Jurisdiction of Assessing Officer- Branches of bank were spread over many districts, Assessing Officer (TDS) of district, where in Head Office was situated, had no jurisdiction in respect of branches spread over other districts. [ S.133A, 201, 260A ]