JUDGMENT : 1. In both appeals since identical question of law and facts are involved they are decided by this common judgment. 2. By way of these appeals, the appellant has assailed the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeals preferred by the department confirming the order of CIT(A). 3. Counsel for the appellant framed the following questions of law in DBITA No. 312/2017:— “(i) Whether in the facts and circumstances of the case the ITAT has erred in holding that interest paid by assessee is governed by clause (v) of sub section (3) of section 194A of the Act and not by sub clause (b) of clause (I) of sub section (3) of section 194A of the Act. (ii) Whether in the facts and circumstances of the case the ITAT was justified in confirming the order of CIT(A) in deleting the disallowance of Rs. 48285223/- made u/s 40(a)(ia) of the IT Act on account of interest paid by the assessee without making TDS thereon.” 4. While admitting the DBITA No. 246/2016, this Court on 15th November, 2016, framed the following substantial of law: “(i) Whether in the facts and circumstances of the case the ITAT has erred in holding that interest paid by assessee is governed by clause (v) of sub section (3) of section 194A of the Act. In fact the interest paid by assessee is governed by sub clause (b) of clause (I) of sub section (3) of section 194A of the Act.” 5. Counsel for the appellant has taken us to the order of the assessing officer and contended that the assessing officer while considering the matter relied on provisions of 194A and after taking into consideration the interest paid to the members of the society is held as under:— 6.1 During the year under consideration, the assessee has claimed following expenses:— Interest- Rs. 83,87,237/- Rent- Rs. 4,89,308/- Security- Rs. 1,56,529/- Legal- Rs. 77,800/- Audit- Rs. 2,98,853/- Total- Rs. 94,09,727/- But no TDS was found to be made on the above expenses, hence vide letter dated 19.12.2013, assessee was requested to file copy of TDS return filed in support of TDS made on the above expenses.” 6. 83,87,237/- Rent- Rs. 4,89,308/- Security- Rs. 1,56,529/- Legal- Rs. 77,800/- Audit- Rs. 2,98,853/- Total- Rs. 94,09,727/- But no TDS was found to be made on the above expenses, hence vide letter dated 19.12.2013, assessee was requested to file copy of TDS return filed in support of TDS made on the above expenses.” 6. Against which the assessee preferred an appeal and the CIT(A) while considering the matter has observed as under;— “(i) Interest paid by the Co-operative banks to its member depositors are attracted by the provisions of section 194A of the Act, accordingly, additions made of Rs. 83,87,237/- is hereby deleted. Assessee gets a relief to that extent.” 7. The Tribunal while considering the same has affirmed the finding given by the CIT(A). 8. Counsel for the respondent has submitted that the question regarding deletion of disallowance of Rs. 83,87,237/- u/s 40(a)(ia) of the Income Tax Act, 1961, by learned ITAT by holding that the interest paid by assessee is governed by section 194A(3)(v) as against section 194A(3)(i)(b) contemplated by the revenue department. He also contended while inviting the provisions as under:— (a) Section 194(3)(v), prior to its amendment by the Finance Act, 2015, provides exemption from deduction of tax at source as under:— “(v) to such income credited or paid by a cooperative society to a member thereof or to any other co-operative society”. The revenue department interpreted section 194(3)(v) as co-operative society mentioned therein does not include co-operative societies engaged in banking business as separate exemption upto Rs. 10,000/- was available to them under section 194A(3)(i)(b) of the Act. (b) the Circular no. 9/2002 dated 11.9.2002, issued by CBDT, exempted co-operative banks from deducting tax at source under section 194A(3)(v) of the Act. The ld. ITAT, in the present appeal, upholding the order of the learned CIT(A), decided the issue in favour of the assessee after considering the aforesaid CBDT circular, various judgments cited before it and Hon'ble Supreme Court's judgment in the case of K.P Varghese v. ITO (1981) 131 ITR 597 (SC) holding that circulars issued by CBDT which are favourable to assessee are binding on the revenue. (c) the Finance Act, 2015, amended the aforesaid provisions of section 194A(3)(v) w.e.f 01.06.2015 as under:— “(v) to such income credited or paid by a cooperative society (other than a co-operative bank) to a member thereof or to such income credited or paid by a co-operative society to any other cooperative society.” From the above amendment made by the Finance Act, 2015, with prospective effect from 01.06.2015 co-operative banks shall be liable to deduct tax at source on interest payments. However, for the period prior to 01.06.2015, co-operative banks were covered under the exemption under section 194A(3)(v) and hence not liable to deduct tax at source on interest payments. Since the present appeal relates to assessment year 2011-12, the respondent cooperative bank was exempted from the requirement of tax at source under section 194A(3)(v) of the Act.” 9. He has also relied upon the decision of Madras High Court in case of The Coimbatore District v. The Income Tax reported in 382 ITR 266 wherein it has been held as under: “As there is no difference in the functioning of the co-operative banks and other commercial banks, the Finance Act, 2006 and Finance Act, 2007 amended the provisions of the Act to provide for co-operative banks a taxation regime which is similar to that for the other commercial banks. Therefore, there is no rationale for treating the co-operative banks differently from other commercial banks in the matter of deduction of tax and allowing them to avail the exemption meant for smaller credit co-operative societies formed for the benefit of small number of members. However, as mentioned earlier, a doubt has been created regarding the applicability of the specific provisions mandating deduction of tax from the payment of interest on time deposits by the cooperative banks to its members by claiming that general exemption provided is also applicable for payment of interest to member depositors. In view of this, it is proposed to amen the provisions of the section 194A of the Act to expressly provide from the prospective date of 1st June, 2015 that the exemption provided from deduction of tax from payment of interest to members by a co-operative society under section 194A(3)(v) of the Act shall not apply to the payment of interest on time deposits by the co-operative banks to its members. 63. 63. It can be seen from the last part of the portion Extracted above that the very note explaining the cause was specific to the effect that the proposal was to bring forth an amendment with prospective effect from 1.6.2015 There is no dispute now that on and from 1.6.2015 the appellant cannot escape the liability from deduction of tax at source. 64. Once an amendment is introduced, for the purpose of removing the anomalous situation or for the purpose of removing the confusions both in the manner in which the provisions stood and the manner in which they were understood, the same could be taken only to have prospective effect. It must be pointed out that the Parliament did not choose to answer a question. Rather it chose to amend the provisions. It is now well settled that an amendment can only be prospective unless it is made retrospective by express language or necessary implication. Apart from the fact that the express language of Section 194A after amendment does not indicate any retrospectivity, the note explaining the clauses goes one step further in making it clear that it was intended to have prospective effect from 1.6.2015” 10. He has relied upon another decision of Karnataka High Court in Tax Appeal No. 100116/2014 decided on 16th December, 2015 wherein it has been held as under:— “2. The Ministry of Finance, Government of India vide Circular No. 19/2015 in F. No. 142/14/2015-TPL, has held that the Co-operative Banks are not required to deduct tax at source on time deposits of its members paid or credited on or before 1.7.2015 The relevant portion of the circular reads as under: “42.5 In view of this, the provisions of the section 194A(3)(v) of the Income-tax Act have been amended so as to expressly provide that the exemption provided from deduction of tax from payment of interest to members by a co-operative society under section 194A(3)(v) of the Income-tax Act shall not apply to the payment 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. 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.” 11. He has also relied upon the decision of Karnataka High Court in case of Commissioner of Income Tax, Belgaum v. Shri Siddeshwar Co-operative Bank Ltd. reported in [2016] 71 taxmann.com 126 (Karnataka) wherein it has been held as under: “The definition of non-performing assets is as follows:— 1. Non-performing assets: An asset, including a leased asset, becomes non-performing when it ceases to generate income for the bank. A “non-performing asset” (NPA) is a loan or an advance where: (i) the interest and/or installment of principal remain overdue for a period of more than 90 days in respect of a term loan; (ii) the account remains “out of order” for a period of more than 90 days as indicated below, in respect of an Overdraft/Cash Credit (OD/CC); (iii) the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted; (iv) the instilment of principal or interest thereon remains overdue for two crop seasons for short duration crops; (v) the instilment of principal or interest thereon remains overdue for one crop seasons for long duration crops. Banks should, classify an account as NPA only if the interest charged during any quarter is not serviced fully within 90 days from the end of the quarter.’ Further, asset classification which is separately dealt with reference to categories of non-performing assets, as follows: “Banks are required to classify non-performing assets further into the following three categories based on the period for which the asset has remained non-performing and the realisability of the dues; (a) Sub-standard Assets (b) Doubtful Assets (c) Loss Assets” Therefore, it is evident that the mere nomenclature adopted with reference to the bad loans and advances receivable, would refer to all non-performing assets of any nature, of whatever category it was placed as a non-performing asset and therefore, the decision of this court in Can fin Homes Ltd's case would squarely apply.” 12. We have heard counsel for both the sides. 13. We have heard counsel for both the sides. 13. Taking into consideration the date on which the bank was originally treated as a society, it was not justified in deducting the TDS. Thus, the view taken by the CIT(A) is required to be confirmed therefore, the same is confirmed. 14. In appeal No. 312/2017, no substantial question of law arises and in appeal no. 246/2016, the issue is answered in favour of assessee against the department. 15. Both the appeals stand dismissed.