TaxTMI 
TaxTMI 
2023 (7) TMI 87
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...., 13815, 13826, 13827, 13820, 13822, 13831, 13833, 13837, 13838, 14578, 14579, 14756, 14757, 14763, 14764, 14770, 14772, 14777, 14779,14582, 14583, 14584, 14586,14626, 14627, 14631, 14632, 14636, 14638, 14640, 14642, 14659, 14660,14628, 14629, 14641, 14643, 14634, 14635, 14647, 14648, 14650, 14652, 14637, 14633, 14644, 14645, 14649, 14651, 14653, 14654, 14657, 14658, 14697, 14698, 14700, 14702, 14707, 14708, 14715,14716, 14719, 14720, 14709, 14711, 14717, 14718, 14721, 14722, 14723, 14724, 14729, 14730, 14733, 14734, 14818, 14819, 14822, 14823, 14856, 14857, 14868, 14869, 14873, 14875, 14858, 14860, 14863, 14865, 14870, 14871, 14874, 14876, 14880, 14881, 14864, 14866, 14877, 14879,14885, 14886,14891, 14892, 14893, 14896, 14882, 14883, 14887, 14889, 14894, 14897, 14900,14902, 14905, 14906, 14888, 14890, 14895, 14898, 14901, 14904, 14908, 14910, 14913, 14914, 14918, 14920, 14922, 14925, 14927, 14928, 14932, 14933, 14934, 14935, 14936, 14937, 15623, 15624, 20308, 20309, 20311, 20312, 20314, 20315 of 2022 Honourable Dr.Justice Anita Sumanth For the Petitioner : Mr.K.Selvaraj, Mr.S.Prabhu For the Respondents : Dr.B.Ramaswamy, Senior Standing Counsel for R1 Mr.R.Gopinath for R2, M.Mur....
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....e been sanctioned by the State and the petitioner societies are mere conduits or facilitators. Thus, deduction of tax, in such a situation, would greatly prejudice the ultimate beneficiaries of the loans who are farmers and small traders. 6. That apart, the funds withdrawn by the petitioners for onward transmission to the farmers, even if construed to be the income of the petitioner societies together with other incomes earned by the societies, are entitled for deduction in terms of Section 80P of the Act. This would also support their stand that no tax is liable to be deducted at source from the withdrawals. 7. The petitioners additionally submit that, in the budget speech of the Hon'ble Finance Minister, while introducing Section 194N, the proposal for deduction of tax of cash withdrawals was restricted to business payments only. The avowed object was 'to discourage the practice of making business payments in cash' and it was proposed 'to levy TDS of 2% of cash withdrawal exceeding one crore in an year from a bank account'. Thus, Section 194N must be held to be applicable only in respect of business payments and the present payments would not come within the ambit....
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....s (PACCS) functioning under it. Pursuant to the introduction of Section 194 N w.e.f. 01.07.2020, there was a wide ranging survey by the Income-tax Department where it was noticed that the bank had not deducted taxes for the cash payments exceeding, in aggregate, a sum of rupees one crore. 14. The bank was thus taken to task and its liability for non-deduction was determined at a sum of Rs.9,58,77,590/-. This demand relates to the period 01.09.2019 to 31.03.2020, post introduction of Section 194 N as well as the period 2020-21. It is only thereafter, that the banks proceeded to apply the provisions of Section 194 N to insulate themselves from any liability in this regard. The impugned circulars have been issued, and must be seen, in the background of the aforesaid events. 15. The provisions of Section 194 N provide for a mandatory deduction of 2% of cash withdrawals and the object is to discourage, and drive the move toward a cashless or cash-free economy. The scheme of tax deduction also allows, by way of an application under Section 197, for a payee to seek the remedy of deduction at nil/lower rate under various provisions of the Act. However, Section 194N is conspicuous by it....
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....are premature as is reliance upon the judgement in the matter of Eli Lilly. Eligibility to deduction must be tested by the authorities in the course of assessment as it involves the determination of several questions of fact. The society is always entitled to, in the return of income filed by it, seek credit of the taxes attributable to the income returned by it and any excess deduction, if the stand of the societies is accepted in assessment, would have to be refunded to them. 20. My attention is also drawn to an order passed by learned Judge in Madurai in Tirunelveli District Central Cooperative Bank Limited V. The Joint Commissioner of Income Tax (TDS) (W.P.(MD)Nos.6102 to 6125 of 2020 etc. batch, order dated 27.07.2020). 21. Those Writ Petitions have been allowed and the impugned assessments remitted to the file of the assessing officers to be redone afresh. Inter alia, a direction has been given to the assessing officers to exclude the Pongal cash gift distributed by the petitioner banks at the instance of the Government of Tamil Nadu on the reasoning that the societies had merely acted as business correspondents of the banks. 22. The learned Judge also proceeds to state....