TaxTMI 
TaxTMI 
2025 (3) TMI 726
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.... proceedings bearing Na.Ka.No.01560/95-96/Valarchi 1, Dev.Circular No.12/2020-21 dated 01.04.2021. 2. Operative portion of the impugned order reads as under: "In the letter of Tamil Nadu State Chief Co-operative Bank found in Reference 2, details of the amendments made in the Finance Act - 2021 regarding the deduction and payment of TDS amount in connection with the income tax account have been given. In the above circular of Chief Co-operative Bank, details of Income Tax Rate Structures to be deducted from the bank in the financial year 2021-2022, Service Tax Charges and submission of Tax Accounts have been given. Chief Banking Divisional Manager and all Branch Managers of the Bank are hereby informed to strictly follow the instructions given in the circular of Chief Co-operative Bank attached hereto. Acknowledgement of receipt of this circular is requested to be sent by return post." 3. The specific case of the petitioners is that the petitioners are Weavers Cooperative Production and Sale Society engaged in utilizing the services of weavers by supplying yarn to weavers for making dhoties, sarees and bed etc. 4. The learned counsel for....
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....N does not in any way affect the claim of petitioner u/s. 80P of Income Tax Act, 1961. 14. It is submitted that provisions of Section 194N is applicable only if there are cash withdrawals exceeding Rs. One Crore during a financial year. As long as these societies operate through banking channels and cash withdrawals, if any, do not exceed Rs. One Crore, question of TDS under Section 194N of the Act would not arise. Thus, there is no issue of the section adversely affecting the operations of Primary Agricultural Societies, as claimed in the affidavit. 15. It is submitted that as per the Income Tax Act section 197A(1), Form 15G/15H is only applicable to the case of individual taxpayer who is resident of India and not applicable to other tax payers such as company, firms, HUF, AOP, Local body and Artificial Judicial person. Here section 197A(1) clearly mentions "Individual", so it is not applicable to persons other than individuals. 16. It is submitted that if the loan amounts are directly transferred by the Societies to the bank accounts of the farmers the question of TDS under Section 194N would not arise. Almost all the farmers presently hold bank account....
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....g the previous year; and (ii) the deduction shall be- (a) an amount equal to two per cent of the sum where the amount or aggregate of amounts, as the case may be, being paid in cash exceeds twenty lakh rupees during the previous year but does not exceed one crore rupees; or (b) an amount equal to five per cent of the sum where the amount or aggregate of amounts, as the case may be, being paid in cash exceeds one crore rupees during the previous year: Provided further that the Central Government may specify in consultation with the Reserve Bank of India, by notification in the Official Gazette, the recipient in whose case the first proviso shall not apply or apply at reduced rate, if such recipient satisfies the conditions specified in such notification: ^4[Provided also that where the recipient is a co-operative society, the provisions of this section shall have effect, as if for the words "one crore rupees", the words "three crore rupees" had been substituted:] Provided also that nothing contained in this section shall apply to any payment made to- (i) the Government; (ii) any banking company or co-operative s....
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....rative society engaged in carrying on the business of banking; or (iii) a post office. 4. It is the case of the petitioners that there should be no deduction at all, that could be effected from the withdrawals made by them from the banks. The petitioner societies are intermediaries between the bank and agriculturists, who are beneficiaries of the withdrawals made by the petitioners. 5. In most instances, the amounts have 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, whi....
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....operative Societies Act, 1983, it is only the alternative and statutory appeal mechanism, particularly appeal provision under Section 153 that must be invoked by the Cooperative Societies. The Banks also point out that the Circulars merely draw attention to the statutory provisions of the Income tax Act in regard to tax deduction. 13. Heard learned counsel. The counter filed by the Kancheepuram Central Cooperative Bank Limited, R2 in W.P.No.21856 of 2022 states that there are 264 Primary Agricultural Societies (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 ....
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....m such prayer was to be made, the respondents have reported written instructions from the Commissioner of Income Tax (TDS), Coimbatore stating thus: 'As per business allocation rule, Central Government for tax purposes is Finance Minister of India. Hence, any request may be in the name of the Finance Minister with copy to CIT ITA CBDT North Block who would process such requests.' The petitioners may thus approach the competent authority in the Government seeking relief from the application of Section 194N of the Act. 19. The submissions in relation to the grant of deduction under Section 80P 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....