2010 (4) TMI 1068 - HC - Income Tax

Summary

Issues involved: Whether the petitioners Societies qualify as 'Credit Co-operative Society' u/s 194A of the Income-tax Act to receive exemption.

Summary:
1. The eligibility for exemption under section 194A(3)(viia) is limited to specified types of Co-operative Societies. The petitioners' Societies need to determine if they fall within the exempted category to challenge the department's notice requesting details on alleged TDS failure.

2. The notice requires the petitioners to provide quarterly returns, payment details of interest, and financial documents. Failure to deduct TDS may lead to being treated as an 'assessee in default' under section 201(1) and facing penal action under section 271(C). The petitioners claim exemption under sub-section 3(viia) of section 194A based on their status as Primary Credit Co-operative Societies.

3. The Court directed the petitioners to involve the Registrar of Co-operative Societies and the State to verify their status. Certificates from the Joint Registrar indicate the petitioners are registered as Co-operative Societies conducting credit activities as per registered bye laws, suggesting acceptance as a 'credit society.'

4. The Court decided that the petitioners should respond to the notice by filing objections with the department, along with certificates proving their status as 'Primary Credit Co-operative Societies' for exemption under section 194A(3)(viia). The department can seek clarification from the Registrar of Co-operative Societies or the State Government. Further proceedings will be on hold until the question of exemption eligibility is decided, with a speaking order to be issued within three months of receiving objections.

5. All Writ Petitions are disposed of accordingly.