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2023 (3) TMI 1387 - HC - Income TaxTDS u/s 194N - cash withdrawals exceeding Rs.1 and from their accounts from District Cooperative Banks - WP been filed seeking direction to the Central Government to consider the representation sent by the Chief Secretary, Government of Tamil Nadu to the Chairperson, Central Board of Direct Taxes and the Ministry of Finance, Government of India to accord exemption to the Primary Agricultural Cooperative Credit Societies in the State of Tamil Nadu from the provisions of Section 194-N and to consequently restrain the concerned authorities from taking any coercive steps for recovery of tax deduction at source of payments made by the District Central Co-operative Banks to the Primary Agricultural Co-operative Credit Societies in that regard. HELD THAT - This Court without expressing any view on the merits of the controversy involved, passes the following order - (i) it shall be incumbent upon the Ministry of Finance, Government of India and the Central Board of Direct Taxes, New Delhi to immediately examine the representation in D.O. Lr No. 15350/CC1/2022 dated 27.09.2022 sent by the Chief Secretary, Government of Tamil Nadu; (ii) if it is found that any other details or supporting documents are necessary for granting the relief claimed had not been produced, the deficiencies in that regard shall be informed in writing to the concerned persons requiring the same to be furnished within a time frame of not less than 15 clear working days for the same; (iii) in the event of not being satisfied with the said requirements even thereafter, an enquiry shall be conducted affording full opportunity of hearing to the Government of Tamil Nadu and to all stakeholders through public notice to explain their views in that regard; (iv) a reasoned order shall be passed dealing with each of the contentions raised on merits and in accordance with law and the decision taken communicated to the Government of Tamil Nadu in writing under acknowledgment; and (v) the authorities under the Act shall be restrained from taking any coercive action for recovery of tax deduction at source u/s 194-N of the Act from the Primary Agricultural Co-operative Credit Societies in the State of Tamil Nadu till the aforesaid exercise is completed.
Issues:
Enforcement of Section 194-N of the Income Tax Act, 1961 on Primary Agricultural Co-operative Credit Societies in Tamil Nadu. Detailed Analysis: Issue 1: Enforcement of Section 194-N of the Income Tax Act The petitioners, Primary Agricultural Co-operative Credit Societies in Tamil Nadu, challenged the enforcement of Section 194-N of the Income Tax Act, 1961, which imposed a tax on withdrawals exceeding Rs. 1,00,00,000. The petitioners argued that this enforcement was causing financial hardship and affecting their business transactions with farmers. They sought exemption from this provision, as highlighted in representations made by the Government of Tamil Nadu to the Central Government. Issue 2: Representation and Relief Claimed The Government of Tamil Nadu made representations seeking exemption for Primary Agricultural Co-operative Credit Societies from Section 194-N. The court, without expressing any view on the merits, ordered the Ministry of Finance and the Central Board of Direct Taxes to examine the representation. If additional details were required, the concerned parties were to provide them within a specified timeframe. An enquiry was to be conducted if satisfaction was not met, and a reasoned order was to be passed after hearing all stakeholders. The court restrained authorities from taking coercive action for tax deduction at source until this process was completed. Conclusion: The court directed a thorough examination of the representation by the Government of Tamil Nadu seeking exemption for Primary Agricultural Co-operative Credit Societies from Section 194-N of the Income Tax Act. It outlined a detailed process for addressing any deficiencies, conducting an enquiry, and passing a reasoned order. Until this process was completed, authorities were restrained from taking coercive action for tax deduction at source from the mentioned societies.
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