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TMI Blog2012 (7) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 ('the Act' for short). 2. Facts may be noticed as emerging from Special Civil Application No.11209 of 2002, wherein petitioner No.1 is the Federation of Urban Cooperative Banks having various cooperative banks as its members. Petitioner No.2 is a Cooperative Bank registered under the Gujarat Cooperative Societies Act, 1961. Section 194A of the Act requires every person not being an individual or Hindu Undivided Family who is responsible for paying to a resident any income by way of interest to deduct tax at the prescribed rate at the time of credit of such income to the account of the payee or at the time of payment thereof, whichever is earlier. Sub-section (3) of section 194A, however, provides for exemption from such requirement in sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Board's power to issue clarification under section 119 of the Act. It is the case of the petitioners that clause (v) of sub-section (3) of section 194A provides for exemption from deduction of tax at source under sub-section (1) of section 194A in case of a member of a cooperative society and no further distinction can, therefore, be made by way of circular by the CBDT between different classes of members. 4. Learned counsel for the petitioners pointed out that the very same circular came up for consideration before the Bombay High Court and the same came to be quashed by the Bombay High Court in the case of Jalgaon District Central Co-op. Bank v. Union of India (Bom), 265 ITR 423. Counsel further pointed out that the said decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification which would take away the exemption which has been granted by the statute. The Bombay High Court held and observed as under: "The impugned Notification issued by CBDT, which is in the form of clarification with regard to rights and privileges of a duly registered member and nominal member is outside the scope of Section 119 of the Income Tax Act, 1961. No doubt, Section 119 of the Income Tax Act, 1961 generates some power in CBDT. But the power so generated by virtue of Section 119 is required to be utilized in a prescribed manner. CBDT is empowered to issue only administrative instructions to the subordinate authorities for the purpose of proper administration and enforcement of the provisions of the Income Tax Act, 1961. Under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the validity of the impugned circular from all angles, we are of the clear opinion that CBDT has no authority to make a crack in the exemption clause contained in Section 194-A(3)(v) of the Income Tax Act, 1961 by issuing the impugned circular. The CBDT cannot usurp the powers of Parliament by virtue of Section 119 of the Income Tax Act, 1961. The CBDT, under the garb of Section 119 of the Income Tax Act, 1961, cannot exercise wider powers than the powers bestowed on it. The CBDT has no power to introduce a substantial change or alteration in the provisions of the Income Tax Act, 1961 by importing the ideas unknown to the Income Tax Act, 1961. The impugned circular, therefore, does not stand to the legal test. In the result, both the wr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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