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TMI Blog2023 (7) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... 544, 14599, 14604 of 2022 - - - Dated:- 26-6-2023 - W.P.Nos. 14536, 14538, 14539, 14542 14544, 14599, 14604, 14616, 14613, 14620, 14611, 14621, 14617, 14624, 14626, 15430, 15579, 15581, 15585, 15587, 15434,15435, - 15471, 15475, 15479, 15482, 15484, 15472, 15481, 15478, 15486, 15489, 15476, 15483,15488, 15492, 15495, 15526, 15531, 15532, 15537, 15539, 15534, 15538, 15540, 15541, 15544, 15551, - 15606, 15608, 15634, 15646, 15648, 15635, 15641, 15645, 15649, 15652, 15640, 15650, 15656, 15659, 15660, 15653, 15657, 15661, 15664, 15667, 15658, 15662, 15666, 15669, 15672, 15678, 15680, 15682, 15684, 15687, 15690, 16295, 21300, 21305, 21307 of 2022 And W.M.P.Nos. 13728, 13731, 13734, 13735, 13736, 13737, 13739, 1374013744, 13745, 13795, 13796, 13802, 13804, 13818, 13821, 13814, 13816, 13824,13825, 13813, 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash withdrawal. The provisions of Section 194 N coming under Chapter XVII dealing with collection and recovery deduction at source provides for deduction of an amount equal to 2% of any cash withdrawal made by persons from (i) a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) a co-operative 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 That apart, the funds withdrawn by the petitioners for onward transmission to the farmers, even if co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Cooperative Bank Ltd has filed a counter in W.P.No.21856 of 2022 challenging the maintainability of the Writ Petitions in light of the decision of this Court in K.Marappan V. Deputy Registrar of Co-operative Society (2006 (4) MLJ 641). 12. The Full Bench of this Court has in the above decision, held that under the scheme of the Tamil Nadu Cooperative 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application of Section 194N and hence, if at all the petitioners believe that they qualify for the exemption, they may seek redressal under the in-built statutory mechanism provided as above, if they so choose. 18. To a query from the Court, as to who would constitute the specific authority before whom 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 fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponded with the Principal Secretary to Government, Cooperation, Food and Consumer Protection Department requesting that the Cooperation, Food and Consumer Protection Department agitate the issue of grant of exemption under the provisions of Section 194 N of the Income-Tax, 1961 to the primary agricultural cooperative credit societies before the Central Board of Direct Taxes. 6. Pursuant thereto, the Chief Secretary, appears to have addressed the Chairperson of CBDT on 27.09.2022. This communication is placed at page 20 of compilation dated 05.06.2023. However, there is nothing to indicate whether this representation has indeed been sent and whether it is pending before the CBDT. 7. In fact in my order dated 04.11.2022, I have recorded the rival submissions in the context of the appropriate authority to consider request for exemption and stated thus:- 18. To a query from the Court, as to who would constitute the specific authority before whom 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 Min ..... X X X X Extracts X X X X X X X X Extracts X X X X
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