Case Law Details
Erode Mavatta Valamana Thodakka Vs Managing Director (Madras High Court)
Madras High Court directed the Ministry of Finance, Government of India and CBDT to consider exempting primary agricultural cooperative credit societies from the purview of the provisions of Section 194N of the Income Tax Act, 1961.
Facts- The petitioners are Primary Agricultural Cooperative Credit Societies. They deal with lending loans to the members of the concerned Society for agriculture and allied activities.
The Government decided to implement the Pongal Welfare Scheme through these Primary Agricultural Cooperative Credit Societies spread across the State. According to the Scheme, the bulk allotment for the district concerned, would be made to the District Central Cooperative Bank concerned and from the Central Cooperative Bank concerned, the Primary Agricultural Cooperative Credit Society would draw the money in bulk and would distribute the money to the beneficiaries. For the purpose of distributing the money when the Primary Societies withdraw money from the Central Cooperative Bank of the district concerned, that was considered to be the income of the Society, where the Central Cooperative Bank was liable to deduct tax at source as per Section 194N of the Income Tax Act, 1961.
As per Section 194N, it became obligatory on the part of those banking companies to make a deduction of tax at source at 2% of any payment in cash exceeding Rupees One Crore during the previous year to any person, from one or more accounts maintained by the recipient and that should be paid to the credit of the bank concerned as an assessee.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
