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2012 (7) TMI 732 - HC - Income TaxValidity of circular dated 11.9.2002 issued by the Central Board of Direct Taxes in purported exercise of powers under section 119 of the Income Tax Act,1961 - TDS u/s 194A - It is the case of the petitioners that such exemption or exclusion provided in clause (v) of sub-section (3) of section 194A in case of a member of cooperative society would include all members and is not confined to only certain class of members of a cooperative society. Held that:- The contention with respect to locus standi needs to be noted only for rejection. The petitioners are cooperative banks. If exemption under clause (v) of sub-section (3) of section 194A with respect to some of its members is withdrawn, the banks would have to follow the entire procedure of deducting tax at source at the time of paying or crediting such interest in favour of such a member. The member in turn is also be subject to tax deduction regime and all the procedure and procedural requirements would have to be followed by the Banks and the member would suffer the tax deduction at source. It, therefore, cannot be stated that the petitioners which are cooperative banks are not prejudicially affected by the impugned circular. Circular holding that powers under section 119 of the Act would not empower the Board to issue clarification which would take away the exemption which has been granted by the statute. - the circular dated 11.9.2002 as at Annexure A to the petition is, therefore, not effective. - Decided in favor of assessee.
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