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2022 (11) TMI 1213

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....774, 24776, 24873, 24874, 25419 & 25420 of 2022 Honourable Dr. Justice Anita Sumanth For the Petitioners : Mr.C.Prakasam, Mr.K.Selvaraj, Mr.M.Govindan For the Respondents : Mr.ANR.Jayaprathap (for R1) Junior Standing Counsel No Appearance (for R2), Mrs.Hema Muralikrishnan Senior Standing Counsel (for R1) Mrs.G.Thilagavathy, Senior Counsel for Mr.R.Gopinath (for R2 in WP.No.21856 of 2022) No Appearance (for R2 in WP.17927, 24245, 24249, 24251 & 24253 of 2022) And Mr.ANR.Jayaprathap (for R1) Junior Standing Counsel COMMON ORDER This batch of Writ Petitions has been filed by Primary Agricultural Cooperative Credit Societies (in short 'Society/Societies') and turns on the appreciation of a common set of facts as well as legal provisions. ....

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....te 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 That apart, the funds withdrawn by the petitioners for onward transmission to the farmers, even if construed to be the income of the petitioner societies together with other incomes earned by the societies, are entitled for deduction in terms of Section 80P of the Act. This would also support their stand that no tax is liable to be deducted at source from the withdrawals. 7. The petitioners additionally submit that, in the budget speech of the Hon'ble Finance Minister, while introducing Section 194N, the proposal for deduction o....

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....e for the purpose of making payments to the farmers for purchase of agricultural produce as well as satisfaction of other allied conditions. They would claim parity with the APMCs and thus argue that there would be no liability to tax and consequently no necessity to deduct tax at source. 11. The respondents contest the writ petitions vehemently. The Income tax department reiterates the mandatory nature of Section 194 N. Only the Kanchipuram 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....

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....ard a cashless or cash-free economy. The scheme of tax deduction also allows, by way of an application under Section 197, for a payee to seek the remedy of deduction at nil/lower rate under various provisions of the Act. However, Section 194N is conspicuous by its absence therein, and does not figure in the list of such provisions. 16. The intention is clear, that compliance with the requirement of Section 194 N is non-negotiable except in line with the specific exceptions stipulated under the proviso extracted below: Provided also that nothing contained in this section shall apply to any payment made to- (i) the Government; (ii) any banking company or co-operative society engaged in carrying on the business of banking or a post offi....

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....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 filed by it, seek credit of the taxes attributable to th....