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IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 04.11.2022 CORAM THE HONOURABLE DR. JUSTICE ANITA SUMANTH W.P.Nos.17136, 17927, 18787, 21856, 24245, 24249, 24251, 24253, 24792, 25143, 25481, 25486, 25719, 25813 & 26343 of 2022 and WMP,Nos.16441, 16442, 16443, 17259, 17260, 18143, 18144, 18145, 20872, 20873, 23222, 23225, 23229, 23230, 23232, 23233, 23236, 23237, 23727, 23728, 24095, 24097, 24480, 24481, 24487, 24488, 24774, 24776, 24873, 24874, 25419 &
25420 of 2022 WP.No.17136 of 2022:
1 S.N.299 Molasi Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary, S.Sureshkumar M/49 S/o.R.Selvaraj, Kattuvelampalayam A.Erayamangalam Post, Tiruchengode Taluk, Namakkal District – 637 210.
2 S.1290 Pudupuliampatti Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary S.Marimuthu M/53, S/o.Sengodan, Pudupuliampatti Sithalandur Post, Tiruchengode Taluk, Namakkal District.
3 S.608 Patlur Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary S.Kavery F/59 W/o.
Sengodan P.Goundampalayam Post Tiruchengode Taluk Namakkal District -637 210.
4 S.N.204 Thokkavadi Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary S.Sankar M/53 S/o.Sidha Naiker Thokkavadi Post 637 215 Tiruchengode Taluk, Namakkal District.
5 S.5834 T.Anangoor Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary V.Kalaiselvi F/51 W/o.S.Ramasamy T.Anangoor Post - 637 304 Tiruchengode Taluk, Namakkal District.
6 S.304 Vattur Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary A.Sarojini F/54 W/o.
T.Radhakrishnan Vattur Post 637 205 Tiruchengode Taluk, Namakkal District.
7 S.1405 Kolikalnatham Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary P.Kalyani F/56 W/o.Periyasamy Kolikalnatham Post Tiruchengode Taluk, Namakkal District-637 209.
8 S.404 P.Komarapalayam Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary K.Sivakumar M/49 S/o.M.Kuppusamy P.Komarapalayam 638 183, Komarapalayam Taluk, Namakkal District.
9 S.297 Padaveedu Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary A.Sekar M/55 S/o.
Athiyannan Padaveedu Post Kumarapalayam Taluk Namakkal District – 637 303.
10 S.679 Karuveppampatti Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary P.Murugesan M/55 S/o.Periya Gounder Karuveppampatti Post 637 304 Thanneerpandhalpalayam via, Tiruchengode Taluk, Namakkal District.
11 S.748 Varakurampatti Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary M.Jeevanandam M/57 S/o.Muthusamy Animoor Post 637 214 Tiruchengode Taluk, Namakkal District.
12 S.449 Sirumolasi Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary M.Selvi F/52 D/o.
Murugesan Panneerkuthipalayam Post 637 209 Tiruchengode Taluk, Namakkal District.
13 S.291 Morangam Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary R.Mani M/59 S/o.A.
Rathinam Palamedupudur Palamedu 637 503 Tiruchengode Taluk, Namakkal District.
14 S.1072 T.Neikarapatti Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary K.Natarajan M/58 S/o.Kaliyanna Gounder Chinnathambipalayam Post 637 209, Tiruchengode Taluk, Namakkal District.
15 S.288 Pilikkalpalayam Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary R.Sureshkumar M/57 S/o.Ramasamy Pilikkalpalayam Post Paramathi Velur Taluk, Namakkal District.
16 S.1067 Jameen Ilampalli Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary R.Mohanraj M/37 S/o.Raman Jameen Ilampalli Post 637 210, Paramathi Velur Taluk, Namakkal District.
17 S.1274 Sullipalayam Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary Kuppayee F/56 W/o.Rasappan Sullipalayam Post 637 203 Paramathi Velur Taluk, Namakkal District.
18 S.390 Pothanur Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary S.Prabakaran M/41 S/o.R.Somasundaram Pothanur Post 638 181 Paramathi Velur Taluk, Namakkal District.
19 S.1314 Periyasolipalayam Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary K.Shanmugam M/58 S/o.Kumarappa Gounder Periyasolipalayam Post Kabilarmalai Via, Paramathivelur Taluk, Namakkal District.
20 S.1392 Sidhampoondi Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary R.Balasubramaniam M/55 S/o.Rajavel Kondarasampalayam Post Kandampalayam Via, Paramathi Velur Taluk, Namakkal District.
21 S.1394 Kurumbalamahadevi Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary T.Mohanraj M/51 S/o.V.Thangavel Kurumbalamahadevi Post Paramathivelur Taluk, Namakkal District.
22 S.909 Anangoor Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary N.Thiyagarasan M/60 S/o.Nachimuthu Anangoor K.Ayyampalayam Post, Jedarpalayam Via, Paramathivelur Taluk, Namakkal District – 637 213.
23 S.431 Perunkurichi Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary T.Mani M/47 S/o.Thangaraj Perunkurichi Post Paramathivelur Taluk Namakkal District.
24 S.1310 Solasiramani Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary C.Ramamoorthi M/54 S/o.Chinnappa Gounder Solasiramani Post Paramathivelur Taluk, Namakkal District.
25 S.3576 Pandamangalam Primary Agricultural Cooperative Credit Society Ltd Rep. by its Secretary P.Susiladevi M/57 S/o.Kumarasami Pandamangalam Post
637 208 Paramathivelur Taluk, Namakkal District.
26 S.210 Vengarai Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary V.Balasubramanian M/52 S/o.Vaiyapuri Vengarai Post 637 208 Paramathivelur Taluk, Namakkal District.
27 S.1322 Pillur Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary M.G.Dhandapani M/53 S/o.Gopal Pillur Post 637 206 Nadanthai Via Paramathivelur Taluk, Namakkal District.
28 S.887 Kudacherry Primary Ag ricultural Cooperative Credit Society Ltd. Rep. by its Secretary C.Thangavelu M/59 S/o.Channamuthu Nadanthai Via Paramathivelur Taluk Namakkal District-637206.
29 S.609 Ramadevam Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary K.Murugan M/47 S/o.
Kathamuthu Ramadevam Post 637 203 Paramathivelur Taluk, Namakkal District.
30 S.1393 Arthanaripalayam Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary K.Thiyagarajan M/59 S/o.Karuppan Arthanaripalayam Nadanthai Post-637 206, Namakkal District.
31 S.1280 Thidumal Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary S.N.Jayaraman M/59 S/o.Narayanan Thidumal Post 637 204 Kabilarmalai Via, Paramathivelur Taluk, Namakkal District.
32 No.5559 Nadanthai Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary P.Manivannan M/57 S/o.K.Poosaripillai Nadanthai Post 637 206, Paramathivelur Taluk, Namakkal District.
33 No.6041 Kunnamalai Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary P.Shanmugam M/56 S/o.Palaniyappan Kunnamalai Post Paramathivelur Taluk, Namakkal District -637 203.
34 No.849 Nallur Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary M.Mohanapriya F/42 W/o.Shanmugam N.Kandampalayam Post Paramathivelur Taluk, Namakkal District.
35 S.741 Karichipalayam Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary P.Loganatha M/59 S/o.Palaniappan Karichipalayam Post Sithalandur Via, Paramathivelur Taluk, Namakkal District – 638 181.
36 S.336 Nachipatty Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary G.Sakunthala F/56 W/o.P.Ganesan Nachipatty Post Vennandhur Via, Rasipuram Taluk, Namakkal District-637 505.
37 S.1286 R.Pudupalayam Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary P.Raja M/49 S/o.S.Periyasamy R.Pudupalayam Post 637 408 Rasipuram Taluk, Namakkal District.
38 S.236 Akkaraipatty Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary P.Selvi M/52 S/o.Palanivel Akkaraipatty Post 637 503 Rasipuram Taluk, Namakkal District.
39 S.1239 Athanur Ayeepalayam Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary S.
Palaniappan M/56 S/o.Sundra Gounder Athanur Post Rasipuram Taluk, Namakkal District – 636 301.
40 No.10288 K.K.Valasai Primary Agricultural Cooperative Credit Society Ltd. Rep. by its Secretary S.Palaniappan M/56 S/o.Sundra Gounder K.K.Valasai P.Mettur Post 636 203, Rasipuram Taluk, Namakkal District.
41 S.11042 Palanthinnipatty Primary Agricultural Cooperative Credit Society Ltd.
Rep. by its Secretary P.Sakthivel M/55 S/o.Periyanna Palanthinnipatty Post Rasipuram Taluk, Namakkal District – 637 505. ... Petitioners Vs
1.The Income Tax Officer, Namakkal, Namakkal District.
2.The General Manager, Salem District Central Cooperative Bank Ltd., Salem, Salem District. ... Respondents PRAYER: Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari, calling for the entire records relating to the impugned order passed by the 2nd respondent in his proceedings Na.Ka.No.2416/95/Accts., dated 16.03.2021 and quash the same.
| WP.Nos. | For Petitioners | For Respondents |
| WP.17136 & 18787 of 2022 | Mr.C.Prakasam | Mr.ANR.Jayaprathap (for R1) Junior Standing Counsel No Appearance (for R2) |
| WP.17927, 21856, 24245, 24249, 24251 & 24253 of 2022 | Mr.K.Selvaraj | 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) |
| WP.24792, 25143, 25481, 25486, 25719, 25813 & 26343 of 2022 | Mr.M.Govindan | Mr.ANR.Jayaprathap (for R1) Junior Standing Counsel |
2022 Mr.R.U.Dinesh Rajkumar, Additional Government Pleader (for R2 to R4 in WP.Nos.25719, 25813 &
26343 of 2022)
COMMON ORDER
This batch of Writ Petitions has been filed by Primary Agricultural Co-
operative Credit Societies (in short ‘Society/Societies’) and turns on the appreciation of a common set of facts as well as legal provisions.
2. All the petitioner societies challenge Circulars issued by the District Central Cooperative Banks, Salem, Kancheepuram and Kumbakonam, arrayed as R2 in all writ petitions (referred to as ‘Banks’) bearing Na.Ka.No.2416/95/Accts. dated 16.03.2021, Na.Ka.1545/2006-07/P.13 dated 29.03.2021 and Na.Ka.No.2727/2020-B3, dated 07.01.2022 respectively. The societies function for the purposes of advancing crop and fertilizer loans to agriculturalists and have accounts with R2 banks.
3. The impugned Circulars refer to the statutory mandate of Section 194 N of the Income Tax Act, 1961 (in short ‘Act’) providing for deduction of tax on 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 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 of tax of cash withdrawals was restricted to business payments only. The avowed object was ‘to discourage the practice of making business payments in cash' and it was proposed 'to levy TDS of 2% of cash withdrawal exceeding one crore in an year from a bank account'. Thus, Section 194N must be held to be applicable only in respect of business payments and the present payments would not come within the ambit of Section 194N.
8. They also refer in their pleadings, to the judgment of the Hon’ble Supreme Court in the case of Commissioner of Income Tax, New Delhi Vs. Eli Lilly and Co. (India) (P) Ltd., [178 Taxmann 505]. This judgment is to the effect that the purpose of provisions for tax deduction under Chapter XVIIB, is to see that any sum which is chargeable to tax under Section 4 of the Income Tax Act must be brought within the ambit of tax with the requisite deduction.
9. Thus, it is only in respect of amounts that constitute income in the hands of the payee that tax should be deducted. In the present case, the withdrawals do not constitute income of the petitioner and hence such liability would not arise.
10. They place great reliance upon a CBDT Notification bearing No.70 of
2019 dated 20.09.2019, whereunder commission agents or traders operating under the provisions of the Agricultural Produce Market Committee (APMC) have been permitted to withdraw cash in excess of one crore without deduction of tax at source, upon them establishing that such withdrawals were for the purpose of making payments to the farmers for purc
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