DD. 541 Adiyanuthu Primary Agricultural Co-operative Credit Society V. The Income Tax Officer

WP(MD)/4843/2023

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The case involves multiple Primary Agricultural Co-operative Credit Societies (petitioners) seeking a writ of mandamus against various respondents including the Income Tax Officer and the Central Board of Direct Taxes, concerning the application of Section 194N of the Income Tax Act, which imposes TDS on cash transactions exceeding one crore. The petitioners argued that the cash transactions are essential for their operations benefiting agriculturalists, and sought an exemption from this provision. The court referenced previous similar cases and noted that the Chief Secretary of Tamil Nadu had requested an exemption for these societies, which was considered but ultimately declined, with an adjustment increasing the threshold limit for TDS from one crore to three crores. The court dismissed the petition, citing that the respondents had already addressed the exemption request by increasing the threshold limit.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 756465 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 23-08-2023
• Assessment Year: misc
• Other Referred Cases: W.P.(MD).No.4499 of 2023, W.P.(MD).No.6233 of 2020
• Laws Referred To: Article 226 of the Constitution of India, Section 194N of the Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: N KUMAR; R KUMAR
• Assessee Lawyers: V O S KALAISELVAM
• Keywords: Cash transactions; Cooperative Societies; Exemption; TDS; Threshold Limit; Writ of Mandamus
• Section: 194N

Judgement Text

"W.P.(MD).No.4843 of 2023 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 23.08.2023 CORAM THE HONOURABLE MRS.JUSTICE S.SRIMATHY W.P.(MD).No.4843 of 2023 and W.M.P.(MD).Nos.4530 and 4531 of 2023 1.D.D.541 Adiyanuthu Primary Agricultural Co-operative Credit Society, Represented through its Secretary, Adiyanoothu Post, Dindigul Taluk, Dindigul District – 624 003. 2.A.1237 Kullalakundu Primary Agricultural Co-operative Credit Society Limited, Represented through its Secretary, Kullalakundu Post, Nilakottai Taluk, Dindigul District – 624 201. 3.D.D.388 Kuppammalpatti Primary Agricultural Co-operative Credit Society Limited, Represented through its Secretary, Kuppammalpatti Post, Nilakottai Taluk, Dindigul District – 624 212. 4.DD.544 Sirumalai Primary Agricultural Co-operative Credit Society, Represented through its Secretary, Sirumalai Post, Dindigul Taluk, Dindigul District – 624 003. 5.DD.517 Chettinaickenpatty Primary Agricultural Co-operative Credit Society, Represented through its Secretary, Chettinaickenpatty Post, Dindigul Taluk, Dindigul District – 624 004. 1/9 https://www.mhc.tn.gov.in/judis W.P.(MD).No.4843 of 2023 6.DD.537 Narasingapuram Primary Agricultural Co-operative Credit Society, Represented through its Secretary, Narasingapuram Post, A.Vellode Village, Dindigul District – 624 307. ... Petitioners Vs. 1.The Income Tax Officer, O/o. Income Tax, TDS Ward, Madurai ME, Income Tax Staff Quarters Complex, Kulamangalam Main Road, Meenambalpuram, Madurai – 625 002. 2.The Managing Director / Joint Registrar of Dindigul Central Cooperative Bank Kootturavu Nagar, Trichy Salai, Dindigul – 624 005. 3.The Registrar of Cooperative Societies, 170, Periyar EVR High Road, Kilpauk, Chennai – 10. 4.The Principal Secretary to Government Cooperation, Food and Consumer Protection Department, Secretariat, Chennai – 9. 5.The Director, Ministry of Finance, Department of Revenue, Room No.48C, North Block, New Delhi – 110 001. 6.Thiru.Nitin Gupta, Chairperson, Central Board of Direct Taxes, New Delhi. ... Respondents 2/9 https://www.mhc.tn.gov.in/judis W.P.(MD).No.4843 of 2023 Prayer : Writ Petition filed under Article 226 of the Constitution of India, praying this Court to issue a Writ of Mandamus, directing the fifth and sixth respondents into the proceedings of the fourth respondent in D.O.Lr.No. 15350/CC1/2022 dated 27.09.2022 to accord exemption to the petitioners and direct the respondents not to take coercive steps including deduction of TDS till the appropriate orders are passed by the fifth and sixth respondents into the proceedings as above. For Petitioners : Mr.V.O.S.Kalaiselvam For R-1 : Mr.N.Dilip Kumar, Senior Standing Counsel. For R-2 to R-4 : Mr.R.Suresh Kumar, Additional Government Pleader. ORDER This Writ Petition is filed for Mandamus directing the fifth and sixth respondents to consider the proceedings of the fourth respondent in D.O.Lr.No. 15350/CC1/2022 dated 27.09.2022 to accord exemption to the petitioners and direct the respondents not to take coercive steps including deduction of TDS till the appropriate orders are passed by the fifth and sixth respondents. 2. Admittedly, the petitioners are functioning for the welfare of the agriculturalist. The cooperative societies transactions would be in cash, since the some of the agriculturalist would not have bank accounts. As the 3/9 https://www.mhc.tn.gov.in/judis W.P.(MD).No.4843 of 2023 respondents introduced new provisions under Section 194N restricting the cash transactions to Rupees One Crore. If any transaction is over and above rupees one crore, then the respective cooperative society is liable for tax under TDS. This has caused difficulties to the societies to implement the schemes for the benefits of agriculturalist. Section 194N is challenged before the Hon'ble Division Bench in batch of cases and the said cases are still pending. 3. In the meanwhile, the Chief Secretary of the Tamil Nadu Government has sent a communication dated 27.09.2022 seeking exemption to all the cooperative societies from the purview of Section 194N. According to the petitioners, there are similar orders passed regarding the claim of the petitioners and they relied on W.P.(MD).No.4499 of 2023 batch vide order dated 03.03.2023 and W.P.(MD).No.6233 of 2020 vide order dated 18.07.2023. It is seen that the Learned Single Judge has taken note of the letter issued by the Chief Secretary and has issued a direction not to take coercive steps until the exemption letter is considered by the Central Board of Direct Taxes. 4. The learned Senior Standing Counsel appearing for the respondents submitted that the letter was considered by the authorities and they have issued an Office Memorandum dated 22.02.2023 and the same is extracted hereunder: 4/9 https://www.mhc.tn.gov.in/judis W.P.(MD).No.4843 of 2023 5/9 https://www.mhc.tn.gov.in/judis W.P.(MD).No.4843 of 2023 5. In the said Circular F.No.370153/9/2023-TPL dated 22.02.2023, the Under Secretary of Ministry of Finance, Department of Revenue Central Board of Direct Taxes has referred to the letter dated 27.09.2022, which the petitioner is relying on and categorical stated that exemption under Section 194N cannot be granted. However, threshold limit of one crore would be increased to three crore and the increased threshold limit would come into effect from 01.04.2023. Therefore, the respondents have clearly stated that the earlier provisions will be applicable from the date of amendment until 31.03.2023 and the limit is one crore. From 01.04.2023, the petitioners are entitled to threshold limit of three crores. If over and above one crore/three crore, transactions are made in cash, then the petitioners are liable to pay TDS. Therefore, the contention of the petitioners that the exemption was not considered cannot be entertained, since the exemption was considered and the same was declined by increasing the threshold limit. Therefore, the petitioners have not made out any case and hence mandamus cannot be issued. 6/9 https://www.mhc.tn.gov.in/judis W.P.(MD).No.4843 of 2023 6. With the above observations, this Writ Petition is dismissed. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed. 23.08.2023 NCC : Yes/No Index : Yes / No Internet : Yes/ No Nsr To 1.The Income Tax Officer, O/o. Income Tax, TDS Ward, Madurai ME, Income Tax Staff Quarters Complex, Kulamangalam Main Road, Meenambalpuram, Madurai – 625 002. 2.The Managing Director / Joint Registrar of Dindigul Central Cooperative Bank Kootturavu Nagar, Trichy Salai, Dindigul – 624 005. 3.The Registrar of Cooperative Societies, 170, Periyar EVR High Road, Kilpauk, Chennai – 10. 7/9 https://www.mhc.tn.gov.in/judis W.P.(MD).No.4843 of 2023 4.The Principal Secretary to Government Cooperation, Food and Consumer Protection Department, Secretariat, Chennai – 9. 5.The Director, Ministry of Finance, Department of Revenue, Room No.48C, North Block, New Delhi – 110 001. 6.Thiru.Nitin Gupta, Chairperson, Central Board of Direct Taxes, New Delhi. 8/9 https://www.mhc.tn.gov.in/judis W.P.(MD).No.4843 of 2023 S.SRIMATHY, J. Nsr W.P.(MD).No.4843 of 2023 23.08.2023 9/9 https://www.mhc.tn.gov.in/judis "