The Ramanathapuram District Central Co-Operative Bank Ltd v. The Commissioner Of Income Tax (Appeals)-Ii, Income Tax Department, V.p.r.nadar Road, Madurai

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURTDATED: 29.04.2014Coram: THE HONOURABLE MR.JUSTICE R.SUBBIAH Writ Petition (MD) No.7037 of 2014 & M.P.(MD).No.1 of 2014 The Ramanathapuram District Central Co-operative Bank Ltd.,Represented by its Managing DirectorS.SenthamilselviD/o.M.Subramanian265-E, Vandikara Street,Ramanathapuram,Ramanathapuram District... PetitionerVs. 1.The Commissioner of Income Tax (Appeals)-II, Income Tax Department, V.P.R.Nadar Road, Madurai. 2.The Income Tax Officer, Income Tax Department, TDS ward, Railway Feeder Road, Virudhunagar, Virudhunagar District.. . RespondentsPetition filed under Article 226 of the Constitution of India toissue a Writ of Certiorari to call for the records of the petitionerherein (in PAN No. ) for the Assessment Year 2013-2014 and theorderpassedbythesecondrespondentu/s.201(1),videC.No.TDS/VNR/MRIR00354E/2013-14, dated 17.03.2014 and quash the orderpassed by the second respondent. For Petitioner : Mr.K.RaviFor Respondents: Mr.R.KrishnamoorthySenior Central Government Standing CounselORDER The petitioner has filed this writ petition for a Certiorari tocall for the records of the petitioner herein (in PAN No. ) forthe Assessment Year 2013-2014 and the order passed by the secondrespondent u/s.201(1), vide C.No.TDS/VNR/MRIR00354E/2013-14, dated17.03.2014 and quash the order passed by the second respondent.https://hcservices.ecourts.gov.in/hcservices/ 2. In the petition, the petitioner has averred that the petitioneris a Co-operative Society under the Tamil Nadu Co-operative SocietiesAct, 1983 and obtained license to carry out banking activities. Thepetitioner had debited interest payment on deposits and borrowings tothe tune of Rs.13,96,89,841/- for the Assessment year 2013-2014. But,the petitioner did not deduct tax at source under Section 194A of theAct on the interest paid to depositors, since the same was paid only tothe members of the petitioner. The petitioner was guided in this regardby the provisions of the Act in Section 194 A(3)(v) and the decision ofthe Bombay High Court in Jalgaon District Central Co-operative Bank Ltd.vs. Union of India. The second respondent vide an order under Section201(1) of the Income Tax Act, vide C.No.TDS/VNR/MRIR00354E/2013-14,dated 17.03.2014 for the assessment year 2013-2014 has raised a demandof Rs.1,53,65,882/- (Tax deductible/payable Rs.1,39,68,984/- andinterest under Section 201(1A) Rs.13,96,898), alleging non compliance ofTDS provisions. 3. It is the case of the petitioner that the petitioner is a Co-operative Society carrying on Banking business and governed by TamilNadu Co-operative Societies Act, 1983. The petitioner being aggrieved bythe order under Section 201(1) dated 17.03.2014 of the second respondentpreferred an appeal before the first respondent on 04.04.2014 which ispending adjudication. Being aggrieved by the order of demand underSection 201(1) of the Income Tax Act, the petitioner filed a petitionfor stay of collection of the tax demanded before the first respondentand not to treat the assessee as an assessee in default. Powers havebeen vested under Section 220 (6) of the Income Tax Act, on the firstrespondent to consider such application and to treat the Assessee as notin default. This application is yet to be disposed of. In the meanwhile,the present writ petition has been filed to quash the impugned order. 4. Learned counsel appearing for the Income Tax Department submitsthat already appeal has been filed by the petitioner and the same ispending before the first respondent. Therefore, the petitioner has towork out his remedy only in the pending appeal. 4. Learned counsel appearing for the Income Tax Department submitsthat already appeal has been filed by the petitioner and the same ispending before the first respondent. Therefore, the petitioner has towork out his remedy only in the pending appeal. 5. Learned counsel for the petitioner submits that as per Section194A(3) of the Income Tax Act, the exemption is available to theinterest payments made only to its members or to any other Co-operativeSociety. Since the petitioner is squarely covered by the above exemptionprovided under Section 194A(3) of the Income Tax Act, the impugned orderis not legally sustainable. Therefore, the writ petition is maintainable. 6. Irrespective of the submissions made on either side, I am of theopinion that since an appeal is pending before the first respondent, itwould be appropriate for the petitioner to work out his remedy beforethe appellate authority by raising all the grounds. Hence, this Court isconstrained to pass the following orders:- The petitioner is directed to pay 25% of the demand amount,within a period of eight weeks. On such payment, the firstrespondent is directed to take the appeal and dispose of thesame, within a period of 8 weeks thereafter. The petitioner ishttps://hcservices.ecourts.gov.in/hcservices/at liberty to raise all the defence raised in this writ petitionbefore the first respondent. 3 The writ petition is disposed of accordingly. No costs. Consequently,connected miscellaneous petition is closed.Sd/-Assistant Registrar(W) /TRUE COPY/ Sub Assistant Registrar To1.The Commissioner of Income Tax (Appeals)-II, Income Tax Department, V.P.R.Nadar Road, Madurai.2.The Income Tax Officer, Income Tax Department, TDS ward, Railway Feeder Road, Virudhunagar, Virudhunagar District. +1cc to Mr.R.Krishnamoorthy, Advocate SR.No.26996 jikrPA/02.05.2014/3P/4C (IT) Writ Petition (MD) No.7037 of 2014 &M.P.(MD).No.1 of 201429.04.2014