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: 29.04.2014 CORAM: THE HONOURABLE MR.JUSTICE R.SUBBIAH Writ Petition (MD) No.7036 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... Petitioner Vs. 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... Respondents Petition filed under Article 226 of the Constitution of Indiato issue a Writ of Certiorari to call for the records of thepetitioner herein (in PAN No. ) for the Assessment Year2012-2013 and the order passed by the second respondent u/s.201(1), vide C.No.TDS/VNR/MRIR00354E/2013-14, dated 17.03.2014 andquash the order passed by the second respondent. For Petitioner : Mr.K.RaviFor Respondents: Mr.R.Krishnamoorthy Senior Central Government Standing Counsel ORDER The petitioner has filed this writ petition for a Certiorarihttps://hcservices.ecourts.gov.in/hcservices/to call for the records of the petitioner herein (in PANNo.AAIFR2500A) for the Assessment Year 2012-2013 and the orderpassedbythesecondrespondentu/s.201(1),vide C.No.TDS/VNR/MRIR00354E/2013-14, dated 17.03.2014 and quash theorder passed by the second respondent. 2. In the petition, the petitioner has averred that thepetitioner is a Co-operative Society under the Tamil Nadu Co-operative Societies Act, 1983 and obtained license to carry outbanking activities. The petitioner had debited interest payment ondeposits and borrowings to the tune of Rs.7,62,51,271/- for theAssessment year 2012-2013. But, the petitioner did not deduct taxat source under Section 194A of the Act on the interest paid todepositors, since the same was paid only to the members of thepetitioner. The petitioner was guided in this regard by theprovisions of the Act in Section 194 A(3)(v) and the decision ofthe Bombay High Court in Jalgaon District Central Co-operativeBank Ltd. vs. Union of India. The second respondent vide an orderunder Section 201(1) of the Income Tax Act, videC.No.TDS/VNR/MRIR00354E/2013-14, dated 17.03.2014 for theassessment year 2012-2013 has raised a demand of Rs.93,02,655/-(Tax deductible/payable Rs.76,25,127/- and interest under Section201(1A) Rs.16,77,528), alleging non compliance of TDS provisions. 3. It is the case of the petitioner that the petitioner is aCo-operative Society carrying on Banking business and governed byTamil Nadu Co-operative Societies Act, 1983. The petitioner beingaggrieved by the order under Section 201(1) dated 17.03.2014 ofthe second respondent preferred an appeal before the firstrespondent on 04.04.2014 which is pending adjudication. Beingaggrieved by the order of demand under Section 201(1) of theIncome Tax Act, the petitioner filed a petition for stay ofcollection of the tax demanded before the first respondent and notto treat the assessee as an assessee in default. Powers have beenvested under Section 220 (6) of the Income Tax Act, on the firstrespondent to consider such application and to treat the Assesseeas not in default. This application is yet to be disposed of. Inthe meanwhile, the present writ petition has been filed to quashthe impugned order. 4. Learned counsel appearing for the Income Tax Departmentsubmits that already appeal has been filed by the petitioner andthe same is pending before the first respondent. Therefore, thepetitioner has to work out his remedy only in the pending appeal. 4. Learned counsel appearing for the Income Tax Departmentsubmits that already appeal has been filed by the petitioner andthe same is pending before the first respondent. Therefore, thepetitioner has to work out his remedy only in the pending appeal. 5. Learned counsel for the petitioner submits that as perSection 194A(3) of the Income Tax Act, the exemption is availableto the interest payments made only to its members or to any otherCo-operative Society. Since the petitioner is squarely covered bythe above exemption provided under Section 194A(3) of the IncomeTax Act, the impugned order is not legally sustainable. Therefore,https://hcservices.ecourts.gov.in/hcservices/the writ petition is maintainable. 6. Irrespective of the submissions made on either side, I amof the opinion that since an appeal is pending before the firstrespondent, it would be appropriate for the petitioner to work outhis remedy before the appellate authority by raising all thegrounds. Hence, this Court is constrained to pass the followingorders:- The petitioner is directed to pay 25% of the demandamount, within a period of eight weeks. On such payment,the first respondent is directed to take the appeal anddispose of the same, within a period of 8 weeks thereafter.The petitioner is at liberty to raise all the defenceraised in this writ petition before the first respondent. The writ petition is disposed of accordingly. No costs.Consequently, connected miscellaneous petition is closed. Sd/-Assistant Registrar(Writs) /True Copy/ To Sub-Assistant Registrar 1.The Commissioner of Income Tax (Appeals)-II, Income Tax Department, V.P.R.Nadar Road, Madurai. 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. Railway Feeder Road, Virudhunagar, Virudhunagar District. +1cc to Mr.R.Krishnamoorthy, Advocate, in SR. No.26999/14 +1cc to Mr.K.Ravi, Advocate, in SR. No.26542/14. jikr msm 02.05.2014 p3/5c