IDUKKI DISTRICT POST AND TELEGRAPH DEPARTMENTS EMPLOYEES CO OPERATIVE SOCIETY IN RE Vs. IDUKKI DISTRICT POST AND TELEGRAPH DEPARTMENTS EMPLOYEES CO OPERATIVE SOCIETY IN RE

JUDGEMENT

(1.) THE petitioners are primary credit societies registered under the Kerala Co operative Societies Act. THEy have challenged the notices issued by the Income-tax Officer in reference to tax deduction on interest other than interest on securities required under Section 194A of the Income-tax Act, 1961 (hereinafter referred to as "the Act").

(2.) THE impugned notices proceeded on the basis that the co operative societies would be governed by Section 194A of the Act for the purpose of deduction of tax at source from the interest paid or credited on deposits and their failure to deduct tax at source amounts to violation of the provisions of the Income-tax Act. THE co operative societies have taken up the stand that they are exempted under Section 194A and they are not coming within the purview of the said section. THErefore, the question for consideration is whether the petitioner-co operative societies are liable to deduct tax on interest paid or credited at source as required. Section 194A of the Act obliges any person who is responsible for paying any income by way of interest other than income by way of interest on securities, shall at the time of credit of such income or payment thereafter deduct income-tax thereon at the rates. Sub-section (3) of Section 194A sets out certain categories of persons who are exempted from Section 194A.

(3.) THE case of the petitioners is that for the purpose of understanding the expression "co operative society" one need not go beyond the definition given under the Income-tax Act. According to Section 2(19), it means a cooperative society registered under the Co operative Societies Act. THE petitioners satisfy this definition.