Muralidhara Arikady, Chief Manager,
Sri Guru Raghavendra Sahakar Bank Ltd ,Banagalore.4
Background:- Ours is a Co Op bank registered under Karnataka state Co Op act 1959, rules 1960. Till date we are not deducting the TDs on member deposits .Recently IT dept has sought information u/s 133(6) of IT act about the TDS threshold limit crossed members deposit details , whom they claim as never shown the deposits/ interests in their annual It returns.
Upon collecting information from all co op banks of Karnataka by IT intelligence commissioner forward it to IT TDS commissioner , who deployed his team to survey the co op banks personally to collect the report . Upon collecting the report , they served notice to Branch Managers at Bangalore and defined them as default assesses , and posted the case for hearing. Now till date , the date over date is given in hearing and no order is passed by the deputy commissioner IT-TDS.
Please inform and share with us the following facts Sir:-
1. As per IT Act 1961 u/s 194 C (3) subsection V it is well established by the act and various high courts that , the co op bank is a society and all the law applicable to societies applicable to co Op Banks.
2. Now the It dept reinterprets the subsection VII (a) and (b) of the act , and orally commands that, TDS is applicable to co Op Banks and Co Op society and Co Op Banks are not the same as far as the It law concerned .
3. If the said law was implemented in 1995 Finance Act and effected from 01-07-1995 when it was effected to commercial banks , it could have applied to co Op Banks. However they never implemented it to Co Op Banks since then.
4. Subsequently CBDT has clarified the fact in its direct tax circular 9/2002 dtd 11/9/2002. That the TDs is applicable to NON MEMBERS of a Co Op Banks and members are exempted as per the subsection VII B of the IT Act.
5. The Bombay High Court order in Aug 2002 is also confirms the same, subsequently in 2012 the Gujarat high court order also reconfirms it , quoting the Bombay high court order and supreme court order for dismissing the challenge by IT dept in 2002 itself.
6. The recent(2011) Vishakapattanm co op bank also won the case against IT tribunal on the same grounds of TDS non deduction to its members.
7. When all the cases are favoured the Co Op sector , how the It dept now orally insists for the TDs deduction to its members? Upon lapse of the 18 years of subsection vii b introduced in the law.
8. Now IT dept asks only 3 yrs details of a assesses since he cannot ask beyond that as per law of Limitation applies. However once IT dept opens for 2010-11, he can reopen the assessment for 6 years and harass the co Op Bank members. In such case , if IT officer can forget 15 years TDs lapses and enquire only 3 years due to limitation, then who is responsible for the lapse of his duty, which incurred a huge loss to countries exchequer, can’t we challenge on this ground and ask for a status quo from the Hon’ble High court? To get immediate relief.
9. When CBDT itself clarified the fact in its circular 9/2002, the IT dept claims that , the impugned circular quashed by the High court. If it is the case , please refer the quashing order where it is ordered that the, CBDT Direct tax circular 9/2002 dtd 11/9/2002 ANNEXURE B stands quashed . The point to be noted is Annexure B not the entire contents of the main circular. Annexure B is the own definition made by IT dept which is ridiculed by the Hon’ble Bombay high court and quashed it.
10. Please inform us can we challenge their claim and branding the Banks as assesses in default under It act 1961.
I C Naik
IT people are right. Better not fight.