Section 194N TDS Applies to Cooperative Credit Societies | HC

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Section 194N TDS on cooperative societies

Case Details: A 1160 Manjanaickanpatti Primary Agricultural Cooperative Credit Society Ltd. vs. Deputy Commissioner of Income-tax - [2025] 173 taxmann.com 860 (Madras)

Judiciary and Counsel Details

  • Vivek Kumar Singh, J.
  • Silambanan, Sr. Counsel for the Petitioner.
  • N. Dilip Kumar, Sr. Standing Counsel & D. Shanmugaraja Sethupathi for the Respondent.

Facts of the Case

The petitioner was a cooperative credit society constituted by its members as shareholders, dedicated to serving their interests. The Government of India and the Government of Tamil Nadu implement their policies through such societies. The Government’s sanction funds through District Central Co-operative Banks to primary cooperative societies, and members benefit from loans, subsidies, waivers and annual gifts like Pongal gifts distributed through ration shops under the control of these societies.

The petitioner contended that the amendment to the Income Tax Act exempted cooperative societies engaged in banking activities from the purview of Section 194N. It had been consistently held that gifts like Pongal gifts and banking transactions are not subject to Section 194N.

High Court Held

The Madras High Court held that Section 194N applies to the petitioner’s transactions, including loans and subsidies, irrespective of the cooperative society’s nature. The legal provisions and amendments are clear, and no exemption applies in this case as claimed by the petitioner. The respondents have followed the procedures properly and passed the impugned orders in accordance with the law.

The court distinguished the precedents cited by the petitioner, noting that the factual circumstances of those cases differed from the present case. Therefore, the court upheld the respondents’ actions, including the deduction of TDS, as lawful and procedurally correct.

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied