Tuesday, 30 April 2013

Circular passed by CBDT as per S. 119 beyond its authority is not considered to be effective:


As per the provisions of Section 194A(3)(v), a co-operative society is not supposed to comply with the requirements of TDS as prescribed u/s 194A at the time of paying interest to its members or to any other co-operative society. The said section makes no distinction between different classes of members. However, CBDT issued a Circular dated 11/09/02 making certain distinction between different classes of members and narrowed down the scope of members in respect of whom the said exemption was available. On challenging the said validity of the said circular, the Hon’ble High Court held that CBDT has crossed its authority under the garb of Section 119 of the Act and hence, the said circular is not effective.

[GUJARAT URBAN CO-OPERATIVE BANK FEDERATION (SCA 11209 of 2002 with 1465 of 2003, Judgment dated 12/06/12)]

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