Disposed

N.Bhaskaran Nair v. State of Kerala

Kerala HC2 Dec 2020WP(C)/10698/2020

Case brief

AI extract

What is this about?

Petitioner-proprietor of chit fund sought writ directing respondents to enable Foremen to deposit security in their own PAN accounts to claim TDS credit. Court held RBI Master Circular prevents uploading third-party PANs. Court directed Registrar to frame new procedure allowing deposit in Foreman's name with lien in favour of Registrar. Petition disposed of directing Respondent 2 to adopt the prop

What did the court decide?

Directing Respondent 2 to consider petitioner's representation for deposit scheme with lien in Foreman's name and take final decision within two months.

N.Bhaskaran Nair Vs State of Kerala — Banking and Recovery | Kerala HC (2020)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE N.NAGARESH

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WEDNESDAY,THE 2ND DAY OF DECEMBER 2020/11TH AGRAHAYANA,1942

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WP(C).No.10698 OF 2020(J)

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PETITIONER:

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N.BHASKARAN NAIR, AGED 71 YEARS, S/O. NARAYANAN NAIR, PROPRIETOR, SURYANARAYANA CHIT FUNDS PVT. LTD., KANJAVELI P.O., KOLLAM, PIN-691 602.

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BY ADV. SMT.ANJANA KANNATH

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RESPONDENTS:

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1 STATE OF KERALA REPRESENTED BY ITS SECRETARY TO GOVERNMENT, TAX DEPARTMENT, THIRUVANANTHAPURAM, PIN-695 001.

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2 REGISTRATION INSPECTOR GENERAL,

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VANCHIYOOR, THIRUVANANTHAPURAM, PIN-695 035.

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3 THE DIVISIONAL MANAGER,CANARA BANK, CONVENER SLBC, CANARA BANK BUILDING, SPENCOR JN, MG ROAD, THIRUVANANTHAPURAM, PIN-695 001.

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4 ASSISTANT REGISTRAR OF CHITTY, ANCHALUMOODU, KOLLAM – 691 601.

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ADDL. 5 THE MANAGER,STATE BANK OF INDIA, THRIKKADAVOOR BRANCH, ACHALUMMOODU, KOLLAM, PIN-691 601. (IMPLEADED AS PER ORDER IN IA 1/2020 DATED 24-8-2020).

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R3 BY ADV. DR.PAULY MATHEW MURICKEN R5 BY ADV. SHRI.JAWAHAR JOSE GOVERNMENT PLEADER SMT. DEEPA NARAYANAN

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02.12.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) No.10698/2020

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J U D G M E N T

~ ~ ~ ~ ~ ~ ~ ~ ~

Dated this the 2^nd day of December, 2020

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Petitioner, who is the Proprietor and Manager of a Chit Fund Company, seeks to issue a writ of Mandamus commanding the 2^nd and 3^rd respondents to implement the decision in Ext.P2 which was taken as per the direction of this Court in Ext.P1 judgment.

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The petitioner states that as per Section 20(a)(i) of the Chit Funds Act, 1982, a Foreman applying for previous sanction to conduct chit shall deposit in the name of the Registrar, an amount equal to 50% of the chit amount in cash in an approved Bank. Such Foremen-depositors can withdraw the deposited amount after the chit. The Bank used to deduct a tax on the interest arising on such deposits.

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However, the petitioner and other Foremen who are depositing security amounts with the Bank, are unable to

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WP(C) No.10698/2020

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claim/get credit of the TDS amount while filing the income tax returns, for the reason that the amount is being deposited in the PAN account number of the Assistant Registrar of Chitties and not in the PAN number of the depositors.

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Though representations were filed before the Registration Inspector General, the said grievance of the Foreman remained unredressed. The petitioner thereupon approached this Court filing W.P.(C) No.7277/2019 seeking to enable the Foremen to deposit security amount with the PAN number of the Foremen. This Court, as per Ext.P1 judgment dated 28.03.2019 in W.P.(C) No.7277/2019, directed the 2^nd respondent to consider the issue.

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The 1^st respondent thereupon convened a meeting to decide the issue relating to the remittance of chitty security deposit. A decision was taken in the meeting to enable the Foremen to deposit the security amount in the name of Assistant Registrar on behalf of the Foremen with the PAN number of the Foremen. Though a decision was taken, the same was not implemented. The petitioner thereafter

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submitted Ext.P3 representation before the Inspector General of Registration. The representation did not yield any result. It is in the said circumstances that the petitioner has approached this Court.

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I have heard learned counsel for the petitioner, learned Government Pleader appearing for respondents 1, 2 and 4 and learned Standing Counsel representing the 3^rd respondent and the additional 5^th respondent.

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Ext.P2 minutes of the meeting held on 03.07.2019 in the Chamber of the Secretary, Taxes Department regarding the remittance of Chitty Security Deposit, in which the Divisional Manager, SLBC, Canara Bank was also a participant, the following decision was taken:-

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“Decision

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SLBC shall give instruction to the Banks for making necessary entries in the following manner while remitting the Chit security deposit as per Central Chit Fund Act Section 20(1).

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“Deposited in the name of Assistant Registrar.......... on behalf of …........... (name of company) with PAN No............”

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The learned counsel for the additional 5^th

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respondent submitted that as the deposits are made in the name of the Assistant Registrar of Chitties as per his request, the Permanent Account Number issued by the Income Tax Department in the name of Assistant Registrar alone can be shown in the said account, by virtue of the Ext.R5(b) Master Circular issued by the Reserve Bank of India. As the Master Circulars issued by the RBI is a delegated legislation, under Section 35(a) of the Banking Regulation Act, 1949, the Bank is bound to comply with the said Circular.

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The counter affidavit filed by the 5^th respondent proceeds to state as follows:-

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“6. As per Section 139-A(5) of the Income Tax Act, every person shall have to quote the PAN number in all documents pertaining to such transactions as may be prescribed by the Board in the interests of the revenue. Accordingly, it is prescribed as per serial number 12 in the table appended to Rule 114-B of the Income Tax Rules, for every term deposit with a Banking Company to which the Banking Regulation Act applies, the PAN number will have to be quoted by the account holder. Based upon the said statutory provision, the State Bank of India, developed a unified sophisticated software throughout the country, where

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there is no provision to upload the PAN number of a 3^rd party other than the account holder. Rather, a reading of Section 194-A of the Income Tax Act, mandates the person who is the recipient of interest alone, who will have to pay the tax. The Tax Deductible at Source (in short TDS) can only be deducted, and can be given due credit, only to the PAN account of the foreman, cannot be shown in the account of the Assistant Registrar of Chitty. Thus, legally, the mentioning of PAN account details of a 3^rd party, other than the account holder, is not a legal requirement, and it is an irrelevant requirement also.

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It is submitted that the grievance projected by the petitioner can be redressed, only if, the security deposit so made under Section 15(1)(b) of the Chitties Act, is deposited in the name of respective foreman, with a marking of “lien” in favour of the Assistant Registrar. So, the Assistant Registrar of chitty should come forward with a new procedure, by permitting the foreman to make the statutory deposit in their own name, with “lien” in favour of the Assistant Registrar, then alone, the PAN detail of the foreman can be documented by the bank.”

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Therefore, the Foremen can be permitted to make statutory deposit in their own name, granting lien to the Assistant Registrar, contended the Standing Counsel for the 5^th respondent.

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After hearing the learned Standing Counsel for the 5^th respondent, this Court is of the opinion that the proposal contained in the counter affidavit filed by the additional 5^th respondent is reasonable and practicable. However, in order

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to adopt this procedure, the Registrar of Chitties will have to frame a new procedure by permitting the Foremen to make the statutory deposit in their own name, with lien in favour of the Assistant Registrar. This is a matter to be considered on the administrative side by respondents 1 and 2.

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In the circumstances, the writ petition is disposed of directing the 2^nd respondent-Registration Inspector General to consider Ext.P3 representation filed by the petitioner, in the light of the averments made in paragraphs 6 and 7 of the counter affidavit filed by the additional 5^th respondent, quoted hereinabove. The 2^nd respondent shall take a final decision in the matter within a period of two months.

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Sd/- N. NAGARESH, JUDGE

aks/02.12.2020

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APPENDIX

PETITIONER'S EXHIBITS:

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EXHIBIT P1 TRUE COPY OF THE JUDGMENT IN WP(C) NO.7277/2019 DATED 28.03.2019.

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EXHIBIT P2 TRUE COPY OF THE PROCEEDINGS WHICH WAS HELD IN THE CHAMBER OF THE 1ST RESPONDENT BEARING NO.TAXES/C3/64/2019-TAXES DATED 01.08.2019.

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EXHIBIT P3

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TRUE COPY OF THE REPRESENTATION DATED 12.05.2020 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT ALONG WITH ITS RECEIPT.

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EXHIBIT P4

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TRUE COPY OF THE REPRESENTATION DATED 12.05.2020 FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT ALONG WITH ITS RECEIPT.

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RESPONDENTS' EXHIBITS:

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EXHIBIT R5(a) TRUE COPY OF THE SPECIMEN AUTHORISATION GIVEN BY THE ASSISTANT REGISTRAR OF CHITTY.

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EXHIBIT R5(b)

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TRUE COPY OF THE RELEVANT PAGES OF THE MASTER CIRCULAR ISSUED BY THE RESERVE BANK.

N.Bhaskaran Nair v. State of Kerala

Case brief

What is this about?

What did the court decide?

N.Bhaskaran Nair v. State of Kerala

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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