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2015 (9) TMI 1674 - ITAT BANGALORETDS u/s 194A - considering the Board to be an institution, association or body falling within sub-clause (f) of clause (iii) of sub-section (3) of Section 194A - Whether the State Welfare Board constituted through the notification issued under / in consonance with Section 18(1) of the Building and Other Construction Workers’ (Regulation and Employment and Conditions of Service) Act, 1996 could be considering as a corporation established by a Central / State or Provincial Act, falling within the meaning of notification GO No.SO 3469, dt.22.10.1970 ? - HELD THAT:- The common genus that runs through all the three clauses is that ownership is vested with the Government either by way of holding the shares or by way of financing. If a company whose shares are held by the government is considered as one falling within sub-clause (f) of clause (iii) of section 194A of the Act, there is no reason why a welfare board constituted in accordance with the Central enactment should be excluded from its ambit. Especially so since funds of the Board was nothing but only cess collected by contractors under a statutory edict. Apart from the above, what we find is that the Board has been established through a notification issued, under section 18 of Building and other Construction Workers’ (Regulation and Employment and Conditions of Service) Act, 1996. This Section has been reproduced by us above at para ten above. Clause (2) thereof states that the Board shall be a body corporate. To understand what is a body corporate, when a ready definition is not available in the relevant statutes, the best place to look is the Companies Act, 1956. A body corporate is considered equivalent to a corporation. The board can thus very well be construed as a corporation. It has been constituted to exercise the powers conferred on a State under the Building and other Construction Workers’ (Regulation and Employment and Conditions of Service) Act, 1996. Thus in our opinion the methodology in which and the purpose for which the board has been created, when seen along with the wording of SO No.3469, dt.22.10.1970, would show that it could claim itself to be falling within subclause (f) of clause (iii) to sub-section (3) of Section 194A of the Act. Assessee had a bonafide reason to believe that interest payment on deposits placed by the Board did not warrant deduction of tax at source. Assessee was justified in considering the Board to be an institution, association or body falling within sub-clause (f) of clause (iii) of sub-section (3) of Section 194A of the Act. It had every reason to hold a bonafide belief that it was not liable to deduct tax at source on the interest payments effected by it to the Board. Especially so since Board gave all details to the assessee as to how it was constituted and also explained why the interest paid to it was exempt. In the facts and circumstances of the case, we are therefore of the opinion that assessee could not be deemed to be one in default for not deducting tax at source on interest paid to the board. Accordingly we set aside the orders of the Ld. CIT (A) and that of ITO (TDS) treating the assessee as one in default u/s.201(1) and levying interest u/s.201(1A) of the Act. - Decided in favour of assessee.
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