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2016 (8) TMI 1548 - AT - Income TaxTDS u.s 194 - TDS on payments made to an exempt entity like M/s. APIIC, in whose respect eligibility for exemption u/s. 11 - whether eligibility for exemption u/s. 11 is to be decided by the AD from year to year? - HELD THAT:- There is no provision in the IT Act to grant blanket permit for non-deduction of tax except by following procedure of applying to the appropriate authority. To get the exemption certificate, the concern seeking exemption from the deductee, it has to apply to the DIT (Exemption) with the request in proper form, only upon approval from DIT (Exemption) in writing, the exemption is allowed not otherwise. In our considered view, the grounds raised by the revenue are correct. In the present case, the CIT(A) has made the passing comment that APIIC is a exempt entity, but, the CIT(A) has allowed the ground of assessee treating the transaction as capital in nature. CIT(A) has not adjudicated this ground mainly on exemption of entity. Hence, the ground raised by the revenue is dismissed. Whether M/s. APIIC is a corporation established by the State Government of Andhra Pradesh and not by the Central Government so as to enjoy the exemption available u/s. 196(iii)? - There is no dispute that APIIC established under State Act. In the present case, CIT(A) has allowed the exemption by treating the APIIC as a concern u/s 194A(iii)(b) of the Act. On careful observation, the concern which is exempt u/s 194A(iii)(b) should be a financial corporation established by or under central, state or provincial Act. On the record submitted before us does not clarify that APIIC is a financial corporation. Since we are not sure about the type of financial corporation, we remit this issue back to the file of the AO to determine the status. In case it is found that it is a financial corporation, the exemption may be granted. Whether 'Provision for Expenses" is made on adhoc basis, no TDS is deductible on such provision, which is in contravention to the provisions of section 194(2) ? - CIT(A) has allowed as no TDS is deductible on such provision, which is in contravention to the provisions of section 194(2) of the Ac. We are surprised to observe that there is no such section 194(2) in the Act. The section referred by the revenue is relating TDS on dividend. Since, there is no relevance to the present case, we are not considering this ground for adjudication. Appeal of the revenue is partly allowed for statistical purposes
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