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2021 (9) TMI 1219 - AT - Income TaxTDS u/s 194A - interest payment to APIIC[State Government undertaking] - 2nd round of litigation - whether the APIIC is covered u/sec. 194A(3)(iii)(b) of Act - Commissioner deleted the addition made by the AO u/sec. 201(1) & 201(1A) of the Act by accepting the claim of the Assessee - HELD THAT:- APIIC, the payee company has been incorporated under the Companies Act, 1966 holding of which is entirely held by the Government of Andhra Pradesh and, therefore, the provisions of section 194(A)(1) of the Act are not applicable qua interest paid/payable by the Assessee to the said organization APIIC as per section 194(3)(iii)(f) of the Act. Considering the peculiar facts and circumstances in totality, we are in concurrence with the conclusion of the ld. Commissioner for covering the APIIC u/sec. 194A(3)(iii)(f) of the Act and to the effect as well that APIIC is an organization exempted u/sec. 11 of the Act having filed ‘NIL’ taxable income, is not liable to tax and, therefore, deduction of tax at source qua APIIC is not attracted. Consequently, the conclusion drawn by the ld. Commissioner, whereby deleted the addition made by the AO u/sec. 201(1) & 201(1A) of the Act is liable to be affirmed. Whether APIIC is a ‘financial corporation’ or not within the meaning of section 194A(3)(iii)(b)? - whether the ld. Commissioner was empowered to adjudicate the issue which was not the subject matter of the appeal and/or the original claim of the Assessee? - HELD THAT:- APIIC is also exempt from TDS provisions as APIIC is held by GoAP and is the State Government undertaking thereby covered as per section 194(3)(iii)(f) of the Act, however, this fact was not considered by the ld. Commissioner. In appeal before the Hon'ble Tribunal in the first round of litigation, the said fact was not brought to the knowledge of the Bench and therefore the same remained un-noticed, which resulted into remanding the issue to the file of the AO by the Hon'ble Tribunal to find out the applicability of section 194(3)(iii)(b) instead of section 194(3)(iii)(f) of the Act. Therefore, all sequences resulted into multi and prolonged litigations. However as the controversy has been settled by the Ld. Commissioner while considering and allowing the alternative claim of the Assessee raised by ground no. 7 wherein it was claimed that without prejudice, the AO failed to consider the submission of the appellant that the interest paid to APIIC in which all the shares are held by the Government of Andhra Pradesh is an entity covered u/s 194A(3)(iii)(f) is exempted from TDS vide notification No. SO 3489, dated 22/10/1970, therefore there is no need to adjudicate ground Nos. 2 specifically as the same become infructuous hence dismissed.
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