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2018 (6) TMI 1847 - ITAT CHANDIGARHTDS u/s 194C and 194A - External Development Charges (herein referred to as ‘EDC’) and interest on late payment of EDC to Greater Mohali Area Development Authority (‘GMADA’) - AO held that tax was required to be deducted u/s 194C and u/s 194A on interest payment made to GMADA - As the assessee had not deducted tax at source, he treated the assessee/person responsible as ‘assessee in default’ and created demand u/s 201(1) / 201(1A) HELD THAT:- A perusal of the notifications and policies of the Govt. also clearly reveal that though, in lieu of the benefits, concessions, incentives given by the government to the promoter for the purpose of development of infrastructure, the proportionate cost at fixed rates is got deposited by the government from the promoter for external development work, yet, the development is carried out by the local authority out of its own obligations/duties. The entire discussion can be summed up in the manner that though the promoter contributes towards the proportionate cost of infrastructure development, however, the works are not carried out by the local authority in consequence of specific performance of the agreement/contract but out of its own obligations and duties towards the public. Since the agreement cannot be said to be a work / service contract, hence, the provisions of section 194C will not be attracted in this case. Interest paid on account of delayed payment of EDC charges - The perusal of the above statutory provisions of section 29 of the Punjab Regional and Town Planning and Development Act, 1995, read with notification dated August 14,2006 reveals that the GMADA has been established by the State Act. As per the sub section (4)(1) of section 29, ‘GMADA’ is a body corporate as well as local body. In the case of ‘CIT (TDS) Vs. Canara Bank’ [2016 (5) TMI 570 - ALLAHABAD HIGH COURT] has elaborately discussed the distinction between a corporation established under an Act and body incorporated under an Act. Hon'ble High Court while replying upon the decision in the case of Dalco Engineering (P.) Ltd. v. Satish Prabhakar Padhye [2010 (3) TMI 912 - SUPREME COURT] has observed that a company incorporated under the Companies Act is not created by the Company Act but comes into existence in accordance with the provisions of the said Act and that there was a well-marked distinction between body created by a statute and a body which after coming into existence is governed in accordance with the provisions of a statute. The Hon'ble High Court while discussing about the status of ‘New Okhla Industrial Development Authority, Noida’ which was established under the Uttar Pradesh Industrial Area Development Act, 1976 has held that the said corporation (Noida) was established by the State Act and, therefore, was entitled to exemption payment of tax u/s 194A of the Act. The above decision of the Hon'ble Allahabad High Court is squarely applicable to the facts and circumstances of the case as the GMADA has been constituted by the State Government Act and it has been specifically provided that it is a body corporate and in view of the notification dated October 22, 1977 of the Central Government, the GMADA falls under the definition of any Corporation established by the Central, State or Provincial Act and thus the provisions of section 194A are not applicable. In view of this, the assessee was not liable to deduct TDS while remitting interest on delayed EDC charges to the GMADA. We uphold the order of the CIT(A) in setting aside the impugned demand but on different grounds as discussed above. It is clarified that any observation made in this order will not be construed to or subscribing to or approving of the view in any manner of the CIT(A) that the EDC charges or interest thereupon by GMADA was not the taxable income of the GMADA. The above question is left open to be decided in an appropriate case. This appeal of the revenue is dismissed
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