TMI Blog2012 (4) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... the consolidated order of the CIT(A), Jammu, dated 22.02.2011 relating to assessment years 2006-07 to 2010-11 respectively. As the issues involved in all these appeals are identical, these were heard together and are being disposed of by this common order for the sake of convenience. 2. The grounds of appeals raised by the Revenue are common in all the appeals except variation in amounts. However, the common grounds raised in ITA No.206(Asr)/2011 are as under: 1. That the Ld. CIT(A) has erred in holding that the assessee was not liable to deduct any tax at source on interest accrued on FDRs held by the Jammu Development Authority relying on the Notification No.3489 dated 22.10.1970. 2. That the Ld. CIT(A) has erred in ignoring the fact that the Jammu Development Authority is not a Corporation but a Local Authority and is also filing its return of income in the status of Local Authority. 3. That the ld. CIT(A) has erred in ignoring the fact that in view of the amendment made in section 10(20) w.e.f. 01.04.2003 the benefits conferred by clause (20A) no such authority was taken away. 4. That the appellant craves the leave to add, amend, modify, delete any of the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso discussed the amendment made as to the addition of an explanation to section 10(20) of the I.T.Act to demonstrate that w.e.f. 01.04.2003 the income of local authorities was taxable. He further observed that the Jammu Development Authority was wrong in writing to Branches of the Bank that no TDS was to be deducted. The AO further stated that the Jammu Development Authority could not do so without the authorization from the Income Tax Department. Accordingly, he created a demand of ₹ 4,71,580/- u/s 201 and 201(1A) of the I.T.Act. 4. On appeal, the learned CIT(A) deleted the addition made by the AO by holding as under: I have carefully considered the facts of the case, the assessment order and the written submission. In my considered opinion the assessee deserves to succeed. The exceptions provided in section 194A(3) (iii)(f) of I.T. Act and as per notification u/s Jammu Development corporation is a creation of J K Development Act and satisfied the condition at S.No.39 of such notification. The Chapter II, clause 1(2) of the J K Development Act reads that The authority shall be a body corporate by the name of the local Area having perpetual succession and a commo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year of their coming into being. The discussion as to the local authorities coming into the tax net w.e.f.01.04.03 is also not relevant as the sole issue have is whether TDS was deductible or not on the interest accrued to M/s. JDA. In view of the above, I hold that no tax was deductible on accrued interest on FDRs of JDA with M/s. The J K Bank Ltd. The demand created u/s 201(1A) is deleted and the assessee is not be treated in default. The Ld. CIT(A) while allowing the appeal has committed two fundamental errors of law i.e. a) He has failed to appreciate that as per notification issued in pursuance of sub-clause (f) of clause (iii) of sub-section (3) of section 194A of the Act, the exemption has been provided to Any Corporation established by a Central, State or Provincial Act at entry No.39 of the said notification. The Jammu Development Authority is not a corporation established by the State Act. It has been established under the Jammu Kashmir Development Act, 1970. There is great difference between a corporation established under the Central or State Act and a corporation under a Central or State Act. The critical difference has been elaborated by the Hon ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess they give personal guarantees. (3) Continuity of existence as its ownership can be transferred through a sale or gift of shares. Thus, the difference between a corporation and a body corporate is too obvious. It is clear that the ld. CIT(A) could not appreciate this subtle difference and was grossly misled in holding that the Jammu Development Authority is a corporation established by the State Act and thus wrongly allowed the assessee s appeal. Without prejudice to the above, it may further be mentioned that the Jammu Development Authority has been claiming itself to be a local authority in its returns of income an as such the ld. CIT(A) erred in accepting the claim of the assessee that it is a corporation. Further, even a local authority has been taken away from the purview of exemption provided u/s 10(2) of the Act w.e.f. 1.4.2003. In view of the above submissions, it is prayed that the order of the AO may kindly be restored and that the ld. CIT(A) be vacated. 5.1. The Ld. DR also drew our attention towards Notification attached by the assessee at pages 16 17 of the paper book, especially entry at Sl. No.39 (Any corporation established by a Central, State o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51 5.3. Lastly, he requested that the argument advanced by the Ld. DR is contrary to law and facts applicable in the case of the assessee and therefore, having no relevancy on the issue in dispute, requested that the appeal filed by the department may be dismissed. 6. We have heard the rival contentions and perused the relevant material placed before us, especially the order passed by the ld. first appellate authority alongwith written submissions filed by the ld. DR as well as the paper book filed by the ld. counsel for the assessee. We have also gone through the order of the ITAT, Delhi Bench, in the case of Chief/Senior Manager, Oriental Bank of Commerce vs. ITO (TDS Survey), Ghaziabad, ITA No.2228/Del/2011 for the assessment year 2005-06, dated 15.7.2011 and find that exactly similar issue, which is in dispute, before us, has already been adjudicated and decided in favour of the assessee, by the said decision of the ITAT, Delhi Bench I . For the sake of convenience, the order passed by the ITAT, Delhi Bench I (supra) is reproduced as under: ITA No.2228/Del/2011 for the A.Y. 2005-06, dated 15.7.2011 Chief/Senior Manager, Oriental Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.1. Thus, respectfully following the aforesaid order of the ITAT, Delhi Bench I , we dismiss the appeal filed by the Revenue by holding that the Jammu Development Authority is in exempted category where the provisions of section 194(1) are not applicable. We also hold that exception provided in section 194A(3)(iii)(f) of the Act and as per notification, the Jammu Development Authority is a creation of J K Development Act and satisfies the condition at Entry No.39 of the said notification and we hold that no tax was deductible on accrued interest on FDRs of Jammu Development Authority with J K Bank Ltd. Keeping in view the above discussions, we hold that no interference is called for in the well reasoned impugned order passed by the ld. first appellate authority and accordingly we uphold the same. Hence, the appeal of the Revenue in ITA No. 206(Asr)/2011 is dismissed. 7. Now we take up appeals in ITA Nos.207 to 210(Asr)/2011 for the assessment years 2007-08 to 2010-11. As the issue involved in the present appeals are similar to the issues adjudicated and decided by us in ITA No.206(Asr)/2011 (supra) in assessee s own case, therefore, the findings given therein shall equ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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