TMI Blog2015 (8) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... unded and is hereby rejected. Identical issue involving payment of interest by some banks to Ghaziabad Development Authority without tax withholding came up for consideration before the Delhi Bench of the Tribunal in the case of Chief/Senior Manager, Oriental Bank of Commerce vs. ITO. [2013 (2) TMI 204 - ITAT NEW DELHI] wherein held that the payment of interest by Oriental Bank of Commerce to Ghaziabad Development Authority is covered within the provisions of section 194A(3)(iii)(f) and, hence, there is no obligation for deduction of tax at source. Consequently, the order passed u/s 201(1) was set aside. Similar view has been taken in the case of ITO (TDS) vs. Branch Manager Jammu & Kashmir Bank Ltd. [2012 (4) TMI 573 - ITAT AMRITSAR] as held that payment of interest by the bank to Jammu Development Authority (Jammu) is exempt u/s 194A(3)(iii)(f) and, hence, there can be no liability u/s 201(1) and 201(1A) on the bank and resultantly, the bank cannot be treated as an assessee in default u/s 201(1) and 201(1A). Likewise view has been taken by the Amritsar Bench of the Tribunal in ITO vs. the Branch Manager, Jammu, Jammu & Kashmir Bank Ltd., [2012 (12) TMI 727 - ITAT AMRITSAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addl. CIT (TDS) that no deduction of tax at source on interest payment made to NOIDA was warranted in view of the applicability of the provisions of section 194A(3)(iii)(f). The assessee contended that the payment to NOIDA authority was covered under clause 39 of the Notification No. 3489 dated 22.10.1970 issued pursuant to the above provision and, as such, there was no requirement on its part to deduct tax at source on the amount of interest paid. Not convinced, the Addl. CIT(TDS) Ghaziabad, passed order dt. 28.2.2013 u/ss 201(1) and 201(1A) read with section 194A of the Act treating the assessee in default for a total sum of ₹ 5,06,29,869/-. The assessee preferred appeal before the CIT(A), Noida, assailing the order passed by the Addl. CIT(TDS), Ghaziabad. By the impugned order, the assessee s contention of no obligation for tax withholding from interest paid to NOIDA, came to be accepted. That is how, the Revenue is in appeal before us. 3. The first issue taken up by the ld. DR is against the jurisdiction of the CIT(A), Noida, to entertain appeal and pass order against the order u/s 201(1) and 201(1A) of the Act passed by the Addl. CIT (TDS), Ghaziabad. The ld. DR stren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... she received a reference from Addl. CIT (TDS), Ghaziabad, regarding transfer of cases from CIT(A), Noida to CIT(A), Ghaziabad, where orders u/s 201(1) and 201(1A) were passed by him as per the Notification dated 27.3.2012. Then, there is a reference to a letter dated 5.6.2014 by which CIT(A), Noida was requested to transfer all the appeals against the orders passed by the Addl.CIT (TDS), Ghaziabad in the case of banks, to the CIT(A), Ghaziabad. The same letter dated 18.7.2014 addressed by the CCIT, Ghaziabad, then indicates that a meeting was called by her on 14.7.2014 to examine the issue of transfer of cases from CIT(A), Noida to CIT(A), Ghaziabad and it was observed that : `The order (Notification dt. 27.3.2012) does not mention the appellate jurisdiction for cases finalized by Addl. CIT TDS Range, Ghaziabad. . In that meeting, the CIT(A), Noida, pointed out that since in the cases of banks, the Department was challenging his jurisdiction to pass orders, so, the question of jurisdiction lying with him be clarified. After this, Principal CCIT, Kanpur issued order dated 15.11.2014, giving jurisdiction to CIT(A) Noida, over the appeals filed against the orders passed by the authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which we shall discuss hereinafter. 6. Now, we espouse the main issue on merits as to whether the assessee was liable to deduct tax at source u/s 194A on interest paid to NOIDA? Before answering this question, it is relevant to consider the provisions of section 194A, the relevant part of which reads as under:- 194A. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force : .. (3) The provisions of sub-section (1) shall not apply- ( i ) ( iii ) to such income credited or paid to- ( a ) to ( e ) .. ( f ) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette; ( iv ) . 7. Sub-section (1) of section 194A casts an obligatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is under the UP Industrial Area Development Act, 1976 that the UP Government constituted various industrial development authorities with the name of the area, such as, NOIDA Authority and Ghaziabad Authority, etc. The case of the Revenue is that only a corporation established by , inter alia , a State Act can be brought within the purview of exemption. The ld. DR argued that if the corporation is established under the State Act, then, the exemption to the payer bank from deduction of tax at source on the interest income, is not available. The ld. DR vehemently argued that since NOIDA has been constituted as a corporation established `under the State Act and not by the State Act, the exemption to the assessee bank from tax withholding stood waived. In order to buttress this contention, the ld. DR relied on the judgment of the Hon ble Supreme Court in the case of Dalco Engineering Pvt. Ltd. vs. Satish Prabhakar Padhye and Ors., dated 31.3.2010, a copy of which has been placed in the paper book. The ld. AR also drew strength to fortify his point of view by relying on the same judgment for contending that the assessee is a Corporation established by the State Act. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... background of the facts prevailing in that case in which the Respondent urged that the appellant, a company, be declared as established by or under the Act. The Hon ble Supreme Court further observed that: `Thus, a State Financial Corporation is established under a central Act. Therefore, when the words by and under an Act are preceded by the words established , it is clear that the reference is to a corporation established, that it is brought into existence, by an Act or under an Act. In short, the term refers to a statutory corporation as contrasted from a non-statutory corporation incorporated or registered under the Companies Act. From the italicized portion of the above prescription of the judgment, it is manifest that in the context of a statutory corporation, the words ` by and under an Act can be read as `by an Act or under an Act . The above observations make it explicit that in contrast to a non-statutory corporation, a statutory corporation is considered as established by or under an Act and the use of the words `by and `under in such a situation, is interchangeable. 11. Adverting to the facts of the instant case, we find that the assessee is a statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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