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Addl. CIT (TDS) , Ghaziabad Versus Canara bank, Sector-06, Noida.

2015 (8) TMI 415 - ITAT DELHI

Liability to deduct tax at source u/s 194A on interest paid to NOIDA - lack of jurisdiction of the ld. CIT(A), Noida for passing order against the order of Addl.CIT(TDS), Ghaziabad - Held that:- The Principal CCIT, Kanpur issued order on 15.11.2014 reverting jurisdiction to the CIT(A), Noida over the orders passed by Addl.CIT(TDS), Ghaziabad and the other authorities working under CIT (TDS), Kanpur. This shows that between 5.6.2014 and 15.11.2014, the jurisdiction of the first appellate authorit .....

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he ld. CIT(A), Noida for passing order against the order of Addl.CIT(TDS), Ghaziabad, is unfounded 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 .....

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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 ]. All these precedents support the proposition that the payment of interest by banks to the State Industrial Development Authorities does not require any deduction of tax at source in terms .....

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ugned order. - Decided against revenue. - ITA No.1359/Del/2014 - Dated:- 7-8-2015 - SHRI R.S. SYAL AND SHRI C.M. GARG, JJ. For The Assessee : Shri Ajay Wadhwa, Advocate, Ms Raj Rani Lakra & Ms Reema Malik, CAs For The Department : Shri Ramesh Chandra, CIT, DR ORDER PER R.S. SYAL, AM: This appeal by the Revenue arises out of the order passed by the CIT(A) on 2.12.2013 in relation to the assessment year 2006-07. 2. Succinctly, the assessee, a Branch of Canara Bank, made interest payment of  .....

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igibility for exemption as local authority u/s 10(20) of the Income-tax Act, 1961 (hereinafter also called the Act ). The Hon ble Allahabad High Court, vide its order dated 28.02.2011 decided the issue against NOIDA, thereby denying the benefit of exemption u/s 10(20) of the Act. Pursuant to this order by the Hon ble Allahabad High Court, the Addl. Commissioner of Income-tax (TDS), Ghaziabad, took up proceedings u/s 201(1) and 201(1A) of the Act and issued a show cause notice to the assessee as .....

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bove 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 o .....

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d. It was submitted that the correct jurisdiction lied with CIT(A), Ghaziabad. Since the order was wrongly passed by CIT(A), Noida, the ld. DR pleaded that the same be declared as null and void. In the opposition, the ld. AR submitted that the CIT(A), Noida, had rightful jurisdiction over the matter and there was no lacuna in the passing of order by this authority. 4. We have heard the rival submissions and perused the relevant material on record. Before deciding the question of territorial juri .....

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rs passed by the officers working under the charge of CIT, Ghaziabad and CIT, Aligarh. In our considered opinion, this Notification does not advance the case of the Revenue because the Addl. CIT(TDS), Ghaziabad, does not fall under the jurisdiction of CIT, Ghaziabad, but that of CIT(TDS), Kanpur. Then, the ld. DR referred to a Notification dated 27.3.2012 issued by the CCIT, Kanpur in which CIT(A) Noida has been given jurisdiction over appeals against the orders passed, inter alia, by the Office .....

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it can be noticed that the assessee filed appeal before the ld. CIT(A), Noida on 14.3.2013 and the impugned order was passed on 2.12.2013. Then, there is a letter dated 18.7.2014 addressed by the CCIT, Ghaziabad to the Principal CCIT, Kanpur, submitting that 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 r .....

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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 authorities acting under CIT (TDS), Kanpur. The a .....

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y the Addl. CIT(TDS), Ghaziabad to CIT(A), Ghaziabad. This marks the crucial date of 5.6.2014, when the jurisdiction over the orders passed by the Addl.CIT (TDS), Ghaziabad was taken away from CIT(A) Noida and the appeals were directed to be transferred to CIT(A), Ghaziabad. Again, the Principal CCIT, Kanpur issued order on 15.11.2014 reverting jurisdiction to the CIT(A), Noida over the orders passed by Addl.CIT(TDS), Ghaziabad and the other authorities working under CIT (TDS), Kanpur. This show .....

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Ex consequenti, the contention raised by the ld. DR about the lack of jurisdiction of the ld. CIT(A), Noida for passing order against the order of Addl.CIT(TDS), Ghaziabad, is unfounded and is hereby rejected. 5. At this juncture, it is relevant to mention that the ld. DR on the completion of his arguments on the question of jurisdiction prayed for the closure of the proceedings for the time being and requested the Bench to first pass an interim order on the question of jurisdiction. As we are .....

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94A 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 ch .....

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(iv) …. 7. Sub-section (1) of section 194A casts an obligation on the person responsible for paying interest to a resident, to deduct tax at source at the time of credit of such income to the account of the payee or at the time of payment thereof, whichever is earlier. Sub-section (3) is relevant for our purpose. This sub-section provides that the provisions of sub-section (1), which cast obligation on the person responsible for paying interest for deduction of tax at source from such int .....

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for reasons to be recorded in writing, notify in this behalf in the official gazette. Notification under section 194A(3)(iii)(f) has been issued which is dated 22.10.1970, as has been reproduced on page 1 of the assessment order. There are several institutions, specifically or generally, covered under this notification issued u/s 194A(3)(iii)(f). One of such items notified generally is: Any Corporation established by a Central, State or Provincial Act. The crux of the controversy before us is wh .....

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for the development of certain areas in the State into industrial and urban township and for matters connected therewith. The term Authority has been defined u/s 2(b) to mean: Authority constituted u/s 3 of the Act. Section 3(i), in turn, provides that: The State Government may, by notification, constitute for the purpose of this Act, an Authority to be called (Name of the area), industrial development authority, for any industrial development area. It is under the UP Industrial Area Development .....

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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 fort .....

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r against such termination. The Disability Commissioner suggested the employer to re-employ the Respondent, which suggestion was turned down by the appellant. The Respondent argued that the Commissioner, instead of making a mere suggestion, ought to have issued a direction to the employer. He filed a writ petition on this aspect. The Hon ble High Court allowed the said writ petition and directed the employer company to reinstate the Respondent. The Hon ble High Court held that the appellant, tho .....

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established by or under a Central, Provincial or State Act,……… The Hon ble Supreme Court highlighted the use of the words by or under in the definition of the term establishment and explained the difference between a corporation established by an Act and a corporation established under an Act. The Hon ble Apex Court held that a Corporation is established by an Act, where the Act itself establishes the Corporation, such as, State Bank of India Act and Life Insurance Corporat .....

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is to be seen in the 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 exi .....

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ration 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 statutory corporation established by means of the UP Industrial Area Development Act, 1976. It has been noticed above from the preamble of this Act that it has been made for development of certain areas in the State into industrial and urban township. Instead of enacting area-wise Indus .....

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ed under the UP Industrial Area Development Act, we are of the considered opinion that the expression any corporation established by a State Act shall include NOIDA (New Okhla Industrial Development Authority) in the given circumstances. 12. We find that 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 Commerc .....

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