TMI Blog2015 (11) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Societies Registration Act 1860, financed wholly by the Government PEC University is claiming exemption under section 10(23C)(iiiab) of the Act. Section 10(23C)(iiiab), grants exemption from tax to incomes of educational institutions which are wholly or substantially financed by the Government. Undisputedly therefore PEC University is wholly or substantially financed by the Government. Therefore even as per the provisions of section 194A(3)(iii)(f) no tax was required to be deducted at source on the interest paid to it by the assessee. Since both as per the provisions of section 197A and section 194A(3)(iii)(f) the impugned payment was not to be subjected to tax deduction at source. No penalty under section 271C was therefore lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Societies Registration Act, 1860 and financed wholly by the Government and so the interest payment to such soci eties is not subject to tax deduction at source. The contention of learned counsel is correct in this regard. As per notification No. S. O. 3489 dated October 22, 1970, any undertaking or body, including a society registered under the Societies Registration Act, 1860, financed wholly by the Government is notified for the purposes of section 194A(3)(iii)(f) and PEC University of Technology falls in this category of undertaking. Therefore, tax was not required to be deducted at source on interest paid to PEC University of Technology. Moreover, income of PEC University of Technology is exempt under section 10(23C)(iiiab) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to PEC University of Technology which was claiming exemption under section 10(23C)(iiiab) of the Act. Section 197A of the Income-tax Act, 1961, lists circumstances in which no tax has to be deducted at source. Clause (1F) of the section allows certain institutions and associations from receiving payments without tax deduction at source, stating as follows : Notwithstanding anything contained in this Chapter, no deduc tion of tax shall be made from such specified payment to such insti tution, association or body or class of institutions, associations or bodies as may be notified by the Central Government in the Official Gazette, in this behalf. 9. The notification referred to in the above section in Circular No. 4 of 2002 dated Jul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egulatory and Development Authority referred to in clause (23BBE) ; (ix) Prime Minister's National Relief Fund referred to in sub-clause (i), Prime Minister's Fund (Promotion of Folk Art) referred to in sub-clause (ii), Prime Minister's Aid to Students Fund referred to in sub-clause (iii), National Foundation for Communal Harmony referred to in sub-clause (iiia), any university or other educational institution referred to in sub-clause (iiiab) and any hospital or other institution for the reception and treatment of persons as referred to in sub-clause (iiiac) of clause (23C) ; (x) Credit Guarantee Fund Trust for Small Scale Industries referred to in clause (23EB) till assessment year 2006-07 ; (xi) Provident fund to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under section 10(23C)(iiiab) of the Act. Section 10(23C)(iiiab), grants exemption from tax to incomes of educational institutions which are wholly or substantially financed by the Government. Undisputedly therefore PEC University is wholly or substantially financed by the Government. Therefore even as per the provisions of section 194A(3)(iii)(f) no tax was required to be deducted at source on the interest paid to it by the assessee. Since both as per the provisions of section 197A and section 194A(3)(iii)(f) the impugned payment was not to be subjected to tax deduction at source. No penalty under section 271C was therefore leviable. 12. Moreover we find that in the case of ITO v. State Bank of Patiala I. T. A. Nos. 1306 and 1307/Chd/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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