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2015 (11) TMI 630 - ITAT CHANDIGARH

2015 (11) TMI 630 - ITAT CHANDIGARH - [2015] 43 ITR (Trib) 129 (ITAT [Chand]) - Penalty levied under section 271C - assessee had not deducted tax at source under section 194A on interest payment - Held that:- As per the provisions of section 194A(3)(iii)(f) no tax is to be deducted at source on income by way of interest which are credited or paid to such other institutions, association or body which the Central Government may notify in this behalf in the special gazette. For the purpose of secti .....

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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. - Decided against revenue. - I. T. A. No. 1084 /Chd/ 2014 (assessment ye .....

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1C of the Income-tax Act 1961. 3. Briefly stated during the impugned assessment year the assessee had not deducted tax at source under section 194A on interest payment. The Assessing Officer levied penalty under section 271C of the Income-tax Act, 1961, of ₹ 19,70,098, equal to the amount of tax which the assessee had failed to deduct as required under the provisions to Chapter XVII-B of the Act. 4. In appeal before the Commissioner of Income-tax (Appeals) the penalty was deleted vide orde .....

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ties 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 p .....

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y the appellant are allowed." 5. Aggrieved against the same the Department has filed this appeal before us. 6. The Departmental representative argued that the penalty has been deleted by the learned Commissioner of Income-tax (Appeals), for the reason that the assessee had paid interest to a society registered under the Societies Registration Act, 1860 and financed wholly by the Government and therefore, as per section 194A(3)(iii)(f) read with notification No. SO 3489 dated October 22, 197 .....

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t source. In the present case we find that the interest on which alleged tax was not deducted at source was paid by the assessee 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 : "Notwi .....

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unds or authorities or boards or bodies, by whatever name called, whose income is unconditionally exempt under section 10 of the Income-tax Act and who are statutorily not required to file return of income as per section 139 of the Income-tax Act, there would be no requirement for tax deduction at source since their income is anyway exempt under the Income-tax Act. The institutions whose income is unconditionally exempt under section 10 and who are statutorily not required to file return of inco .....

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ther name) referred to in clause (23BB) ; (v) Body or authority referred to in clause (23BBA) ; (vi) SAARC Fund for Regional Projects set up by Colombo Declaration referred to in clause (23BBC) ; (vii) Secretariat of the Asian Organisation of the Supreme Audit Institutions referred to in clause (23BBD) till assessment year 2003-04; (viii) Insurance Regulatory and Development Authority referred to in clause (23BBE) ; (ix) Prime Minister's National Relief Fund referred to in sub-clause (i), Pr .....

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stries referred to in clause (23EB) till assessment year 2006-07 ; (xi) Provident fund to which the Provident Funds Act, 1925 (19 of 1925) referred to in sub-clause (i), recognised provident fund referred to in sub-clause (ii), approved superannuation funds referred to in sub-clause (iii), approved gratuity fund referred to in sub-clause (iv) and funds referred to in sub-clause (v) of clause (25) ; (xii) Employees' State Insurance Fund referred to in clause (25A) ; (xiii) Corporations referr .....

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