TMI Blog2016 (8) TMI 1548X X X X Extracts X X X X X X X X Extracts X X X X ..... r M/s. APIIC is a corporation established by the State Government of Andhra Pradesh and not by the Central Government so as to enjoy the exemption available u/s. 196(iii)? - There is no dispute that APIIC established under State Act. In the present case, CIT(A) has allowed the exemption by treating the APIIC as a concern u/s 194A(iii)(b) of the Act. On careful observation, the concern which is exempt u/s 194A(iii)(b) should be a financial corporation established by or under central, state or provincial Act. On the record submitted before us does not clarify that APIIC is a financial corporation. Since we are not sure about the type of financial corporation, we remit this issue back to the file of the AO to determine the status. In case it is found that it is a financial corporation, the exemption may be granted. Whether 'Provision for Expenses is made on adhoc basis, no TDS is deductible on such provision, which is in contravention to the provisions of section 194(2) ? - CIT(A) has allowed as no TDS is deductible on such provision, which is in contravention to the provisions of section 194(2) of the Ac. We are surprised to observe that there is no such section 194(2) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,320 f Payment to Sri Jagannadha Rao which attracts the provisions of section 194J of the Act 1,40,450 5.61% 7,879 4,680 g Audit fees which attracts the provisions of section 194J 3,40,328 5.61% 19,092 11,400 Total 29,72,42,976 17,83,45,620 3. The AO observed that section 201(1) of the Act provides for consequences of failure to deduct tax at source. As per the provisions of this section, any person who fails to deduct tax at source shall be deemed to be an assessee in default in respect of the tax. Hence, the AO raised a demand of ₹ 29,72,42,976/- u/s 201(1) of the Act. Since the assessee has failed to deduct the tax of ₹ 29,72,42,976/- the AO computed the corresponding interest u/s 201(1A) at ₹ 17,83,45,620/-. 4. Aggrieved, the assessee preferred an appeal before the CIT(A). 5. As regards Interest Payment of ₹ 11,55,83,000/-, paid to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as consideration towards issue of shares, thus it amounts to capital contribution by APIIC which is again beyond the purview of TDS. (f) That Government of A.P. accorded status of local authority to APIIC, hence, any payment made to such local authority are not liable to TDS. (g) The Hon'ble ITAT in ITA No. 1471/Hyd/2010 for A.Y. 2007-08 dated 22.11.2011 held that APIIC is entitled for exemption u/s. 11 of the I.T. Act, 1961, therefore, the income of payee is exempt under Income-tax Act and therefore, there is no need to deduct TDS. 5.2 After considering the submissions of the assessee, the CIT(A) observed that the lease hold land allotted by the Government to the appellant was shown under fixed assets. Further, the appellant had allotted 155,00,000 shares, each at ₹ 10/ towards site lease premium. Accordingly, these amounts spent for acquiring capital asset are not liable to TDS. Moreover, since the income of the payee (i.e. APIIC) is exempt u/s.11 of I.T. Act, 1961 as held by the Hon'ble ITAT vide order in ITA No. 1471/Hyd/2010 dated 22.11.2011, there is no need to deduct the TDS on payments made to such exempt entity. Accordingly, this issue is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 749 to 752/Bang/2012 and others, order dated 14/05/2015. 2. JCIT Vs. Mukund Ltd., [2007] 106 ITD 231 (Mum.) (SB) 3. DCIT Vs. M/s Rithwik Swati Joint Venture, ITA No. 719/Hyd/2010, order dated 18/02/2011. 4. Pfizer Ltd. Vs. ITO (TDS) (OSD), ITA Nos. 1667 1668/Mum/2010, order dated October 31, 2012. 9. Considered the submissions of both the counsels and perused the material facts on record as well as the orders of revenue authorities. 9.1 The revenue has raised ground Nos. 1 2, objecting to the CIT(A) s order, in which CIT(A) has observed that since, APIIC is a exempt entity u/s 11, relying on the decision of ITAT, there is no necessity of TDS. In our view, there is no provision in the IT Act to grant blanket permit for non-deduction of tax except by following procedure of applying to the appropriate authority. To get the exemption certificate, the concern seeking exemption from the deductee, it has to apply to the DIT (Exemption) with the request in proper form, only upon approval from DIT (Exemption) in writing, the exemption is allowed not otherwise. In our considered view, the grounds raised by the revenue are correct. In the present case, the CIT(A) has made t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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