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TMI Blog2023 (7) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... t on interest paid/accrued on Term Deposit Accounts under Saving Bank Account No. 0110040100015854 of the J&K State Rural Roads Development Agency ['JKSRRDA']. After putting the assessee to a show cause notice and according consideration to the submissions put forwarded by it, an order under Section 201(1) and under Section 201(1A) of the Act was passed by the Assessing Authority for the Assessment year 2009-10 creating a demand of Rs. 2,11,19,843/-. 3. On appeal by the assessee, the Commissioner of Income Tax (Appeals) ['CIT(A)'] deleted the addition made by the Assessing Officer by holding that no tax was required to be deducted by the assessee in respect of JKSRRDA being a Society covered by Notification No.3489 dated 22.10.1970. Feeling aggrieved by the order of CIT (A) dated 24.12.2012, the Assessing Authority filed an appeal before ITAT, Amritsar Bench. The ITAT, Amritsar Bench vide its order dated 03.12.2015 confirmed the order of CIT (A) which order of ITAT is called in question by the Commissioner of Income Tax (TDS-I), Chandigarh ['the appellant'] in this appeal. 4. The substantial question of law, which is a sine quo non for maintaining an appeal under Section 260A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax at source as is mandated by Section 194A of the Act. The Assessing Authority, therefore, raised a demand under Section 201(1) for failure of the assessee to make deductions at source while releasing the interest component of the FDRs. 7. The Assessing Authority relied upon Para (xii) of Chapter 13 of Accounts Manual circulated by NRRDA, Ministry of Rural Development, Government of India, New Delhi and came to the conclusion that the gross amount of interest received from the Bank, where the amount is deposited in the shape of FDRs, is to be taken as receipt in bank column of the cash book indicating therein separately the amount of tax deducted at source on the payment side in the Bank column. The Assessing Authority, however, missed Chapter 10 of the Accounting Manual of PMGSY which was fully attracted in the case. The Assessing Authority read the Manual and, in particular its Chapter 13, Para (xii) in isolation and came to the conclusion that even the Finance and Account Manual circulated by the Ministry of Rural Development was indicative of the fact that the Bank was under an obligation to deduct tax at source while crediting the interest accrued on the FDRs converted o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... true that SRRDA is an assessee and liable to file return of income. It is also true that SRRDA is not an organization notified for exemption in terms of a Notification No.3489 dated 22.10.1970. This is so, because, in terms of S.O No. 3489 dated 22.10.2010 issued in pursuance of Section 194A (3)(iii)(f) of the Act, a society registered under the Societies Registration Act, 1860 financed wholly by the Government of India is exempted from the operation of sub-section (1) of Section 194A of the Act, but JKSRRDA is not a society registered under the Societies Registration Act, 1860. It is a society registered under the Act of 1998 which, so far, has not been notified by the Central Government for the purpose of Section 194A (3)(iii)(f) of the Act. The Assessing Authority was not factually incorrect when it held that JKSRRDA was a society not notified separately and specifically under Section 194A(3)(iii)(f) of the Act. 10. We may clarify that in terms of S.O. 3489 dated 22.10.1970, all the societies registered under the Societies Registration Act, 1960 (the Central Act) which are financed wholly by the Government, have already been notified and are entitled to the benefit of exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government was covered by S.O 3489 dated 27.10.1970 and, therefore, no separate notification in the official Gazette was required to be issued by the Central Government to include JKSRRDA specifically within the ambit of exemption provided under Section 194A (3)(iii)(f) of the Act. That apart, once the two Forums below have returned concurrent findings of fact that the funds released for implementation of PMGSY by JKSRRDA and deposited in the account known as "Programme Fund/Account" were the funds/money belonging to the Central Government, there should be no dispute that, in terms of Section 196 of the Act, no deduction of tax is to be made by any person from any sum payable to the Government. It is, thus, abundantly clear that the interest paid or accrued on the Term Deposit Accounts under Saving Bank Account No. 0110040100015854 of JKSRRDA was the money belonging to the Central Government and, therefore, exempted from deduction of income tax at source under Section 194A of the Act. For facility of reference, Section 196 of the Act is reproduced hereunder: "196. Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations-Notwithstanding anythi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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