Addl. CIT(TDS), Ghaziabad V. M/s. Canara Bank, Noida

ITA 1359/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96952 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 06-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHANDRA
• Assessee Lawyers: REEMA MALIK CAS; AJAY WADHWA MS RAJ RANI LAKRA
• Keywords: Non-deduction of tax; Benefit of exemption
• Section: 201(1); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI C.M. GARG, JM ITA NO.1359/DEL/2014 ASSESSMENT YEAR : 2006-07 ADDL. CIT (TDS), GHAZIABAD. VS. CANARA BANK, SECTOR-06, NOIDA. PAN: AAACC6106G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY WADHWA, ADVOCATE, MS RAJ RANI LAKRA & MS REEMA MALIK, CAS DEPARTMENT BY : SHRI RAMESH CHANDRA, CIT, DR DATE OF HEARING : 06.08.2015 DATE OF PRONOUNCEMENT : 07.08.2015 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 Y EAR 2006-07. ITA NO.1359/DEL/2014 2 2. SUCCINCTLY, THE ASSESSEE, A BRANCH OF CANARA BAN K, MADE INTEREST PAYMENT OF RS.20,10,00,000/- TO NEW OKHLA INDUSTRIA L DEVELOPMENT AUTHORITY (HEREINAFTER ALSO CALLED NOIDA) WITHOUT DEDUCTION OF TAX AT SOURCE. NOIDA CLAIMED BEFORE THE ASSESSEE BANK THA T IT WAS A LOCAL AUTHORITY AND, HENCE, ITS INCOME WAS EXEMPT FROM TA X AND, AS SUCH, NO DEDUCTION OF TAX AT SOURCE WAS REQUIRED. THE MATTER WAS CARRIED BEFORE THE HONBLE ALLAHABAD HIGH COURT BY WAY OF WRIT PET ITION AS VARIOUS BANKS INCLUDING THE ASSESSEE AND NOIDA AUTHORITIES WERE NOT IN AGREEMENT WITH THE CLAIM OF ITS ELIGIBILITY FOR EXE MPTION AS LOCAL AUTHORITY U/S 10(20) OF THE INCOME-TAX ACT, 1961 (H EREINAFTER ALSO CALLED `THE ACT). THE HONBLE 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. PURSUA NT TO THIS ORDER BY THE HONBLE ALLAHABAD HIGH COURT, THE ADDL. COMMISSIONE R OF INCOME-TAX (TDS), GHAZIABAD, TOOK UP PROCEEDINGS U/S 201(1) AN D 201(1A) OF THE ACT AND ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY IT MAY NOT BE DECLARED AS ASSESSEE IN DEFAULT FOR NON-DEDUCT ION OF TAX AT SOURCE ON THE AMOUNT OF INTEREST PAID BY IT TO NOIDA. THE ASS ESSEE CONTENDED ITA NO.1359/DEL/2014 3 BEFORE THE ADDL. CIT (TDS) THAT NO DEDUCTION OF TAX AT SOURCE ON INTEREST PAYMENT MADE TO NOIDA WAS WARRANTED IN VIEW OF THE APPLICABILITY OF THE PROVISIONS OF SECTION 194A(3)(III)(F). THE ASS ESSEE CONTENDED THAT THE PAYMENT TO NOIDA AUTHORITY WAS COVERED UNDER CL AUSE 39 OF THE NOTIFICATION NO. 3489 DATED 22.10.1970 ISSUED PURSU ANT TO THE ABOVE PROVISION AND, AS SUCH, THERE WAS NO REQUIREMENT ON ITS PART TO DEDUCT TAX AT SOURCE ON THE AMOUNT OF INTEREST PAID. NOT CONVI NCED, THE ADDL. CIT(TDS) GHAZIABAD, PASSED ORDER DT. 28.2.2013 U/S S 201(1) AND 201(1A) READ WITH SECTION 194A OF THE ACT TREATING THE ASSESSEE IN DEFAULT FOR A TOTAL SUM OF RS.5,06,29,869/-. THE A SSESSEE PREFERRED APPEAL BEFORE THE CIT(A), NOIDA, ASSAILING THE ORD ER PASSED BY THE ADDL. CIT(TDS), GHAZIABAD. BY THE IMPUGNED ORDER, THE ASSESSEES CONTENTION OF NO OBLIGATION FOR TAX WITHHOLDING FRO M INTEREST PAID TO NOIDA, CAME TO BE ACCEPTED. THAT IS HOW, THE REVEN UE IS IN APPEAL BEFORE US. 3. THE FIRST ISSUE TAKEN UP BY THE LD. DR IS AGAINS T THE JURISDICTION OF THE CIT(A), NOIDA, TO ENTERTAIN APPEAL AND PASS ORDER AGAINST THE ORDER ITA NO.1359/DEL/2014 4 U/S 201(1) AND 201(1A) OF THE ACT PASSED BY THE ADD L. CIT (TDS), GHAZIABAD. THE LD. DR STRENUOUSLY ARGUED THAT THE CIT(A), NOIDA, DID NOT HAVE ANY TERRITORIAL JURISDICTION OVER THE ORD ER PASSED BY THE ADDL. CIT (TDS), GHAZIABAD. IT WAS SUBMITTED THAT THE CO RRECT JURISDICTION LIED WITH CIT(A), GHAZIABAD. SINCE THE ORDER WAS W RONGLY 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 O F TERRITORIAL JURISDICTION OF CIT(A) OVER THE ORDER PASSED BY TH E ADDL. CIT(TDS), GHAZIABAD, IT IS RELEVANT TO NOTE AS AN ADMITTED PO SITION THAT THE ADDL. CIT(TDS), GHAZIABAD FALLS UNDER THE JURISDICTION OF CIT(TDS), KANPUR. THE VIEWPOINT OF THE LD. DR ABOUT THE CIT(A), NOIDA NOT HAVING ANY JURISDICTION OVER THE ORDER PASSED BY THE ADDL. CIT (TDS), GHAZIABAD STEMS FROM A NOTIFICATION DATED 27.8.2001 ISSUED BY CCIT, MEERUT IN ITA NO.1359/DEL/2014 5 WHICH CIT(A), GHAZIABAD HAS BEEN SHOWN TO HAVE JURI SDICTION OVER APPEALS AGAINST THE ORDERS PASSED BY THE OFFICERS W ORKING UNDER THE CHARGE OF CIT, GHAZIABAD AND CIT, ALIGARH. IN OUR C ONSIDERED 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, TH E 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 APPEA LS AGAINST THE ORDERS PASSED, INTER ALIA , BY THE OFFICERS WORKING AT NOIDA UNDER CIT(TDS), KANPUR. IT IS ON THE BASIS OF THIS NOTIF ICATION THAT THE LD. DR CLAIMS THAT ONLY THE OFFICERS WORKING AT NOIDA UNDE R CIT (TDS), KANPUR WERE COVERED UNDER THE JURISDICTION OF CIT (A), NOI DA AND NOT THE OFFICERS WORKING AT OTHER STATIONS INCLUDING GHAZIA BAD UNDER CIT(TDS), KANPUR. HERE, IT IS IMPORTANT TO MENTION THAT CIT( TDS), KANPUR, EXERCISES JURISDICTION OVER A LARGER PART OF THE ST ATE OF UP, WHICH ALSO INCLUDES NOIDA AND GHAZIABAD. FROM THE IMPUGNED OR DER, IT CAN BE NOTICED THAT THE ASSESSEE FILED APPEAL BEFORE THE L D. CIT(A), NOIDA ON 14.3.2013 AND THE IMPUGNED ORDER WAS PASSED ON 2.12 .2013. THEN, ITA NO.1359/DEL/2014 6 THERE IS A LETTER DATED 18.7.2014 ADDRESSED BY THE CCIT, GHAZIABAD TO THE PRINCIPAL CCIT, KANPUR, SUBMITTING THAT SHE REC EIVED 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 REFERENCE TO A LETTER DATED 5.6.20 14 BY WHICH CIT(A), NOIDA WAS REQUESTED TO TRANSFER ALL THE APPEALS AGA INST THE ORDERS PASSED BY THE ADDL.CIT (TDS), GHAZIABAD IN THE CASE OF BAN KS, TO THE CIT(A), GHAZIABAD. THE SAME LETTER DATED 18.7.2014 ADDRESS ED BY THE CCIT, GHAZIABAD, THEN INDICATES THAT A MEETING WAS CALLED BY HER ON 14.7.2014 TO EXAMINE THE ISSUE OF TRANSFER OF CASES FROM CIT( A), NOIDA TO CIT(A), GHAZIABAD AND IT WAS OBSERVED THAT : `THE ORDER (N OTIFICATION DT. 27.3.2012) DOES NOT MENTION THE APPELLATE JURISDICT ION FOR CASES FINALIZED BY ADDL. CIT TDS RANGE, GHAZIABAD.. IN THAT MEETI NG, THE CIT(A), NOIDA, POINTED OUT THAT SINCE IN THE CASES OF BANKS , THE DEPARTMENT WAS CHALLENGING HIS JURISDICTION TO PASS ORDERS, SO, TH E QUESTION OF JURISDICTION LYING WITH HIM BE CLARIFIED. AFTER TH IS, PRINCIPAL CCIT, KANPUR ISSUED ORDER DATED 15.11.2014, GIVING JURISD ICTION TO CIT(A) ITA NO.1359/DEL/2014 7 NOIDA, OVER THE APPEALS FILED AGAINST THE ORDERS P ASSED BY THE AUTHORITIES ACTING UNDER CIT (TDS), KANPUR. THE ABOVE SEQUENCE OF EVENTS DIVULGES THAT THERE WAS SOME CONFUSION ABOUT THE JU RISDICTION OF CIT(A), NOIDA OVER THE APPEALS FROM THE ORDERS OF THE AUTHO RITIES UNDER CIT(TDS), KANPUR AND THE CIT(A), NOIDA WAS DISPOSIN G OF THE APPEALS FROM THE ORDERS OF ADDL.CIT(TDS), GHAZIABAD. IT WA S ONLY ON 5.6.2014 THAT THE CIT(A), NOIDAS JURISDICTION OVER THE APPE ALS FILED AGAINST THE ORDERS OF ADDL.CIT(TDS), GHAZIABAD WAS TAKEN AWAY A ND HE WAS REQUESTED TO TRANSFER THE APPEALS ARISING OUT OF TH E ORDERS PASSED BY THE ADDL. CIT(TDS), GHAZIABAD TO CIT(A), GHAZIABAD. TH IS MARKS THE CRUCIAL DATE OF 5.6.2014, WHEN THE JURISDICTION O VER THE ORDERS PASSED BY THE ADDL.CIT (TDS), GHAZIABAD WAS TAKEN AWAY FRO M CIT(A) NOIDA AND THE APPEALS WERE DIRECTED TO BE TRANSFERRED TO CIT(A), GHAZIABAD. AGAIN, THE PRINCIPAL CCIT, KANPUR ISSUED ORDER ON 1 5.11.2014 REVERTING JURISDICTION TO THE CIT(A), NOIDA OVER TH E ORDERS PASSED BY ADDL.CIT(TDS), GHAZIABAD AND THE OTHER AUTHORITIES WORKING UNDER CIT (TDS), KANPUR. THIS SHOWS THAT BETWEEN 5.6.2014 AN D 15.11.2014, THE JURISDICTION OF THE FIRST APPELLATE AUTHORITY TO PA SS THE ORDERS AGAINST THE ITA NO.1359/DEL/2014 8 ORDERS PASSED BY THE ADDL.CIT, GHAZIABAD RESTED WIT H THE CIT(A), GHAZIABAD AND FOR THE PERIODS PRIOR TO 5.6.2014 AND AFTER 15.11.2014, IT VESTED IN CIT(A), NOIDA. SINCE THE IMPUGNED ORDER W AS PASSED ON 2.12.2013, IT BECOMES PALPABLE THAT IT WAS ONLY THE CIT(A), NOIDA WHO HAD RIGHTFUL JURISDICTION OVER THE APPEAL EMANATING FROM THE ORDER PASSED BY THE ADDL. CIT(TDS), GHAZIABAD. 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 JURI SDICTION PRAYED FOR THE CLOSURE OF THE PROCEEDINGS FOR THE TIME BEING A ND REQUESTED THE BENCH TO FIRST PASS AN INTERIM ORDER ON THE QUESTIO N OF JURISDICTION. AS WE ARE SEIZED OF THE ENTIRE APPEAL AND NOT A PARTIC ULAR ASPECT OF JURISDICTION, WE EXPRESSED OVER OPINION IN THE OPEN COURT THAT THE APPEAL WILL BE HEARD IN ENTIRETY AND NOT IN A TRUNCATED MA NNER AND ONLY ONE COMPREHENSIVE ORDER WILL BE PASSED DEALING WITH ALL THE ISSUES INCLUDING ITA NO.1359/DEL/2014 9 THAT OF JURISDICTION. THEREAFTER, THE LD. DR STARTE D HIS ARGUMENTS ON MERITS, WHICH WE SHALL DISCUSS HEREINAFTER. 6. NOW, WE ESPOUSE THE MAIN ISSUE ON MERITS AS TO WHETHER THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE U/S 194 A ON INTEREST PAID TO NOIDA? BEFORE ANSWERING THIS QUESTION, IT IS RELEV ANT TO CONSIDER THE PROVISIONS OF SECTION 194A, THE RELEVANT PART OF WH ICH 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 EQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME -TAX THEREON AT THE RATES IN FORCE : .. (3) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT A PPLY ( I ) ( III ) TO SUCH INCOME CREDITED OR PAID TO ( A ) TO ( E ) .. ( F ) SUCH OTHER INSTITUTION, ASSOCIATION OR BODY OR CL ASS OF INSTITUTIONS, ASSOCIATIONS OR BODIES WHICH THE CENTRAL GOVERNMENT MAY, FOR REASONS TO BE RECORDED IN WRITING, NOTIFY IN THIS B EHALF IN THE OFFICIAL GAZETTE; ( IV ) . ITA NO.1359/DEL/2014 10 7. SUB-SECTION (1) OF SECTION 194A CASTS AN OBLIGAT ION 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 PROVIDE S THAT THE PROVISIONS OF SUB-SECTION (1), WHICH CAST OBLIGATION ON THE PE RSON RESPONSIBLE FOR PAYING INTEREST FOR DEDUCTION OF TAX AT SOURCE FROM SUCH INTEREST, SHALL NOT APPLY IN THE CIRCUMSTANCES GIVEN IN CLAUSES (I) TO (XI). CLAUSE (III) MANDATES THAT THE REQUIREMENT OF DEDUCTION OF TAX A T SOURCE CONTEMPLATED BY SUB-SECTION (1) SHALL BE WAIVED WHE RE SUCH INTEREST IS CREDITED OR PAID TO ANY BANKING COMPANY/FINANCIAL C ORPORATION/LIC/UTI, ETC. ONE OF THE ITEMS OF BENEFICIARIES GIVEN IN S UCH LIST, AS PER SUB- CLAUSE (F) IS, SUCH OTHER INSTITUTION, ASSOCIATION OR BODY OR CLASS OF INSTITUTIONS, ASSOCIATIONS OR BODIES WHICH THE CENT RAL GOVERNMENT MAY, FOR REASONS TO BE RECORDED IN WRITING, NOTIFY IN TH IS 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 O N PAGE 1 OF THE ASSESSMENT ORDER. THERE ARE SEVERAL INSTITUTIONS, SPECIFICALLY OR ITA NO.1359/DEL/2014 11 GENERALLY, COVERED UNDER THIS NOTIFICATION ISSUED U /S 194A(3)(III)(F). ONE OF SUCH ITEMS NOTIFIED GENERALLY IS: ANY CORPORATI ON ESTABLISHED BY A CENTRAL, STATE OR PROVINCIAL ACT. THE CRUX OF THE CONTROVERSY BEFORE US IS WHETHER OR NOT THE ASSESSEE FALLS UNDER THIS ITE M? WHEREAS THE CASE OF THE ASSESSEE IS THAT IT IS A CORPORATION ESTABLISHE D BY THE STATE ACT, THE REVENUE HAS CANVASSED A VIEW THAT THE ASSESSEE IS N OT A CORPORATION ESTABLISHED BY A STATE ACT. 8. IT IS OBSERVED THAT THE ASSESSEE IS A CREATI ON OF THE UP INDUSTRIAL AREA DEVELOPMENT ACT, 1976, A COPY OF WHICH HAS BEE N PLACED ON PAGE 102 OF THE ASSESSEES PAPER BOOK. PREAMBLE OF THIS ACT READS AS : AN ACT TO PROVIDE FOR THE CONSTITUTION OF AN AUTHORITY FOR THE DEVELOPMENT OF CERTAIN AREAS IN THE STATE INTO INDUSTRIAL AND U RBAN TOWNSHIP AND FOR MATTERS CONNECTED THEREWITH. THE TERM AUTHORITY HAS BEEN DEFINED U/S 2(B) TO MEAN: AUTHORITY CONSTITUTED U/S 3 OF T HE ACT. SECTION 3(I), IN TURN, PROVIDES THAT: THE STATE GOVERNMENT MAY, BY NOTIFICATION, CONSTITUTE FOR THE PURPOSE OF THIS ACT, AN AUTHORIT Y TO BE CALLED (NAME OF THE AREA), INDUSTRIAL DEVELOPMENT AUTHORITY, FOR AN Y INDUSTRIAL ITA NO.1359/DEL/2014 12 DEVELOPMENT AREA. IT IS UNDER THE UP INDUSTRIAL A REA DEVELOPMENT ACT, 1976 THAT THE UP GOVERNMENT CONSTITUTED VARIOUS IND USTRIAL DEVELOPMENT AUTHORITIES WITH THE NAME OF THE AREA, SUCH AS, NOIDA AUTHORITY AND GHAZIABAD AUTHORITY, ETC. THE CASE O F THE REVENUE IS THAT ONLY A CORPORATION ESTABLISHED BY , INTER ALIA , A STATE ACT CAN BE BROUGHT WITHIN THE PURVIEW OF EXEMPTION. THE LD. DR ARGUED THAT IF THE CORPORATION IS ESTABLISHED UNDER THE STATE ACT, THEN, THE EXEMPTION TO THE PAYER BANK FROM DEDUCTION OF TAX AT SOURCE ON T HE INTEREST INCOME, IS NOT AVAILABLE. THE LD. DR VEHEMENTLY ARGUED THAT S INCE NOIDA HAS BEEN CONSTITUTED AS A CORPORATION ESTABLISHED `UND ER THE STATE ACT AND NOT BY THE STATE ACT, THE EXEMPTION TO THE ASSESS EE BANK FROM TAX WITHHOLDING STOOD WAIVED. IN ORDER TO BUTTRESS TH IS CONTENTION, THE LD. DR RELIED ON THE JUDGMENT OF THE HONBLE SUPREME CO URT IN THE CASE OF DALCO ENGINEERING PVT. LTD. VS. SATISH PRABHAKAR PA DHYE AND ORS., DATED 31.3.2010, A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK. THE LD. AR ALSO DREW STRENGTH TO FORTIFY HIS POINT OF VIEW BY RELYING ON THE SAME JUDGMENT FOR CONTENDING THAT THE ASSESSEE IS A CORPORATION ITA NO.1359/DEL/2014 13 ESTABLISHED BY THE STATE ACT. SINCE BOTH THE SID ES HAVE HEAVILY RELIED ON THE SAME JUDGMENT, IT BECOMES SIGNIFICANT TO NOT E ITS FACTS AND RATIO . 9. IN THAT CASE, THE APPELLANT, A PRIVATE LIMIT ED COMPANY, EMPLOYED RESPONDENT FOR MORE THAN TWO DECADES. THE RESPONDE NTS SERVICE WAS TERMINATED BY THE APPELLANT DUE TO SOME PHYSICAL DI SABILITY. THE RESPONDENT COMPLAINED TO THE DISABILITY COMMISSIONE R AGAINST SUCH TERMINATION. THE DISABILITY COMMISSIONER `SUGGESTE D THE EMPLOYER TO RE-EMPLOY THE RESPONDENT, WHICH SUGGESTION WAS TURN ED DOWN BY THE APPELLANT. THE RESPONDENT ARGUED THAT THE COMMISSI ONER, INSTEAD OF MAKING A MERE SUGGESTION, OUGHT TO HAVE ISSUED A DI RECTION TO THE EMPLOYER. HE FILED A WRIT PETITION ON THIS ASPECT. THE HONBLE HIGH COURT ALLOWED THE SAID WRIT PETITION AND DIRECTED T HE EMPLOYER COMPANY TO REINSTATE THE RESPONDENT. THE HONBLE HIGH COUR T HELD THAT THE APPELLANT, THOUGH A PRIVATE LIMITED COMPANY, WAS AN ESTABLISHMENT UNDER THE ACT. THE APPELLANT TOOK THE MATTER TO TH E HONBLE SUPREME COURT URGING THAT IT WAS NOT COVERED WITHIN THE MEA NING OF ESTABLISHMENT AND, HENCE, THE PROVISIONS OF SECTI ON 47 WERE NOT ITA NO.1359/DEL/2014 14 APPLICABLE. THE HONBLE SUPREME COURT HELD THAT TH E ASSESSEE COMPANY WAS NOT AN ESTABLISHMENT UNDER THE ACT. IN REACH ING THIS CONCLUSION, THE HONBLE SUPREME COURT CONSIDERED THE DEFINITION OF THE TERM ESTABLISHMENT UNDER THE RELEVANT ACT AS : A CORP ORATION ESTABLISHED BY OR UNDER A CENTRAL, PROVINCIAL OR STATE ACT, T HE HONBLE SUPREME COURT HIGHLIGHTED THE USE OF THE WORDS BY OR UNDER IN THE DEFINITION OF THE TERM ESTABLISHMENT AND EXPLAINE D THE DIFFERENCE BETWEEN A CORPORATION ESTABLISHED `BY AN ACT AND A CORPORATION ESTABLISHED `UNDER AN ACT. THE HONBLE APEX COURT HELD THAT A CORPORATION IS ESTABLISHED `BY AN ACT, WHERE THE A CT ITSELF ESTABLISHES THE CORPORATION, SUCH AS, STATE BANK OF INDIA ACT AND LIFE INSURANCE CORPORATION OF INDIA ACT. ON THE OTHER HAND, A COR PORATION IS ESTABLISHED `UNDER AN ACT, WHEN IT IS NOTIFIED BY THE DELEGATED AUTHORITY, THOUGH UNDER THE ACT. IN THE LIGHT OF THE ABOVE DI STINCTION, IT WAS HELD THAT A COMPANY IS INCORPORATED AND REGISTERED UNDER THE COMPANIES ACT AND NOT ESTABLISHED UNDER THE COMPANIES ACT. ITA NO.1359/DEL/2014 15 10. IT IS SIGNIFICANT TO NOTE THAT THE LINE OF DISTINCTION DRAWN BY THE HONBLE SUPREME COURT BETWEEN THE CORPORATIONS ESTA BLISHED `UNDER THE ACT AND CORPORATIONS ESTABLISHED `BY THE ACT I S 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 HONBLE 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 B Y THE WORDS 'ESTABLISHED' , IT IS CLEAR THAT THE REFERENCE IS TO A CORPORATION ESTABLISHED, THAT IT IS BROUGHT INTO EXISTENCE, BY AN ACT OR UNDER AN ACT. IN SHORT, THE TERM REFERS TO A STATUTORY CORPORATIO N AS CONTRASTED FROM A NON-STATUTORY CORPORATION INCORPORATED OR REGISTERE D UNDER THE COMPANIES ACT. FROM THE ITALICIZED PORTION OF THE ABOVE PRESCRIPTION OF THE JUDGMENT, IT IS MANIFEST THAT IN THE CONTEXT OF A STATUTORY CORPORATION, THE WORDS ` BY AND UNDER AN ACT CAN BE READ AS `BY AN ACT OR UNDER AN ACT. THE ABOVE OBSERVATIONS MAKE IT E XPLICIT THAT IN CONTRAST TO A NON-STATUTORY CORPORATION, A STATUTOR Y CORPORATION IS ITA NO.1359/DEL/2014 16 CONSIDERED AS ESTABLISHED BY OR UNDER AN ACT AND TH E USE OF THE WORDS `BY AND `UNDER IN SUCH A SITUATION, IS INTERCHAN GEABLE. 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 F ROM THE PREAMBLE OF THIS ACT THAT IT HAS BEEN MADE FOR DEVELOPMENT OF C ERTAIN AREAS IN THE STATE INTO INDUSTRIAL AND URBAN TOWNSHIP. INSTEAD O F ENACTING AREA-WISE INDUSTRIAL AREA DEVELOPMENT ACTS, THE UP GOVERNMENT ENACTED A COMMON UP INDUSTRIAL AREA DEVELOPMENT ACT, 1976 TO COVER AUTHORITIES UNDER DIFFERENT AREAS WITH ITS DISTINCT NAME. BUT, FOR THE CREATION OF VARIOUS AREA-WISE AUTHORITIES SUCH AS N OIDA AND GHAZIABAD AUTHORITIES, THERE IS NO OTHER PURPOSE OF THE UP IN DUSTRIAL AREA DEVELOPMENT ACT, 1976. IN OTHER WORDS, WE CAN ALSO SAY THAT THIS ACT IS NOTHING BUT A CULMINATION OF SEVERAL AREA-WISE INDU STRIAL AREA DEVELOPMENT ACTS. SINCE NOIDA HAS BEEN NOTIFIED UN DER THE UP INDUSTRIAL AREA DEVELOPMENT ACT, WE ARE OF THE CONS IDERED OPINION THAT THE EXPRESSION ANY CORPORATION ESTABLISHED BY A ST ATE ACT SHALL INCLUDE ITA NO.1359/DEL/2014 17 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 TA X WITHHOLDING CAME UP FOR CONSIDERATION BEFORE THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF CHIEF/SENIOR MANAGER, ORIENTAL BANK OF COMM ERCE VS. ITO. VIDE ITS ORDER DATED 15.7.2011 IN ITA NO.2228/DEL/2 011, THE TRIBUNAL HAS HELD THAT THE PAYMENT OF INTEREST BY ORIENTAL B ANK OF COMMERCE TO GHAZIABAD DEVELOPMENT AUTHORITY IS COVERED WITHIN T HE PROVISIONS OF SECTION 194A(3)(III)(F) AND, HENCE, THERE IS NO OBL IGATION FOR DEDUCTION OF TAX AT SOURCE. CONSEQUENTLY, THE ORDER PASSED U/S 201(1) WAS SET ASIDE. SIMILAR VIEW HAS BEEN TAKEN BY THE AMRITSAR BENCH O F THE TRIBUNAL IN THE CASE OF ITO (TDS) VS. BRANCH MANAGER JAMMU & KA SHMIR BANK LTD. VIDE ITS ORDER DATED 24.4.2012 IN ITA NO.206 TO 210/ASR/2011, THE TRIBUNAL HAS HELD THAT PAYMENT OF INTEREST BY THE B ANK TO JAMMU DEVELOPMENT AUTHORITY (JAMMU) IS EXEMPT U/S 194A(3) (III)(F) AND, HENCE, THERE CAN BE NO LIABILITY U/S 201(1) AND 201 (1A) ON THE BANK AND ITA NO.1359/DEL/2014 18 RESULTANTLY, THE BANK CANNOT BE TREATED AS AN ASSE SSEE IN DEFAULT U/S 201(1) AND 201(1A). LIKEWISE VIEW HAS BEEN TAKEN B Y THE AMRITSAR BENCH OF THE TRIBUNAL IN ITO VS. THE BRANCH MANAGER , JAMMU, JAMMU & KASHMIR BANK LTD., BY ITS ORDER DATED 2.7.2012, A COPY OF WHICH HAS ALSO BEEN PLACED ON RECORD. ALL THESE PRECEDENTS S UPPORT THE PROPOSITION THAT THE PAYMENT OF INTEREST BY BANKS TO THE STATE INDUSTRIAL DEVELOPMENT AUTHORITIES DOES NOT REQUIRE ANY DEDUCTION OF TAX A T SOURCE IN TERMS OF SECTION 194A(3)(III)(F) AND, HENCE, THE FAILURE TO DEDUCT TAX AT SOURCE ON SUCH INTEREST CANNOT LEAD TO THE BANKS BEING TREATE D AS ASSESSEE IN DEFAULT. NO MATERIAL HAS BEEN PLACED ON RECORD TO DEMONSTRATE THAT ALL/ANY OF THE ABOVE ORDERS HAVE EITHER BEEN REVERS ED OR MODIFIED IN ANY MANNER BY THE HONBLE HIGH COURTS. FURTHER, THE LD. DR FAILED TO POINT OUT ANY CONTRARY DECISION. IN VIEW OF THE LEGAL POS ITION DISCUSSED SUPRA AND THESE PRECEDENTS, WE ARE OF THE CONSIDERED OPI NION THAT THE LD. CIT(A) WAS JUSTIFIED IN REVERSING THE ORDER PASSED BY THE ADDL. CIT (TDS), GHAZIABAD DECLARING THE ASSESSEE LIABLE U/S 201(1) AND 201(1A) OF THE ACT. WE, THEREFORE, UPHOLD THE IMPUGNED ORD ER. ITA NO.1359/DEL/2014 19 13. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 07.08.201 5. SD/- SD/- [C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 07 TH AUGUST, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.