ATS Infrastructure Ltd., Noida V. DCIT (TDS), New Delhi

ITA 1917/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6610 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 28-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 08-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UMESH CHAND DUBEY
• Assessee Lawyers: K N GOYAL; MALA RAJAN
• Keywords: Non-deduction of tax
• Section: 194C; 201(1); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: D: NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NOS. 1917 & 1918/DEL/2016 ASSESSMENT YEAR: 2011-12 ATS INFRASTRUCTURE LTD., K-19, SECTOR-18, NOIDA PAN: AADCA 0609 B VS. DCIT (TDS), NOIDA. (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. MALA RAJAN, CA & SHRI K.N. GOYAL, CA. DEPARTMENT BY : SHRI UMESH CHAND DUBEY, SR. DR DATE OF HEARING : 28.11.2016 DATE OF PRONOUNCEMENT : 30.11.2016 O R D E R PER: LALIET KUMAR, J.M.: BOTH ARE THE APPEALS FILED BY THE ASSESSEE ARISE A GAINST THE ORDER DATED 27/01/2016 PASSED BY THE LD. CIT(A)-I, NOIDA FOR THE A.Y. 2011-12, WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS O F APPEALS; 2 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT GROUNDS IN ITA NO. 1917/DEL/2016 1. THAT THE IMPUGNED ORDER OF THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX (TDS) (DCIT) IS PATENTLY AGAINST LAW, ERRONEOUS AND MERITS TO BE QUASHED. 2. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LEARNED DCIT HAS GROSSLY ERRED IN HOLDING THAT THE APPELLANT WAS LIABLE TO DEDUCT TAX OF RS. 94,01,465 UNDER SECTION 194A OF THE INCOME TAX ACT, 1961 (ACT) ON INTEREST PAYMENT OF RS. 9,40,14,650/- TO GREATER NOIDA INDUSTRIAL DEVELOPME NT AUTHORITY (GNIDA), WHICH BEING A CORPORATION ESTABLISHED UNDER THE UTTAR PRADESH INDUSTRIAL AREA DEVELOPMENT ACT, 1976, AN ACT PASSED BY THE STATE LEGISLATURE IS EXEMPT PER NOTIFICATION NO. 3489 DAT ED 22/10/1970 OF THE CENTRAL BOARD OF DIRECT TAXES UND ER SECTION 194A(3)(III)(F) OF THE ACT. 3. THAT THE LEARNED DCITY HAS ERRED IN RAISING A DE MAND OF RS. 94,01,465/- TOWARDS SHORT DEDUCTION OF TAX A T SOURCE UNDER SECTION 201(1) OF THE ACT AND FURTHER LEVYING INTEREST OF RS. 37,52,031/- UNDER SECTION 201(1A) OF THE ACT ON THE ALLEGED DEFAULT UNDER SEC TION 194A OF THE ACT WHILE THERE IS NO DEFAULT. 4. THAT THE LEARNED DCIT HAS ERRED IN DETERMINING A SHORT DEDUCTION OF TAX OF RS. 8,07,810/- ON PAYMENT OF BU S HIRE CHARGES TO M/S LEASE PLAN INDIA LIMITED OF RS. 90,70,521/- HOLDING THE PAYMENT AS LIABLE TO TAX DEDUCTION @ 10% UNDER SECTION 194I OF THE ACT WHILE THE APPLICABLE TDS RATE IS 2% WHETHER UNDER SECTION 194C AS APPLIED BY THE APPELLANT OR UNDER SECTION 1 94I AS ASSESSED BY THE DCIT. 3 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT 5. THAT THE LEARNED DCIT HAS ERRED IN DETERMINING T AX DEDUCTION LIABILITY ON A PAYMENT OF RS. 90,70,521/- TO M/S LEASE PLAN INDIA LIMITED WHILE THE ACTUAL PAYME NT DURING THE YEAR WAS RS. 1,00,53,343/- ON WHICH DUE TAX AT THE RATE OF 2% UNDER SECTION 194C HAD BEEN DEDUCTED AND DEPOSITED BY THE APPELLANT. 6. THAT THE LEARNED DCIT HAS FURTHER ERRED IN RAISI NG A DEMAND OF RS. 2,98,890/- TOWARDS INTEREST UNDER SECTION 201(1A) FOR ALLEGED SHORT DEDUCTION OF TAX AT SOURCE UNDER SECTION 194I ON THE BUS HIRE CHARGES P AID TO M/S LEASE PLAN INDIA LTD. 7. THAT IN THE FIRST APPEAL, THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS)-I, NOIDA HAS ERRONEOUSLY DECIDED THE APPEAL IN THE CONTEXT ON NON-DEDUCTION OF TAX AT SOURCE ON LEASE RENT PAYMENT TO GNIDA OF RS. 9,40,14,650/- INSTEAD OF INTEREST PAYMENT AND HAS N OT DISPOSED OFF THE ACTUAL GROUNDS OF APPEAL RELATING TO TAX DEDUCTION LIABILITY ON INTEREST PAYMENT TO GNID A UNDER SECTION 194A AND BUS HIRE CHARGES UNDER EITHE R OF THE SECTIONS 194C OR 194I. GROUNDS IN ITA NO. 1918/DEL/2016 1. THAT THE IMPUGNED ORDER OF THE LEARNED ADDITIONAL COMMISSIONER OF INCOME TAX (TDS) (ADDL . CIT) IS PATENTLY AGAINST LAW, ERRONEOUS AND MERITS TO BE QUASHED. 2. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ADDL . CIT HAS GROSSLY ERRED IN LEVYING A PENALTY OF RS.94,01,465 UNDER SECTION 271C OF THE ACT FOR NON-DEDUCTION OF TAX A T SOURCE UNDER SECTION 194A OF THE ACT OF THE SAME AMOUNT ON INTEREST PAYMENT TO GREATER NOIDA 4 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT INDUSTRIAL DEVELOPMENT AUTHORITY (GNIDA), A CORPORATION ESTABLISHED UNDER A STATE ACT. 3. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ADDL . CIT HAS GROSSLY ERRED IN LEVYING A PENALTY OF RS.8,07,810 UNDER SECTION 271C FOR SHORT DEDUCTION OF TAX AT SOURCE OF EQUIVALENT AMOUNT BY APPLYING TDS RATE OF 10% UNDER SECTION 194I ON PAYMENT OF BUS HIRE CHARGES TO M/S. LEASE PLAN INDIA LIMITED INSTEAD OF THE APPLICABLE RATE OF 2% WHETHER HELD AS LIABLE TO TAX DEDUCTION EITHER UNDER SECTION 194C OR 194I OF THE ACT. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN DISMISSING THE APPEAL OF THE APPELLANT AGAINST THE IMPUGNED ORDER ON A TECHNICAL GROUND THAT THE APPELLANT'S COUNSEL HAD WRONGLY MENTION E D THE S E CTION OF LEVY OF PENALTY AS SECTION 271(1)(C) INSTEAD OF 271C. 2. FIRSTLY WE TAKE ITA NO. 1917/JP/2016. REGARDING GROUND NOS. 1 TO 4 OF THE APPEAL, BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUS INESS OF DEVELOPMENT OF GROUP HOUSING PROJECTS FOR THE LAST MANY YEARS. A SURVEY WAS CONDUCTED ON 03/02/2010 TO CHECK THE CORRECT APPLICABILITY OF TDS PROVISIONS FOR THE ASSESSMENT YEAR 2011-12. A SHOW CAUSE NOTICE WAS IS SUED BUT NO ONE ATTENDED THE PROCEEDINGS AND AS SUCH SUMMONS U/S 13 1 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) WAS ISSUED ON 08/01/2014. PURSUANT THERETO SHRI DEEPAK KUMAR, CA APPEARED AND SOUGHT TIME TO 5 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT FURNISH THE DETAILS/EXPLANATION. HOWEVER, HE FAILED TO PROVIDE THE DETAILS, THEREFORE, THE MATTER WAS DECIDED BY THE A.O. THE A .O. HAS HELD THAT THE ASSESSEE HAS FAILED TO DEDUCT TDS AT SOURCE AT THE TIME OF CREDITING/MAKING PAYMENT OF INTEREST TO THE LESSOR I.E. GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY (IN SHOT GNIDA). THE A.O. HAS HELD AS UNDER:- IN VIEW OF THE ABOVE FACTS, IT IS INFERRED THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE AT THE TIME OF CRE DITING/MAKING PAYMENT OF INTEREST TO THE LESSOR I.E. GREATER NOID A INDUSTRIAL DEVELOPMENT AUTHORITY. BY NOT DOING SO, THE ASSESSEE HAS NOT PERFORMED ITS DUTY AS ENVISAGED U/ S 200 OF THE INCOME TAX ACT. I, THEREFORE, HOLD THE ASSESSEE IN DEFAULT U/S 201 OF THE INCOME TAX ACT. DEMAND ON ACCOUNT OF SHORT D EDUCTION OF TAX U/S 201 OF THE INCOME TAX ACT AND INTEREST THER EON U/S 201(1A) IS, THUS, CHARGED AS UNDER: MONTH AMOUNT OF INTEREST PAID (RS.) DATE OF PAYMENT TDS DEDUCTED (RS.) TDS REQUIRE D TO BE DEDUCTED (RS.) SHORT DEDUCTION UNDER SECTION 201 DEFAULTS MONTHS INTEREST UNDER SECTION 201(1A) JUNE 30,387,650 30.06.2010 NIL 3,038,765.00 3,038,765.00 46 1,397,832 MARCH 63,627,000 31.03.2011 NIL 6,362,700.00 6,362,700.00 37 2,354,199 TOTAL 9,401,465.00 9,401,465.00 3,752,031 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WHO HAS SUMMARILY PAS SED AN ORDER IN APPEAL BY REJECTING THE CONTENTIONS OF THE ASSESSEE AND HELD AS UNDER:- 6 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT ALTHOUG H, T HE LD . A.O. H AS IN I TS OR D E R EX AM I NED SEVERAL I SSU E S RE GA R D ING THE LEGAL S T A TU S OF TH E NO I DA AUT H OR I TY T O W HO M L E ASE R ENT W AS PA I D A N D HAS ALSO EXAMINED THE A PPLI CAB ILI T Y OF SEC TI O N 194A O F I.T. AC T , 1961 TO TH E CASE OF T HE NO ID A A UTH O RIT Y T HE DISPUTE BE TW EE N T HE A PP E LL A NT A ND T HE REVENUE I S V ER Y SI MP L E AN D BO I LS DO W N TO TH E I SS UE WHET H ER T A X I S T O BE DE DU C T ED AT SO U RCE ON PAYM ENT O F LEASE R ENT TO THE NO I D A AU T HORI TY . I HAVE A L READY DEC I DED TH I S ISSUE I N FAVOUR OF RE VENUE AND AGA I NST THE APPE LL A N T IN T HE C ASE O F M / S . H-O N E I N DI A L T D . , UDYOG VIHAR , SURAJPUR, G R . NO I DA VIDE APPEAL ORDER NO . 05/2014- 1 5 / NO I D A DAT E D 3 1 / 1 2/2015 . RESPECTFU L LY ADHERING T O M Y DECISION TO THE SA I D C AS E I D O NO T F IN D A N Y I NF IR MITY I N THE ORDE R OF THE AO AND TH E S A ME IS THEREFORE CONFI R M E D . AP PEA L O F THE APP EL LANT FAILS. 4. NOW THE ASSESSEE IS IN APPEALS BEFORE US. THE LD . AR OF THE ASSESSEE HAS SUBMITTED THAT THE DCIT(TDS) HAS RAISED A DEMAN D OF RS. 1,02,09,275/- (94,01,465+8,07,810) U/S 201(1) OF TH E ACT TOWARDS TDS AND RS. 40,50,921 U/S 201(1A) TOWARDS INTEREST. IT WAS FURTHER SUBMITTED THAT THIS TRIBUNAL IN ITA NO. 1359/DEL/2014 DATED 0 7/08/2015 HAS DECIDED THE ISSUE OF TDS ON INTEREST PAYMENT TO GNIDA VIDE ORDER DATED 07/08/2015. THE HONBLE TRIBUNAL HAS HELD AS UNDER: - 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 H AS BEEN NOTICED ABOVE FROM THE PREAMBLE OF THIS ACT THAT IT HAS BEEN 7 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT MADE FOR DEVELOPMENT OF CERTAIN AREAS IN THE STATE INTO INDUSTRIAL AND URBAN TOWNSHIP. INSTEAD OF ENACTING AREA- WISE INDUSTRIAL AREA DEVELOPMENT ACTS, THE UP GOVER NMENT ENACTED A COMMON UP INDUSTRIAL AREA DEVELOPMENT ACT , 1976 TO COVER AUTHORITIES UNDER DIFFERENT AREAS WIT H ITS DISTINCT NAME. BUT, FOR THE CREATION OF VARIOUS AR EA-WISE AUTHORITIES SUCH AS NOIDA AND GHAZIABAD AUTHORITIES , THERE IS NO OTHER PURPOSE OF THE UP INDUSTRIAL AREA DEVEL OPMENT ACT, 1976. IN OTHER WORDS, WE CAN ALSO SAY THAT TH IS ACT IS NOTHING BUT A CULMINATION OF SEVERAL AREA-WISE INDU STRIAL AREA DEVELOPMENT ACTS. SINCE NOIDA HAS BEEN NOTIFI ED UNDER THE UP INDUSTRIAL AREA DEVELOPMENT ACT, WE AR E OF THE CONSIDERED OPINION THAT THE EXPRESSION ANY COR PORATION ESTABLISHED BY A STATE ACT SHALL INCLUDE ITA NO. 1359/DEL/2014 NOIDA (NEW OKHLA INDUSTRIAL DEVELOPME NT AUTHORITY) IN THE GIVEN CIRCUMSTANCES. 12. WE FIND THAT IDENTICAL ISSUE INVOLVING PAYMENT OF INTEREST BY SOME BANKS TO GHAZIABAD DEVELOPMENT AUTHORITY WITHO UT TAX WITHHOLDING CAME UP FOR CONSIDERATION BEFORE TH E DELHI BENCH OF THE TRIBUNAL IN THE CASE OF CHIEF/SENIOR M ANAGER, ORIENTAL BANK OF COMMERCE VS. ITO. VIDE ITS ORDER D ATED 15.7.2011 IN ITA NO.2228/DEL/2011, THE TRIBUNAL HAS HELD THAT THE PAYMENT OF INTEREST BY ORIENTAL BANK OF CO MMERCE TO GHAZIABAD DEVELOPMENT AUTHORITY IS COVERED WITHI N THE PROVISIONS OF SECTION 194A(3)(III)(F) AND, HENCE, T HERE IS NO OBLIGATION FOR DEDUCTION OF TAX AT SOURCE. CONSEQU ENTLY, THE 8 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT ORDER PASSED U/S 201(1) WAS SET ASIDE. SIMILAR VIE W HAS BEEN TAKEN BY THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF ITO (TDS) VS. BRANCH MANAGER JAMMU & KASHMI R 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 BANK TO JAMMU DEVELOPMENT AUTHORITY (JAMMU) IS EXEMPT U/S 194A(3)(III)(F) AND, HENCE, T HERE CAN BE NO LIABILITY U/S 201(1) AND 201(1A) ON THE BANK AND RESULTANTLY, THE BANK CANNOT BE TREATED AS AN ASSE SSEE IN DEFAULT U/S 201(1) AND 201(1A). LIKEWISE VIEW HAS BEEN TAKEN BY THE AMRITSAR BENCH OF THE TRIBUNAL IN ITO VS. THE BRANCH MANAGER, JAMMU, JAMMU & KASHMIR BANK LTD., B Y ITS ORDER DATED 2.7.2012, A COPY OF WHICH HAS ALSO BEEN PLACED ON RECORD. ALL THESE PRECEDENTS SUPPORT THE PROPOSITION THAT THE PAYMENT OF INTEREST BY BANKS T O THE STATE INDUSTRIAL DEVELOPMENT AUTHORITIES DOES NOT R EQUIRE ANY DEDUCTION OF TAX AT SOURCE IN TERMS OF SECTION 194A(3)(III)(F) AND, HENCE, THE FAILURE TO DEDUCT T AX AT SOURCE ON SUCH INTEREST CANNOT LEAD TO THE BANKS BE ING TREATED AS ASSESSEE IN DEFAULT. NO MATERIAL HAS BE EN PLACED ON RECORD TO DEMONSTRATE THAT ALL/ANY OF THE ABOVE ORDERS HAVE EITHER BEEN REVERSED 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 POSITIO N DISCUSSED SUPRA AND THESE PRECEDENTS, WE ARE OF TH E CONSIDERED OPINION THAT THE LD. CIT(A) WAS JUSTIFIE D IN REVERSING THE ORDER PASSED BY THE ADDL. CIT (TDS), 9 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT GHAZIABAD DECLARING THE ASSESSEE LIABLE U/S 201(1) AND 201(1A) OF THE ACT. WE, THEREFORE, UPHOLD THE IMPU GNED ORDER. IT WAS ALSO SUBMITTED BY THE LD AR OF THE ASSESSEE THAT THE JUDGMENT OF THE TRIBUNAL PASSED IN ITA NO. 1359/DEL/2014 WAS UP HELD BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT(TDS) & ANR VS. CANARA BANK PASSED IN INCOME TAX APPEAL NO. 64 OF 2016 DATED 04 /04/2016, WHEREIN THE HONBLE HIGH COURT HAS HELD AS UNDER:- IT EMPOWERS THE AUTHORITY WITH THE PREVIOUS APPROV AL OF THE STATE GOVERNMENT TO LEVY SUCH TAXES, AS IT MAY CONS IDER NECESSARY, FOR MAINTAINING OR CONTINUING ANY AMENIT IES IN THE INDUSTRIAL DEVELOPMENT AREA. THE AUTHORITY HAS TO M AINTAIN ITS OWN FUND. THE OBJECT OF THE AUTHORITY IS TO PREPARE IN SUCH FORM AND AT SUCH TIME EVERY YEAR AS THE STATE GOVERNMENT MAY SP ECIFY, A BUDGET. SECTION 41 DEALS WITH THE CONTROL OF THE ST ATE GOVERNMENT OVER THE AUTHORITY. THE DISSOLUTION OF THE AUTHORIT Y IS ALSO PROVIDED FOR IN SECTION 58. IT CAN APPROPRIATELY BE GATHERED FROM THE AFORESAID PROVISIONS THAT NOIDA HAS BEEN ESTABL ISHED BY THE INDUSTRIAL ACT AND OTHERWISE ALSO EVEN BY NECESSARY IMPLICATIONS IT IS MORE THAN APPARENT THAT NOIDA HAS BEEN ESTABLISH ED BY THE STATE INDUSTRIAL ACT. THERE IS, THEREFORE, NO DOUBT THAT NOIDA OWES ITS EXISTENCE TO A STATUTE WHICH IS THE FOUNTA INHEAD OF ITS POWERS. EVEN OTHERWISE, THE FINE DISTINCTION SOUGHT TO BE M ADE BY LEARNED COUNSEL FOR THE APPELLANTS LOSSES SIGNIFICANCE WHEN THE PROVISIONS 10 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT OF SECTION 194-A(3)(III)(C) AND (D) ARE EXAMINED. T HEY PROVIDE THAT THE INCOME CREDITED OR PAID TO THE LIFE INSURANCE C ORPORATION OF INDIA ESTABLISHED UNDER THE LIFE INSURANCE CORPORAT ION ACT, 1952 OR THE UNIT TRUST OF INDIA ESTABLISHED UNDER THE UN IT TRUST OF INDIA ACT, 1963 ARE EXEMPTED FROM PAYMENT OF TAX AT SOURC E. THERE IS NO DOUBT THAT LIFE INSURANCE CORPORATION OF INDIA A ND THE UNIT TRUST OF INDIA ARE ESTABLISHED BY THE ACTS. THE ACT , THEREFORE, DOES NOT PLACE ANY EMPHASIS ON 'BY' OR 'UNDER' THE ACT. IN THIS VIEW OF THE MATTER, REFERENCE TO THE FINANC IAL CORPORATION ACT BY LEARNED COUNSEL FOR THE APPELLANTS TO SUBSTA NTIATE THAT NOIDA HAS BEEN ESTABLISHED UNDER A STATE ACT IS NOT OF SIGNIFICANCE. THIS APART, AS HAS BEEN POINTED OUT B Y LEARNED SENIOR COUNSEL FOR THE RESPONDENT-BANK, THE SAID CENTRAL A CT AUTHORISED THE STATE GOVERNMENT TO ISSUE THE NOTIFICATION WHER EAS THE INDUSTRIAL ACT AUTHORISES THE STATE GOVERNMENT TO I SSUE THE NOTIFICATION. IN THIS CONNECTION, WE NEED TO REMIND OURSELVES BY OBSERVATIONS MADE IN PARAGRAPH 9 IN THE JUDGMENT OF S.S. DHANOA (SUPRA). THE SUPREME COURT POINTED OUT THAT A CORPORATION ESTABL ISHED 'BY' OR 'UNDER' AN ACT OF LEGISLATURE CAN ONLY MEAN A BODY CORPORATE WHICH OWES ITS EXISTENCE AND NOT MERELY ITS CORPORA TE STATUS TO THE ACT AND IN THIS CONNECTION THE SUPREME COURT RE FERRED TO : A MUNICIPALITY; A ZILA PARISHAD; OR A GRAM PANCHAYAT WHICH OWE THEIR EXISTENCE AND STATUS TO AN ACT OF LEGISLATURE. NOIDA HAS BEEN GRANTED A STATUS OF A MUNICIPALITY U NDER ARTICLE 243-Q OF THE CONSTITUTION OF INDIA WHICH DEALS WITH THE CONSTITUTION OF A MUNICIPALITY. THE SAID ARTICLE PR OVIDES THAT THERE 11 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT SHALL BE CONSTITUTED IN EVERY STATE, - (A) A NAGAR PANCHAYAT FOR A TRANSITIONAL AREA, THAT IS TO SAY, AN AREA IN TRANS ITION FROM A RURAL AREA TO AN URBAN AREA; (B) A MUNICIPAL COUNCIL FOR A SMALLER URBAN AREA; AND (C) A MUNICIPAL CORPORATION FOR A LARGER URBAN AREA. THE PROVISO TO ARTICLE 243-Q, HOWEVER, STIPULATES THAT A MUNICIPALITY UNDER THIS CLAUSE MAY NOT BE CONSTITUTED IN SUCH UR BAN AREA OR PART THEREOF AS THE GOVERNOR MAY, HAVING REGARD TO THE SIZE OF THE AREA AND THE MUNICIPAL SERVICES BEING PROVIDED OR P ROPOSED TO BE PROVIDED BY AN INDUSTRIAL ESTABLISHMENT IN THAT ARE A AND SUCH OTHER FACTORS AS HE MAY DEEM FIT, SPECIFY TO BE AN INDUSTRIAL TOWNSHIP. THE STATE GOVERNMENT HAS ISSUED A NOTIFICATION DATE D 24 DECEMBER 2001 IN EXERCISE OF THE POWERS CONFERRED U NDER THE PROVISO TO CLAUSE (1) OF ARTICLE 243-Q OF THE CONST ITUTION. THE SAID NOTIFICATION PROVIDES THAT HAVING REGARD TO THE SIZ E OF NOIDA WHICH HAS BEEN DECLARED TO BE AN INDUSTRIAL DEVELOP MENT AREA BY A NOTIFICATION DATED 17 APRIL 1976 AND THE MUNICIPA L SERVICES BEING PROVIDED BY NOIDA, THE GOVERNOR IS PLEASED TO SPECI FY THAT NOIDA WOULD BE AN 'INDUSTRIAL TOWNSHIP' WITH EFFECT FROM THE DATE OF PUBLICATION OF THE NOTIFICATION. THIS CLEARLY MEANS THAT INSTEAD OF MUNICIPAL CORPORATION PROVIDING SERVICES, NOIDA WOU LD PROVIDE THE SAID SERVICES AND IF THAT BE SO, THEN AS OBSERV ED BY THE SUPREME COURT IN S.S. DHANOA (SUPRA), NOIDA WILL OW E ITS EXISTENCE TO AN ACT OF THE STATE. WE HAVE, THEREFORE, NO MANNER OF DOUBT FROM A READI NG OF THE PROVISIONS OF THE INDUSTRIAL AREA DEVELOPMENT ACT T HAT THE NOIDA HAS BEEN CONSTITUTED BY THE STATE ACT AND, THEREFOR E, ENTITLED TO 12 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT EXEMPTION OF PAYMENT OF TAX AT SOURCE UNDER SECTION 194-A(1) OF THE ACT. THE DECISION OF THE DIVISION BENCH OF THIS COURT IN NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY (SUPRA), ON WHICH RELIANCE HAS BEEN PLACED BY LEARNED COUNSEL FOR THE APPELLANTS, WOULD, THEREFORE, NOT COME TO THE AID OF THE APPELLANTS AS IT WAS RESTRICTED TO THE ISSUE AS TO WHETHER NOIDA WOULD B E A LOCAL AUTHORITY OR NOT AND DID NOT DEAL WITH THE ISSUE IN VOLVED IN THIS APPEAL AS TO WHETHER THE NOIDA IS A CORPORATION EST ABLISHED BY A STATE ACT. ON THE BASIS OF THE ABOVE, IT WAS SUBMITTED THAT NO TDS WAS DEDUCTIBLE AT SOURCE AT THE INTEREST PAYMENT MADE TO GNIDA BY THE APPELLANT AND THEREFORE, THE APPEAL IS REQUIRED TO BE ALLOWED. 5. ON THE OTHER HAND, THE LD SR. DR HAS SUBMITTED T HAT THE JUDGMENT RELIED BY THE LD. AR OF THE ASSESSEE IS NOT APPLICA BLE AS IT PERTAINS TO NOIDA DEVELOPMENT AUTHORITY AND NOT IN RESPECT OF THE GNI DA. IT WAS SUBMITTED THAT THE ORDER PASSED BY THE LD. CIT(A) WAS A CRYPT IC ORDER AND THEREFORE, THE ISSUE IS REQUIRED TO BE REEXAMINED BY THE LD. C IT(A) WITH DETAILED REASONING. IN REBUTTAL, THE LD AR OF THE ASSESSEE H AS BROUGHT TO OUR NOTICE THE ORDER PASSED BY THE LD. CIT(A) DATED 29/07/2016 PASSED IN APPEAL NO. 151/2015-16 WHEREIN THE LD. CIT(A) INSTEAD OF APPLY ING THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT HAS NOT APPLIED THE JU DGMENT ON THE PRETEXT 13 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT THAT THE SAID JUDGMENT IS NOT PASSED BY THE HONBLE JURISDICTIONAL HIGH COURT. THE FINDING OF THE SAID ORDER IS AS UNDER:- 5. THE ORDER DATED 04/04/2016 OF HONBLE ALLAHABAD HIGH COURT IS AN ORDER AND NOT THE JUDGMENT. THE FACTS AND THE ISSUES OF LAW WHICH WERE CONSIDERED BY ME IN MY EARLIER ORDER IN THE CASE OF THE APPELLANT AS WELL AS OTHERS SIMILARLY P LACED BANKS HAVE NOT BEEN CONSIDERED BY HONBLE ALLAHABAD HIGH COURT IN THE ORDER DATED 04/04/2016. THE ORDERS PASSED BY ME WERE NOT CONTESTED BY THE APPELLANT U/S 253 OF IT ACT, 1 961 BEFORE THE LD. ITAT WHICH WAS A STATUTORY RIGHT OF THE APPELLANT BANKS. INSTEAD, THE APPELLANT BANK AS WEL L AS VARIOUS OTHER SIMILARLY PLACED BANKS HAVE MOVED BEF ORE WRIT PETITIONS HONBLE ALLAHABAD HIGH COURT WHICH WERE L ISTED FOR 26/07/2016. HOWEVER, WHILE ISSUING NOTICE TO THE RESPONDENTS AND WHERE THE UNDERSIGNED AUTHORITY IS THE RESPONDENT NO.1, HONBLE ALLAHABAD HIGH COURT DID N OT STAY THE ORDERS PASSED BY ME. FROM THESE FACTS IT IS CLE AR THAT THE FACTS OF THE TWO CASES BEING THE ONE DECIDED BY HON BLE ALLAHABAD HIGH COURT BY ORDER DATED 04/04/2016 AND THE OTHER CASES BEING CHALLENGE TO BY ORDER AGAINST THE APPELLANT BANK AND OTHERS ARE DIFFERENT. 6. IN VIEW OF THE ABOVE, THE ORDER DATED 04/04/2016 OF HONBLE ALLAHABAD HIGH COURT WILL NOT APPLY TO THE FACTS OF THE PRESENT CASE. WITH DUE RESPECT TO THE JURISDICTIONA L HIGH COURT IT IS HELD THAT THE ISSUES INVOLVING THE PRES ENT APPEAL 14 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT WERE NOT ADJUDICATED BY HONBLE ALLAHABAD HIGH COUR T IN ITS ORDER DATED 04/04/2016 AND AS MY ORDER ON THE ISSUE INVOLVED HERE IS OPERATING, IN RESPECTFULLY COMPLIA NCE OF THE SAME, I HOLD THAT THE CASE CANVASSED BY THE LD. COU NSEL FOR THE APPELLANT BANK HAS NOT MERIT AND THERE IS NO IN FIRMITY IN THE IMPUGNED ORDER PASSED BY THE LD. A.O.. THE SAME IS THEREFORE CONFIRMED. THE APPEAL OF THE APPELLANT FA ILS, IS DISMISSED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE TRIBUNAL VIDE ORDER DATED 07/8/2015 HAS DECIDED THE ISSUE THAT THE TDS IS NOT REQUIRED TO BE DEDUCTIBLE ON THE INTEREST PAID TO THE NOIDA AUTHOR ITIES. THE REASONING OF THE COORDINATE BENCH IN THE CASE OF CIT(TDS) VS CAN ARA BANK IS CLEARLY APPLICABLE TO THE PRESENT CASE AS WELL. FURTHER THE GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY (GNIDA) IS A PUBLIC AUTHORITY CONSTITUTED U/S. 3 OF UTTAR PRADESH INDUSTRIAL AREA DEVELOPMENT ACT, 1976 (UP ACT NO. 6 OF 1976). GNIDA IS RESPONSIBLE FOR THE PLANNED DEVELOP MENT OF THE AREA UNDER ITS JURISDICTION. (II) GNIDA IS DECLARED AS I NDUSTRIAL TOWNSHIP BY THE GOVERNOR OF UTTAR PRADESH UNDER PROVISO TO CLAUSE ( 1) OF ARTICLE 243Q OF THE CONSTITUTION OF INDIA. IT IS A LOCAL AUTHORITY IN AS MUCH AS, IT IS BESTOWED WITH THE AUTHORITY TO DISCHARGE FUNCTIONS OF AN INDUSTRIAL TOWNSHIP AS WELL AS MUNICIPALITY. GNIDA DOES NOT HA VE A SEPARATE 15 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT MUNICIPALITY. (III) GNIDA DISCHARGES FUNCTIONS OF M AINTAINING SEWERAGE, WATER, ELECTRICITY, ROADS AND SOCIAL INFRASTRUCTURE SUCH AS SCHOOL, COLLEGES, UNIVERSITIES, DISPENSARIES, HOSPITALS, PARKS, COMMU NITY CENTERS ETC FOR THE BENEFIT OF PUBLIC AT LARGE. THUS THE FUNCTIONS AND ACTIVITIES OF GNIDA ARE SIMILAR TO THE NOIDA DEVELOPMENT AUTHORITY. WE FIND THAT THE IDENTICAL ISSUE INVOLVING THE PAY MENT OF THE INTEREST BY THE BANKS TO NOIDA DEVELOPMENT AUTHORITY AND GAZ IABAD DEVELOPMENT AUTHORITY HAS ALREADY BEEN ADJUDICATED SUPRA BY THE TRIBUNAL AS WELL AS THE BY THE HONBLE ALLAHABAD HIGH COURT, THEREFORE, THE AUTHORITIES BELOW ARE BOUND BY THE AUTHORITATIVE PRONOUNCEMENT OF THE JUDGMENT OF THE TRIBUNAL AS WELL AS BY THE HONBLE ALLAHABAD HIGH C OURT THE LD. SR.DR HAS FAILED TO POINT OUT ANY CONTRAR Y JUDGMENT. IN VIEW OF THE LEGAL POSITION DISCUSSED SUPRA AND THE BINDI NG JUDGMENTS, WE ARE OF THE CONSIDERED OPINION THAT THE ORDER OF THE A.O. A ND THE LD. CIT(A) ARE REQUIRED TO BE SET ASIDE. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS ON THE PAYMENTS MADE BY IT TO THE GNIDA. IN THE LIGHT OF THE ABOVE, THE APPEAL OF THE ASSESSEE IS A LLOWED. 7. GROUNDS NO. 5 TO 7 OF THE APPEAL, IN THIS REGARD , THE ASSESSEE HIRED BUSES FROM A COMPANY M/S LEASE PLAN INDIA LIMITED O N LEASE RENTAL BASIS. 16 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT IT THE A.O ON EXAMINATION FOUND THAT THE AMOUNT WAS PAID OR CREDITED BY VOUCHERS AND THE ASSESSEE HAD CLAIMED DEDUCTION OF TAX U/S 194C OF THE ACT @ 2% AS AGAINST ACTUAL PAYMENT OF RS. 9070521/- . THE A.O. HAS OPINED THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX @ 10% U/S 194I OF THE ACT, WHICH WAS EFFECTIVE FROM 01/4/2008. 8. THE LD CIT(A) ON FIRST APPEAL HAS SUMMARILY DECI DED THIS ISSUE AS MENTIONED HEREINABOVE AND HAD UPHELD THE FINDINGS O F THE A.O. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND HAVE ALSO PERU SED THE APPLICABLE PROVISIONS IN THIS CASE OF PAYMENT OF THE HIGHER CH ARGES OF LEASE RENT OF CARS ETC. TO M/S LEASE PLAN INDIA LIMITED. THE APPL ICABLE SECTION 194I PROVIDES AS UNDER:- 194-I. ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF RENT, 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 THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME -TAX THEREON AT THE RATE OF ( A ) TWO PER CENT FOR THE USE OF ANY MACHINERY OR PLAN T OR EQUIPMENT; AND ( B ) TEN PER CENT FOR THE USE OF ANY LAND OR BUILDING (INCLUDING FACTORY BUILDING) OR LAND APPURTENANT TO A BUILDING (INCLUD ING FACTORY BUILDING) OR FURNITURE OR FITTINGS: PROVIDED THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION WHERE THE AMOUNT OF SUCH INCOME OR, AS THE CASE MAY BE, THE AGGREGATE O F THE AMOUNTS OF SUCH INCOME CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID D URING THE FINANCIAL YEAR BY THE AFORESAID PERSON TO THE ACCOUNT OF, OR TO, THE PAYE E, DOES NOT EXCEED ONE HUNDRED AND EIGHTY THOUSAND RUPEES: 17 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT PROVIDED FURTHER THAT AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO SE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAUSE ( A ) OR CLAUSE ( B ) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING TH E FINANCIAL YEAR IN WHICH SUCH INCOME BY WAY OF RENT IS CREDITED OR PAID, SHA LL BE LIABLE TO DEDUCT INCOME- TAX UNDER THIS SECTION : [ PROVIDED ALSO THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION WHERE THE INCOME BY WAY OF RENT IS CREDITED OR PAID TO A BUSI NESS TRUST, BEING A REAL ESTATE INVESTMENT TRUST, IN RESPECT OF ANY REAL ESTATE ASS ET, REFERRED TO IN CLAUSE ( 23FCA ) OF SECTION 10 , OWNED DIRECTLY BY SUCH BUSINESS TRUST.] EXPLANATION. FOR THE PURPOSES OF THIS SECTION, ( I ) 'RENT' MEANS ANY PAYMENT, BY WHATEVER NAME CALLED , UNDER ANY LEASE, SUB- LEASE, TENANCY OR ANY OTHER AGREEMENT OR ARRANGEMEN T FOR THE USE OF (EITHER SEPARATELY OR TOGETHER) ANY, ( A ) LAND; OR ( B ) BUILDING (INCLUDING FACTORY BUILDING); OR ( C ) LAND APPURTENANT TO A BUILDING (INCLUDING FACTORY BUILDING); OR ( D ) MACHINERY; OR ( E ) PLANT; OR ( F ) EQUIPMENT; OR ( G ) FURNITURE; OR ( H ) FITTINGS, WHETHER OR NOT ANY OR ALL OF THE ABOVE ARE OWNED BY THE PAYEE; ( II ) WHERE ANY INCOME IS CREDITED TO ANY ACCOUNT, WHET HER CALLED 'SUSPENSE ACCOUNT' OR BY ANY OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE P ERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPL Y ACCORDINGLY. A READING OF THE ASSESSMENT ORDER CLEARLY PROVIDES THAT THE A.O. HAS APPLIED THE DEFINITION OF RENT U/S 194-I, WHICH WAS APPLICABLE PRIOR TO THE FINANCE ACT NO. 2 OF 2009 W.E.F. 01/10/2009 AND HAS NOT APPLIED THE PROVISION IN FORCE DURING THE ASSESSMENT YEAR AS ME NTIONED HEREINABOVE. IN VIEW THEREOF, THIS ISSUE IS REMANDED BACK TO THE FILE OF THE A.O. WITH A DIRECTION TO EXAMINE THE APPLICABLE PROVISION OF TH E LAW DURING THE RELEVANT 18 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT ASSESSMENT YEAR AND DECIDE THE APPEAL ACCORDINGLY. THEREFORE, THIS ISSUE IS RESTORED BACK TO THE FILE OF THE A.O. 10. NOW WE TAKE ITA NO. 1918/DEL/2016: WE HAVE DECIDED THE QUANTUM APPEAL OF THE ASSESSEE AND HAVE ALLOWED GROUNDS NO. 1 TO 4 OF THE APPEAL AND HAVE RESTORED BACK THE GROUNDS NO. 5 TO 7 OF THE APPEAL TO THE FILE OF THE A.O.. SINCE WE HAVE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND HAVE RESTORED BACK THE REMAINING GROUND, THEREFORE, IT WOULD BE IN THE INT EREST OF JUSTICE, IF THE PRESENT APPEAL ARISING OF THE QUANTUM PROCEEDINGS I S ALSO RESTORED BACK TO THE FILE OF THE A.O. WITH A DIRECTION TO INITIATE T HE PROCEEDINGS IN THE CASE, THE ISSUE NO. 5 TO 7 ARE DECIDED AGAINST THE ASSESS EE, IN ACCORDANCE WITH LAW. WITH THIS OBSERVATION, THIS APPEAL OF THE ASSE SSEE IS ALSO SET ASIDE TO THE FILE OF THE A.O. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/20 16. SD/- SD/- [N.K. SAINI] [LALIET KUMAR] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 30 TH NOVEMBER, 2016. 19 ITA NO. 1917 & 1918 /DEL/2016 ATS INFRASTRUCTURE LTD. VS DCIT *RANJAN COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.