IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: G NEW DELHI BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.6612/DEL/2017 ASSESSMENT YEAR: 2014-15 ACIT, CIRCLE-78(1), NEW DELHI VS. UNITECH LTD., 6, UNITECH HOUSE, COMMUNITY CENTRE, SAKET, NEW DELHI PAN :AAACU1482H (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORD ER DATED 25/08/2017 PASSED BY THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS)-41 [IN SHORT THE LD. CIT(A)] IN RELATIO N TO ORDER PASSED UNDER SECTION 201(1)/201(1A) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) BY THE ASSESSING OFFICER FOR NON-D EDUCTION OF TAX AT SOURCE ON CERTAIN PAYMENTS TO NOIDA AUTHORITIES FOR APPELLANT BY SH. H.K. CHOUDHARY, CIT(DR) RESPONDENT BY NONE DATE OF HEARING 07.07.2021 DATE OF PRONOUNCEMENT 16.07.2021 2 ITA NO.6612/DEL/2017 ASSESSMENT YEAR 2014-15. THE GROUNDS RAISED BY THE REVENUE ARE REPRODUCED AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE N OIDA IS COVERED UNDER THE EXEMPTION FROM TDS IN VIEW OF PROVISIONS OF SECTION 194A(3)(III)(F) READ WITH NOTIFICATION NO. 3489 DAT ED 20.10.1970, AND IGNORING THE HONBLE ALLAHABAD HIGH COURTS DEC ISION DATED 28.02.2011 IN WRIT PETITION NO. 1338/2005 IN THE CA SE OF NOIDA WHEREIN IT HAS BEEN HELD THAT NOIDA IS NOT A LOCAL AUTHORITY WITHIN THE MEANING OF SECTION 10(2) OF THE INCOME T AX ACT HENCE, NOT ELIGIBLE FOR EXEMPTION TDS U/S 194A(3)(III)(F) OF THE INCOME TAX ACT, 1961? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN PLACING RELIANCE O N THE JURISDICTIONAL HIGH COURTS DECISION DATED 16.10.20 17 IN THE CASE OF M/S RAJESH PROJECTS INDIA PVT. LTD., WHICH IS AP PARENTLY NOT ONLY IN CONTRADICTION OF THE JUDGEMENT OF THE HONB LE ALLAHABAD HIGH COURT IN WRIT PETITION NO. 1338/2005 DATED 28. 02.2011 BUT ALSO THE DECISION OF THE HONBLE SUPREME COURT IN A DITYAPUR AREA DEVELOPMENT AUTHORITY VS UOI & OTHERS 283 ITR 97? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE A SSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON PAYMENT OF INTERE ST TO NOIDA? 4. THE ORDER OF THE CIT(A) BEING ERRONEOUS IN LAW A ND ON FACTS NEEDS TO BE VACATED AND THE ORDER OF THE ACIT BE RESTORED . 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY ONE OR MORE OF THE GROUND OF THE APPEAL AS STATED ABOVE AS AND WHEN NEED FOR DOING SO MAY ARISE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT DURING T HE COURSE OF SURVEY PROCEEDINGS UNDER SECTION 133A OF THE ACT CO NDUCTED ON 29/12/2016, THE INCOME-TAX AUTHORITIES OBSERVED THA T NO TAX WAS DEDUCTED ON PAYMENT OF 121,96,86,778/- TO NOIDA AUTHORITY. IT WAS EXPLAINED BY THE ASSESSEE THAT IN VIEW OF THE AFFIDAVIT FILED BY THE NOIDA AUTHORITIES, NO TAX WA S DEDUCTED ON SAID SUM AND THEREFORE, THE ASSESSEE SHOULD NOT BE TREATED AS ASSESSEE IN DEFAULT UNDER SECTION 201 OF THE ACT FOR NON- DEDUCTING OF TAX ON THE INTEREST PAYMENT MADE/DEBIT ED TO NEW OKHALA INDUSTRIAL DEVELOPMENT AUTHORITY (NOIDA). TH E SAID 3 ITA NO.6612/DEL/2017 REQUEST WAS REJECTED BY THE ASSESSING OFFICER ON TH E GROUND THAT NOIDA AUTHORITY IS NO LONGER ENTITLED TO CLAIM EXEM PTION UNDER SECTION 10(20) OF THE ACT IN VIEW OF THE DECISION O F THE HONBLE ALLAHABAD HIGH COURT AND REJECTION OF THE SLP BY TH E HONBLE SUPREME COURT AGAINST THE SAID DECISION OF THE HON BLE ALLAHABAD HIGH COURT. ACCORDINGLY, THE ASSESSING OFFICER HELD THE ASSESSEE IN DEFAULT FOR NON-DEDUCTION OF TAX AT SOURCE ON PA YMENT OF INTEREST AMOUNTING TO 133,18,84,399/- AND RAISED LIABILITY OF 20,00,77,281/-. AGGRIEVED, THE ASSESSEE FILED APPEA L BEFORE THE LD. CIT(A), WHO ALLOWED THE APPEAL OF THE ASSESSEE FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF RAJESH PROJECTS INDIA PRIVATE LIMITED VS CIT(TDS) (2017) 7 8 TAXMANN.COM 263 (DELHI) . AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL, RAISING THE GROUNDS AS REPRODU CED ABOVE. 3. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE, WHO APPEARED THROUGH VIDEO CONFERENCING FACILITY AND PER USED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT LD. CIT( A) HAS DELETED THE TAX LIABILITY RAISED UNDER SECTION 201(1) AND 2 01(1A) IN THE CASE OF THE ASSESSEE OBSERVING AS UNDER: 5. THE APPELLANT HAS CONTENDED THAT SINCE NOIDA HA S BEEN NOTIFIED UNDER THE UP INDUSTRIAL AREA DEVELOPMENT ACT, THE E XPRESSION ANY CORPORATION ESTABLISHED BY A STATE ACT SHALL INCLU DE NOIDA AUTHORITY. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE JURISDICTIONAL ITAT IN THE CASE OF ACIT(TDS) V. CAN ARA BANK [2015] 62 TAXMANN.COM 261 (DELHI-TRIB.). 6. THIS ISSUE HAS BEEN CONSIDERED BY THE HIGH COURT S IN THE FOLLOWING CASES:- (I) IN THE CASE OF CIT(TDS) VS. SYNDICATE BANK, DEC IDED ON 23.08.2016, THE HONBLE ALLAHABAD HIGH COURT HAS FU RTHER CLARIFIED:- 4. COUNSEL FOR PARTIES ALSO ADMITTED THAT IN WRIT (TAX) NO. 1338 OF 2005, DECIDED ON 28.02.2011, ISSUE WAS DECI DED THAT 4 ITA NO.6612/DEL/2017 NOIDA IS NOT A LOCAL AUTHORITY WITHIN THE MEANING OF SECTION 10 (20) OF THE ACT AND THIS ISSUE WAS ANSWERED AGAI NST NOIDA. HOWEVER, IN PRESENT CASE. ISSUE IS WHETHER N OIDA IS A CORPORATION ESTABLISHED BY STATE ACT AND THIS QUE STION HAS BEEN ANSWERED IN FAVOUR OF NOIDA AND ASAINST REVENU E IN A SUBSEQUENT MATTER I.E. I.T.A. NO. 64 OF 2016, COMMI SSIONER OF INCOME TAX (TPS) AND ANOTHER VS. CANARA BANK, DECID ED ON 04.04.2016. THE DIVISION BENCH IN JUDGMENT DATED 04.04.2016 HAS ALSO CONSIDERED EARLIER DIVISION BEN CH JUDGMENT DATED 28.02.2011 AND DISTINGUISHED THE SAM E BY OBSERVING THAT THERE WAS A DISPUTE WHETHER NOIDA WO ULD BE A LOCAL AUTHORITY OR NOT WHILE IN A SUBSEQUENT J UDGMENT THE ISSUE WAS WHETHER NOIDA IS CORPORATION ESTABLISH ED BY STATE ACT OR NOT. THEREFORE, EARLIER JUDGMENT CONFI NED TO THE QUESTION OF STATUS OF NOIDA BEING LOCAL AUTHORITY WOULD NOT HAVE ANY APPLICATION TO THE ISSUE RAISED SUBSEQUENT LY. 5. IN VIEW THEREOF, IT CANNOT BE SAID THAT JUDGMENT IN WRIT (TAX) NO. 1338 OF 2005 (SUPRA) COULD HAVE OPERATED AS RES- JUDICATA AND TRIBUNAL HAS ERRED IN DECIDING THE CAS E OTHERWISE IN HOLDING THAT NOIDA HAS BEEN ESTABLISHE D BY STATE ACT. CONSIDERING THE FACT THAT THIS ISSUE IS NOW COVERED BY JUDGMENTS OF THIS COURT IN INCOME TAX APPEAL NO. 64 OF 2016 AND HAS BEEN ANSWERED AGAINST REVENUE AND IN F AVOUR OF NOIDA, IN OUR VIEW, ALL SUBSTANTIAL QUESTIONS OF LAW ARE ANSWERED AGAINST APPELLANT AND IN FAVOUR OF NOIDA. 6. APPEAL IS, ACCORDINGLY, DISMISSED. (II) THE HONBLE DELHI HIGH COURT IN ITS JUDGMENT DATED 16.02.2017 IN THE CASE OF RAJESH PROJECTS (INDIA) ( P.) LTD. VS. COMMISSIONER OF INCOME-TAX (TDS)- II, [2017] 78 TAX MANN.COM 263 (DELHI) WHEREIN THE FACTS OF THE CASE ARE UNDOUBTED LY SIMILAR TO THE CASE AT HAND. THE COURT HAS RENDERED JUDGEMENT REGA RDING THE DIFFERENT COMPONENTS OF THE PAYMENTS MADE TO GNOIDA FOR THE LEASE/RENT/INTEREST/OTHER PAYMENTS FOR ACQUISITION A PLOT ON RENT ON 99 YEARS LEASE HOLDING AS UNDER: 20. IN VIEW OF THE ABOVE ANALYSIS, THE COURT HEREB Y CONCLUDES AS FOLLOWS: (1) AMOUNTS PAID AS PART OF THE LEASE PREMIUM IN TE RMS OF THE TIME- SCHEDULE(S) TO THE LEASE DEEDS EXECUTED B ETWEEN THE PETITIONERS AND GNOIDA, OR BI-ANNUAL OR ANNUAL PAYM ENTS FOR A LIMITED/SPECIFIC PERIOD TOWARDS ACQUISITION OF LE ASE HOLD RIGHTS ARE NOT SUBJECT TO TDS, BEING CAPITAL PAYMEN TS; 5 ITA NO.6612/DEL/2017 (2) AMOUNTS CONSTITUTING ANNUAL LEASE RENT, EXPRESS ED IN TERMS OF PERCENTAGE (E.G. 1%) OF THE TOTAL PREMIUM FOR THE DURATION OF THE LEASE, ARE RENT, AND THEREFORE SUBJ ECT TO TDS. SINCE THE PETITIONERS COULD NOT MAKE THE DEDUCTION DUE TO THE INSISTENCE OF GNOIDA, A DIRECTION ISSUED TO THE SAI D AUTHORITY (GNOIDA) TO COMPLY WITH THE PROVISIONS OF LAW AND M AKE ALL PAYMENTS, WHICH WOULD HAVE BEEN OTHERWISE PART OF T HE DEDUCTIONS, FOR THE PERIODS, IN QUESTION, TILL END OF THE DATE OF THIS JUDGMENT. ALL PAYMENTS TO BE MADE TO IT, HENCE FORTH, SHALL BE SUBJECT TO TDS. (3) AMOUNTS WHICH ARE PAYABLE TOWARDS INTEREST ON THE PAYMENT OF LUMP SUM LEASE PREMIUM, IN TERMS OF THE LEASE WHICH ARE COVERED BY SECTION 194-A ARE COVERED BY THE EXEMPTION UNDER SECTION 194A (3) (F) AND THEREFORE, NOT SUBJECTED TO TDS. (4) FOR THE REASON MENTIONED IN (3) ABOVE, ANY PAYM ENT OF INTEREST ACCRUED IN FAVOUR OF GNOIDA BY ANY PETITIO NER WHO IS A BANK - TO THE GNOIDA, TOWARDS FIXED DEPOSITS, ARE ALSO EXEMPT FROM TDS. 7. AS THE FACTS OF THE CASE ARE SIMILAR TO THOSE IN THE CASE OF RAJESH PROJECTS (SUPRA) WHERE, SIMILARLY LAND HAD BEEN GIV EN ON SIMILAR TERMS BY GNOIDA. NOW THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, FOLLOWING THE JUDGEMENTS OF THE JURIS DICTIONAL HIGH COURT GIVEN ABOVE, THE PAYMENT OF INTEREST BY THE A PPELLANT COMPANY TO NOIDA IS NOT LIABLE TO TDS, AS IT IS COV ERED UNDER EXEMPTION U/S 194A (3)(III)(F). THE ASSESSEE IS NOT HELD TO BE AN ASSESSEE IN DEFAULT. 8. THE ABOVE DECISIONS IS RENDERED ON THE BASIS OF SECTION 194A (3)(III)(F) AND NOT ON NOIDA AUTHORITY CLAIMING EXE MPTION UNDER SECTION 10(20) OF THE ACT. THE HONBLE ALLAHABAD HI GH COURT WHILE DISPOSING OFF THE WRIT PETITION VIDE ITS ORDER DATE D 28TH FEBRUARY, 2011 HELD THAT NOIDA AUTHORITY IS NOT A LOCAL AUTHO RITY WITHIN THE MEANING OF SECTION 10(20) OF THE ACT. THIS HAS BEEN REITERATED BY THE DELHI HIGH COURT IN THE CASE OF RAJESH PROJECTS (IN DIA) (P.) LTD. VS. COMMISSIONER OF INCOME-TAX (TDS)- II, (SUPRA). 3.1 IN OUR OPINION, THE LD. CIT(A) HAS FOLLOWED BINDIN G PRECEDENTS OF THE JURISDICTIONAL HIGH COURT WHILE A LLOWING THE APPEAL OF THE ASSESSEE AND, THEREFORE, WE DO NOT FI ND ANY INFIRMITY 6 ITA NO.6612/DEL/2017 IN THE SAID ORDER OF THE LEARNED CIT(A). ACCORDINGL Y, WE UPHOLD THE SAME AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JULY, 2021. SD/- SD/- (KULDIP SINGH) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16 TH JULY, 2021. RK/- (DTDC) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI