ITO, Jaipur V. BRANCH MANAGER, Jaipur

ITA 966/JPR/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7536 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-02-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 09-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Section: 133A; 12A; 201(1); 10

Judgement Text

1 ITA 966(16)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI SANJAY ARORA ITA NO. 966 TO 973/JP/2011 ASSTT. YEARS : 2004-05 TO 2011-12. THE INCOME-TAX OFFICER, VS. BRANCH MANAGER, WARD TDS-2, STATE BANK OF BIKANER & JAIPUR, JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) C.O. NOS. 4 TO 11/JP/2012 ( ARISING OUT OF ITA NOS. 966 TO 973/JP/2011 ) ASSTT. YEARS : 2004-05 TO 2011-12. BRANCH MANAGER, VS. THE INCOME-TAX OFFICER, STATE BANK OF BIKANER & JAIPUR. WARD TDS-2, JAIPUR. JAIPUR. (APPLICANT) (RESPONDENT) APPELLANT BY : SHRI SUBHASH CHANDRA RESPONDENT BY : SHRI P.C. PARWAL DATE OF HEARING : 07.02.2012. DATE OF PRONOUNCEMENT : 10.02.2012. ORDER DATE OF ORDER : 10/02/2012. PER BENCH : THESE ARE EIGHT APPEALS AND EIGHT CROSS OBJECTIONS BY DEPARTMENT AND ASSESSEE RELATING TO ASSESSMENT YEARS 2004-405 TO 2011-12 RE SPECTIVELY. 2. IDENTICAL GROUND IN ALL THE APPEALS OF THE DEPAR TMENT ARE AS UNDER :- 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE DEMAND RAISED UNDER SECTI ON 201(1)/201(1A) OF THE I.T. ACT BY THE A.O. ON ACCOUNT NON-DEDUCTION O F TAX SOURCE BY THE ASSESSEE ON PAYMENT OF INTEREST TO THE RAJASTHAN RU RAL DEVELOPMENT AGENCY AS THE SAID AGENCY IS NOT COVERED UNDER CIRC ULAR NO. 4/2002 IN RESPECT OF BOARDS OR BODIES WHOSE INCOME IS UNCONDI TIONALLY EXEMPT UNDER SECTION 10 OF THE IT ACT, 1961, AS CLAIMED BY THE ASSESSEE BEFORE THE LD. CIT (A). 3. IN THE PRESENT CASES, PROCEEDINGS UNDER SECTION 201(1) AND 201(1A) FOR ASSESSMENT YEARS 2004-05 TO 2011-12 FOR NON DEDUCTI ON OF TDS ON THE INTEREST PAID BY THE ASSESSEE BANK TO RAJASTHAN RURAL ROAD DEVELOPME NT AGENCY (RRRDA), A BODY FORMED BY THE STATE GOVERNMENT, WAS INITIATED. 4. ON SURVEY BY DEPARTMENT, IT WAS REVEALED THAT RA JASTHAN RURAL ROAD DEVELOPMENT AGENCY, A NODAL AGENCY WAS FORMED AS A SOCIETY BY THE STATE GOVERNMENT. THE MINISTRY OF RURAL DEVELOPMENT, CENTRAL GOVERNME NT OF INDIA, UNDER THE PROGRAMME OF PRADHAN MANTRI GRAM SADAK YOJNA (PMGSY) SENT THE FUNDS IN THE NAME OF RAJASTHAN RURAL ROAD DEVELOPMENT AGENCY, WHICH WAS DEPOSITED IN THE ACCOUNT MAINTAINED WITH THE ASSESSEE I.E. STATE BANK OF BIKANER & JAIPUR. ON SURVEY, IT WAS REVEALED THAT HUGE INTEREST HAS BEEN ACCRUED ON THE AMOUNT OF DEPOSIT AND NO TDS HAS BEEN DEDUCTED BY THE BANK IN VIEW OF PROVISIONS OF SECTION 194A. IT WAS ALSO FOUND THAT NEITHER ANY CERTIFICATE HAS BEEN OBTAINED UNDER SECTION 197 THAT NO TAX IS PAYABLE ON THE AMOUNT OF INTEREST. THEREAFTER, THE ADDITIONAL CIT UNDER SECTION 144A D IRECTED THE TDS ITO TO INITIATE PROCEEDINGS UNDER SECTION 201(1A) OF THE ACT. THER EAFTER, PROCEEDINGS WERE INITIATED. DETAILED REPLY WAS FILED ON BEHALF OF THE ASSESSEE. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION FILED ON BEHALF OF THE ASSESSE E. ACCORDINGLY HE HELD THAT ASSESSEE HAS 3 VIOLATED THE PROVISIONS OF SECTION 194A AND, THEREF ORE, HE LEVIED INTEREST AND PENALTY UNDER SECTION 201(1) AND 201(1A). 4.1. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). LEGAL GROUND AS WELL AS GROUND ON MERIT WERE RAISED. LEGAL GROUND RAISED THAT ADDITI ONAL CIT WAS NOT EMPOWERED TO DIRECT TDS ITO TO PASS ORDER UNDER SECTION 201(1) AND 201( 1A). ON MERIT, DETAILED SUBMISSIONS WERE FILED. LEGAL GROUND WAS REJECTED. HOWEVER, ON MERIT THE GROUND OF THE ASSESSEE WAS ALLOWED BY HOLDING THAT ASSESSEE HAS N OT COMMITTED ANY DEFAULT UNDER SECTION194A AND, THEREFORE, WAS NOT LIABLE TO DEDUC T TAX. 5. NOW BOTH ARE IN APPEAL. DEPARTMENT IS CHALLENGI NG THAT ASSESSEE WAS NOT LIABLE TO DEDUCT TAX WHEREAS ASSESSEE HAS CHALLENGED THE LEGA L GROUND REJECTED BY LD. CIT (A). STRONG RELIANCE WAS PLACED ON THE ORDER OF AO BY LD . CIT D/R. PORTION OF ORDER OF AO WAS READ ALSO. IT WAS STATED THAT THOUGH INCOME OF THE SOCIETY MAY BE EXEMPT BUT INTEREST HAS ACCRUED AND, THEREFORE, THE BANK WAS LIABLE TO DEDUCT TDS ON ACCRUAL OF INTEREST. 6. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE PLACED RELIANCE ON THE ORDER OF LD. CIT (A). COPY OF WRITTEN SUBMISSION WAS ALSO FI LED. WRITTEN SUBMISSIONS SO FILED WERE EXPLAINED ALSO. IT WAS STATED THAT THE INTEREST ACC RUED ON THE FUNDS WAS NOT LIABLE TO BE TAXED IN THE HANDS OF THE SOCIETY AS THE INTEREST W AS ACCRUED ON ACCOUNT OF MINISTRY OF RURAL DEVELOPMENT. WHATEVER THE AMOUNT WAS ACCRUED AS INTEREST, THAT WAS CREDITED TO THE ACCOUNT OF MINISTRY OF RURAL DEVELOPMENT ACCOUN T. ATTENTION OF THE BENCH WAS DRAWN ON PAGE 29 OF PAPER BOOK WHERE GUIDELINES TO THIS EFFECT IS PLACED. IT WAS FURTHER SUBMITTED THAT A NOTIFICATION UNDER SECTION 194A( 3 )(III)(F) WAS ALSO ISSUED BY THE CENTRAL GOVERNMENT BY WHICH VARIOUS AGENCIES/SOCIETIES WERE EXEMPTED FROM DEDUCTING TAX. EVEN UNDER SECTION 196, THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX. THE LD. CIT (A) HAS 4 DISCUSSED ALL THESE ASPECTS IN DETAIL AND THEN ONLY HAS ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. IN REPLY, THE LD. CIT D/R HAS AGAIN EMPHASIZED O N THE FINDING OF THE AO. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED T HEM CAREFULLY. THOUGH WE HAVE DISCUSSED THE BRIEF FACTS SOMEWHERE ABOVE IN THIS O RDER, HOWEVER, WE WOULD LIKE TO DISCUSS THE FACTS IN DETAIL ONCE AGAIN IN THE FOLLO WING MANNER :- 8.1. A TDS SURVEY U/S 133A DATED 12.01.2011 WAS CON DUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE BANK. DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT M/S RAJASTHAN RURAL DEVELOPMENT AGENCY (RRRDA), A NODAL AGENCY OF MINISTRY OF RURAL DEVELOPMENT (MORD), GOVERNMENT OF INDIA HAS KEPT TH E FUNDS RELEASED BY MORD IN A SEPARATE BANK ACCOUNT CALLED PROGRAMME FUND OPENED WITH THE ASSESSEE BANK TO BE UTILIZED FOR THE PURPOSE OF APPROVED WORK UNDER PRA DHAN MANTRI GRAM SADAK YOJNA (PMGSY). ON THESE FUNDS, BANK HAS CREDITED INTEREST . ON SUCH INTEREST, ASSESSEE BANK HAS NOT DEDUCTED TAX AT SOURCE U/S 194A. 8.2. SHOW CAUSE NOTICE U/S 201(1)/201(1A) DT. 17.01 .2011 FOR F.Y. 06-07 ONWARDS & 22.02.2011 FOR F.Y. 05-06 ONWARDS WERE ISSUED TO T HE ASSESSEE BANK. FURTHER, LOOKING TO THE AMOUNT INVOLVED A REFERENCE U/S 144A WAS MADE B Y THE ITO (TDS) TO ADDL. CIT (TDS), JAIPUR WHO ISSUED NECESSARY DIRECTION TO THE ITO (TDS) WHICH ARE REPRODUCED AT OF THE ASSESSMENT ORDER. 8.3. THE AO IN PURSUANCE OF DIRECTIONS GIVEN BY ADD L. CIT (TDS), JAIPUR U/S 144A HELD THE ASSESSEE LIABLE FOR DEDUCTION OF TAX AT SO URCE U/S 194A. THE REASONS GIVEN BY ADDL. CIT (TDS) FOR HOLDING THE ASSESSEE LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194A IS AS UNDER:- 5 (I) THE ACCOUNTING PROCEDURE OF THE PMGSY ACCOUNTS MANUAL - PROGRAMME FUNDS AND THE TRIPARTITE AGREEMENT BETWEEN M/S RRRD A, SBBJ AND MORD ITSELF SAYS THAT TAX WAS REQUIRED TO BE DEDUCTED AT TAX AT SOURCE WHICH THE ASSESSEE HAS FAILED TO DEDUCT. (II) M/S RRRDA IS AN EXECUTING/IMPLEMENTING BODY OF THE GOVERNMENT AND NOT GOVERNMENT ITSELF AND SO IT DOES NOT AUTOMATICA LLY FALLS UNDER THE PROVISIONS OF SECTION 196 OF THE IT ACT, 1961. (III) EVEN THE NOTIFIED INSTITUTIONS U/S 194A(3)(II I)(F) WILL ALSO NOT BE AUTOMATICALLY EXEMPTED FROM TDS UNLESS THEY FURNISH TO THE PAYER A DECLARATION IN THE PRESCRIBED FORMAT I.E. FORM NO. 15G. (IV) THE FUNDS RECEIVED FROM GOVERNMENT OF INDIA AN D OTHERS ARE IN THE FORM OF GRANTS IN THE HAND OF RRRDA AND INTEREST ACCRUED / PAID ON SUCH IRRETRIEVABLE GRANTS IS SUBJECT TO TDS U/S 194A OF THE I.T. ACT, 1961. (V) THE HONBLE SUPREME COURT DECISION IN CASE OF M /S HINDUSTAN COCA COLA BEVERAGE PVT. LTD. VS. CIT 293 ITR 226, NOWHERE STA TES THAT LIABILITY CANNOT BE CREATED U/S 201(1) AND 201(1A) BUT IT ONLY SPEAKS A BOUT NON-ENFORCEMENT OF THE DEMAND IN A CASE WHERE THE TAX HAS BEEN PAID BY THE DEDUCTEE ASSESSEE. (VI) ACCORDINGLY, ITO (TDS) ISSUED ORDER DT. 18.03. 2011 U/S 201(1)/201(1A) FOR F.Y. 03-04 TO F.Y. 10-11 TREATING THE ASSESSEE BANK IN DEFAULT FOR NOT DEDUCTING TDS U/S 194A AS PER THE TABLE BELOW: FINANCIAL YEAR DEMAND U/S 201(1) DEMAND U/S 201(1A) TOTAL DEMAND 2003-04 65,60,050/- 51,70,975/- 1,17,31,025/- 2004-05 21,51,805/- 16,06,319/- 37,58,124/- 2005-06 2,54,05,920/- 1,58,21,935/- 4,12,27,855/- 2006-07 3,00,46,434/- 1,58,28,554/- 4,58,74,988/- 2007-08 2,50,66,332/- 1,00,64,948/- 3,51,31,280/- 2008-09 3,99,81,052/- 1,18,11,308/- 5,17,92,360/- 2009-10 3,77,68,378/- 70,02,568/- 4,47,70,946/- 2010-11 2,40,67,533/- 13,59,514/- 2,54,27,047/- 6 9. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). D ETAILED WRITTEN SUBMISSIONS WERE FILED BEFORE HIM. AFTER DISCUSSING THE DETAILS, THE LD. CIT (A) FOUND THAT ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AS PROVISION OF SECTION 194A W AS NOT APPLICABLE. THE LD. CIT (A) HAS DISCUSSED THIS BASIC CONTROVERSY IN PRESENT CASE RE LATES TO THE NATURE AND OWNERSHIP OF INTEREST INCOME AND WHETHER TDS PROVISIONS ARE APPL ICABLE ON SUCH RECEIPTS OR NOT. HE CALLED FOR A REMAND REPORT FROM AO WHERE HE REITERA TED WHAT IS ALREADY STATED IN HIS ORDER. THE LD. CIT(A) AFTER CONSIDERING THE ENTIRE FACTS HELD THAT SECTION 194A IS NOT APPLICABLE IN THE PRESENT CASE FOR THE FOLLOWING RE ASONS: I.) NATURE OF RECEIPT - FROM THE RELEVANT ARTICLES OF MEMORANDUM OF UNDERST ANDING AND ACCOUNTS MANUAL OF PMGSY, IT CAN BE INFERRED TH AT THE AMOUNT RECEIVED BY RRRDA IS A PROJECT FUND RELEASED BY THE CENTRAL G OVERNMENT AND NOT A GRAND-IN-AID AS SUCH. ACCORDINGLY, BEING A CENTRA L GOVERNMENT SPONSORED SCHEME, THE PROVISION OF TDS SECTIONS ARE NOT APPLI CABLE AS SUCH. II.) OWNERSHIP OF THE INTEREST INCOME - FROM THE CHAPTER 10 OF ACCOUNTING MANUAL OF PMGSY SCHEME IT IS CLEARLY EVIDENT THAT ANY INTEREST INCOME ACCRUED ON THE SURPLUS FUND OF THE PROJECT PARKED IN THE BA NK, WOULD BE BELONGING TO MINISTRY OF ROAD DEVELOPMENTS / CENTRAL GOVERNMENT AND THE SRRDA/RRRDA WOULD NOT HAVE ANY RIGHTS OVER SUCH INTEREST INCOME . IN OTHER WORDS, THE PLAIN AND UNAMBIGUOUS PROVISION OF THE ACCOUNTS MANUAL OF PMG SY LEAVES NO DOUBT OF ANY KIND REGARDING THE NATURE AND OWNERSHIP OF SUCH INT EREST INCOME. ACCORDINGLY, IT IS FELT THAT ONCE IT IS PROVED BEYOND DOUBT THAT TH E INTEREST INCOME BELONGS TO MORD, THUS THE TDS IS NOT REQUIRED TO BE DEDUCTED U /S 196 OF THE ACT, WHICH EXEMPTS A SUM RECEIVABLE BY THE GOVERNMENT AND OTHE R ENTITIES MENTIONED THEREIN. III.) WHILE IGNORING THE CONTENTS OF CHAPTER-10 OF ACCOU NTS MANUAL THE AO HAS HEAVILY RELIED UPON ANOTHER CHAPTER I.E. CHAPTER-15 , WHICH STIPULATES THE CONCEPT OF DEDUCTION OF TDS BY BANK ON SUCH INTEREST INCOME AND THE ACCOUNTING TREATMENTS TO BE GIVEN ON SUCH OCCASION. WHILE REFE RRING SUCH ACCOUNTING PRINCIPLE PRESCRIBED, THE AO HAS HELD THAT THE BANK WAS REQUIRED TO DEDUCT THE TDS ON INTEREST INCOME UNDER CONSIDERATION. HOWEVER , IN MY OPINION THE ABOVE PROVISION WAS A RESIDUARY IN NATURE, TO TAKE CARE O F AN EXIGENCY OR EVENTUALITY, 7 WHEN THE TDS IS DEDUCTED BY BANK AND HOW TO CLAIM T HE REFUND OF THE SAME ALSO. THUS UNDUE IMPORTANCE SHOULD NOT BE GIVEN TO SUCH S UB-ORDINATE CLAUSE. MOREOVER THAT CLAUSE ALSO CONSIDERED THE INTEREST I NCOME IS TAX FREE ONLY AS THE PROCEDURE OF CLAIMING REFUND OF SUCH IS ALSO MENTIO NED THEREIN. OTHERWISE ALSO THE LEGAL POSITION IN THIS REGARD IS CONTRARY TO SU CH CONTRADICTORY ASSUMPTION AS THE EARLIER CHAPTER-10 CLEARLY SPECIFY THE NATURE AND S TATUS OF THE INTEREST INCOME AS BELONGING TO THE MINISTRY OF RURAL DEVELOPMENT AS S UCH. ONCE THE LEGAL AND FACTUAL POSITION TOWARDS THE BELONGINGNESS OF SUCH INCOME IS CLEARLY ESTABLISHED, THEN ANY SUBSEQUENT CONTRADICTORY MECHANISM / PROVI SION MADE IN THE SAME INTERNAL MANUAL HAS NO BINDING OR OVERRIDING EFFECT ON SUCH STATUTORY POSITION. ACCORDINGLY, I FIND FORCE IN THE ARGUMENTS OF THE L D.AR THAT SUCH ACCOUNTING HEADS ARE PROVIDED TO COVER A SITUATION WHERE THE B ANK HAS, FOR SOME REASON, DEDUCTED THE TAX AT SOURCE AND PROVIDING FOR SUCH A CCOUNTING HEAD CANNOT OVERRIDE THE PROVISIONS OF THE ACT. THEREFORE, SIMPLY ON SUC H HYPOTHETICAL SITUATION, THE BANK CANNOT BE MADE LIABLE FOR DEDUCTION OF TAX AT SOURCE ON THE INTEREST CREDITED TO THE PROJECT FUND, IGNORING THE VITAL FACT THAT S UCH INTEREST IS PAYABLE TO THE GOVERNMENT ONLY WHICH IS EXEMPTED FROM TDS PROVISIO NS U/S 196. IV.) THIS PARTICULAR ASPECT CAN ALSO BE LOOKED INTO WITH ANOTHER ANGLE, I.E. THE STATUS OF RRRDA VIZ. THE PROVISION OF S. 194A AS SUCH. THE CL AIM OF THE LD.AR OF APPLICABILITY OF NOTIFICATION NO.SO3489 DATED 22.10 .1970 OF CBDT WAS EXAMINED. AS POINTED OUT THE ABOVE NOTIFICATION EXE MPTS ANY UNDERTAKING OR BODY INCLUDING A SOCIETY REGISTERED UNDER THE SOCIE TY REGISTRATION ACT, 1860, FINANCED WHOLLY BY THE GOVERNMENT. IT IS AN UNDISP UTED FACT THAT RRRDA IS A BODY ESTABLISHED BY THE STATE GOVERNMENT, REGISTERE D UNDER SOCIETY ACT AND FULLY FUNDED BY THE STATE GOVERNMENT AS SUCH. CONSIDERING THE ABOVE ASPECT, IN MY CONSIDERED OPINION, EVEN RRRDA IS ALSO COVERED UNDE R THE ABOVE NOTIFICATION, BEING AS A BODY FINANCED WHOLLY BY THE STATE GOVERN MENT. ACCORDINGLY, IT IS HELD THAT EVEN ON THIS GROUND, THE INTEREST RECEIPT EARN ED BY RRRDA ON THE SURPLUS OF PROJECT FUND OF PMGSY IS NOT LIABLE FOR DEDUCTION O F TAX AT SOURCE. THE AOS CONTENTIONS THAT THE APPELLANT, BEING REGISTERED U/ S 12A, IS NOT EXEMPTED UNCONDITIONALLY ALSO HAS NO BEARING ON THE ISSUE UN DER CONSIDERATION AS M/S RRRDA IS OTHERWISE FULLY EXEMPTED FROM TDS PROVISIO N, IN VIEW OF THE ABOVE REFERRED NOTIFICATION OF THE CBDT. THUS FULFILLMENT OF CONDITIONS OF THE REGISTRATION U/S 12A IS NOT A RELEVANT QUESTION FOR THE MATTER UNDER QUESTION. V.) FROM THE IMPUGNED ORDER, IT IS OBSERVED THAT THE AO HAS SIMPLY EXAMINED THE ISSUE UNDER CONSIDERATION, WHILE CONFINING THE SAME TO THE AFFAIRS OF M/S RRRDA ONLY. WHEREAS, AS DISCUSSED AND DECIDED, THE INTERE ST INCOME UNDER CONSIDERATION IS BELONGING TO THE MINISTRY OF ROAD DEVELOPMENT / CENTRAL GOVERNMENT ONLY, AS 8 CLEARLY STIPULATED IN THE ACCOUNTS MANUAL OF THE PM GSY. THOUGH THE ABOVE ASPECT WAS BROUGHT TO THE NOTICE OF AO, HOWEVER, HE HAD SIMPLY BRUSH ASIDE THIS VITAL ISSUE AND CONCENTRATE HIS EFFORTS AND ARGUMEN TS, WHILE CONSIDERING SUCH INTEREST RECEIPTS BELONGING TO RRRDA ONLY. ACCORDIN GLY, IT IS ALSO NOTED THAT THE REASONS AND JUSTIFICATIONS EXTENDED BY HIM, WHILE H OLDING THE APPLICABILITY OF S.194A IN THE PRESENT CASE, ARE BASICALLY RELATED T O RRRDA ONLY. SINCE, NOW IT HAS BEEN HELD THAT THE INTEREST RECEIPT DO BELONG T O THE MINISTRY OF RURAL DEVELOPMENT ONLY, THEREFORE, ALL SUCH ARGUMENTS OF THE AO HAVE BEEN FOUND IRRELEVANT, UNWARRANTED AND INSIGNIFICANT AS SUCH. 10. THE DETAILED SUBMISSIONS WERE FILED ON BEHALF O F THE ASSESSEE WHICH WILL BE USEFUL TO CONSIDER THE ISSUE ARE DISCUSSED HERE AS UNDER : AT THE OUTSET IT MAY BE NOTED THAT THE LD. CIT(A) HAS HELD THE NON-APPLICABILITY OF SEC.194A ON THE GROUND THAT, (I) PROVISION OF TD S SECTIONS ARE NOT APPLICABLE ON PROJECT FUNDS RELEASED BY THE CENTRAL GOVERNMENT ; (II) OWNERSHIP OF INTEREST INCOME BELONGS TO MINISTRY OF ROAD DEVELOPMENT/ CEN TRAL GOVERNMENT AND THEREFORE TDS IS NOT REQUIRED TO BE DEDUCTED U/S 19 6; (III) CHAPTER 10 OF THE ACCOUNTS MANUAL WHICH PROVIDES THAT INTEREST ON THE FUND BELONGS TO MINISTRY OF ROAD DEVELOPMENT CANNOT OVERRIDE CHAPTER 15 OF THE ACCOUNTS MANUAL WHICH PROVIDES FOR CLAIMING REFUND WHEN TAX IS DEDUCTED A T SOURCE BY BANK; (IV) AS PER NOTIFICATION NO. SO 3489 DATED 22.10.1970, RRRDA BE ING A SOCIETY REGISTERED UNDER SOCIETIES REGISTRATION ACT,1860 FINANCED WHOL LY BY THE GOVERNMENT IS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194A; (V) THE AOS CONTENTION THAT RRRDA BEING REGISTERED U/S 12A IS NOT EXEMPTED UNCO NDITIONALLY AND THEREFORE TDS PROVISIONS ARE APPLICABLE HAS NO BEARING AS IT IS OTHERWISE FULLY EXEMPTED BY THE NOTIFICATION OF CBDT. THE DEPARTMENT, HOWEVER, IN ITS GROUNDS OF APPEAL HAVE ONLY RAISED THE ISSUE THAT THE AGENCY IS NOT C OVERED UNDER CIRCULAR NO. 4/2002 WHICH IS APPLICABLE WHEN INCOME IS UNCONDITIONALLY EXEMPT U/S 10 OF THE ACT AND THEREFORE THE LD. CIT(A) HAS ERRED IN DELETING THE DEMAND. THE DEPARTMENT HAS NOT CHALLENGED THE OTHER REASONS FOR WHICH THE DEMAND H AS BEEN DELETED AS STATED ABOVE. IN FACT LD. CIT(A) HAS NOT AT ALL RELIED CIR CULAR NO. 4/2002 IN DELETING THE 9 DEMAND U/S 201(1)/201(1A). HENCE FOR THIS REASON AL ONE THE GROUND OF THE DEPARTMENT BE DISMISSED. WITHOUT PREJUDICE TO ABOVE IT MAY BE NOTED THAT M/S RRRDA IS A NODAL AGENCY OF MINISTRY OF RURAL DEVELOPMENT (MORD/ NRRD A) GOVERNMENT OF INDIA TO MONITOR THE EXPENDITURE INCURRED BY THE PW D IN IMPLEMENTING OF PRADHAN MANTRI GRAM SADAK YOJNA (PMGSY). FOR THIS P URPOSE, FUNDS ARE RELEASED BY (MORD) IN A SEPARATE BANK ACCOUNT OPENE D & OPERATED BY RRRDA & THE FUNDS HELD IN THIS ACCOUNT ARE ALLOWED TO BE UTILIZED ONLY FOR THE PURPOSE OF APPROVED WORK UNDER PMGSY. THIS FACT IS EVIDENT FRO M CLAUSE 4(G) OF THE MOA OF RRRDA (PB 11-14) & FROM THE LETTER OF MINISTRY OF RURAL DEVELOPMENT FOR RELEASE OF FUNDS (PB 55). M/S RRRDA IN MOU WITH NATIONAL RURAL ROAD DEVELOPME NT AGENCY (NRRDA) & THE ASSESSEE BANK (PB 15-18) HAVE OPENED A SPECIFIC BANK ACCOUNT WITH THE ASSESSEE BANK FOR THIS PURPOSE. CHAPTER 1 OF PM GSY ACCOUNTS MANUAL IN PARA 1.3.18 & 1.3.19 REFERS TO SUCH MOU IN FOLLOWING WOR DS: - (PB 27) 1.3.18 A TRIPARTITE MEMORANDUM OF UNDERSTANDING WI LL BE ENTERED INTO BETWEEN THE BANK, STATE-LEVEL AGENCY AND THE MINISTRY OF RURAL DEVELOPMENT WHEREIN THE PARTIES WOULD AGREE TO ABIDE BY THE PROVISIONS OF THE GUIDE LINES. IN PARTICULAR, THE BANK WILL AGREE TO ABIDE BY THE INSTRUCTIONS ISSUED, FROM TIM E TO TIME, BY THE MINISTRY OF RURAL DEVELOPMENT/ NATIONAL RURAL ROADS DEVELOPMENT AGENC Y (NRRDA) REGARDING THE OPERATION OF THE ACCOUNT. THE BANK WILL NOT MAKE AN Y ADVANCE, OVERDRAFT OR LOANS TO ANY STATE GOVERNMENT OR ITS AGENCY OR UNIT OR CORPO RATION OR ANY ONE ELSE OUT OF OR AGAINST THE SECURITY OF THE INVESTMENTS OR FUNDS OR PMGSY ACCOUNT UNDER ANY CIRCUMSTANCES. 1.3.19 MONEY ACCRUING AS INTEREST WILL BE ADDED TO THE SAME ACCOUNT. THE EXPENDITURE OUT OF THIS INTEREST AMOUNT WILL BE GUIDED THE INST RUCTIONS /GUIDELINES TO BE ISSUED BY THE MINISTRY OF RURAL DEVELOPMENT/NRRDA FROM TIME T O TIME. THE BANK SHALL INTIMATE TO THE SRRDA, THE INTEREST AMOUNT CREDITED BY IT TO THE ACCOUNT FROM TIME TO TIME. THE MORD OR THE NRRDA MAY, FROM TIME TO TIME, ISSUE SUCH DIRECTIVES TO THE BANK /SRRDA AS NECESSARY FOR SMOOTH FLOW OF FUNDS A ND EFFECTIVE OF THE PROGRAMME AND THE BANK SHALL TAKE NOTE OF THE ADVICE, AND COM PLY WITH SUCH DIRECTIVES. THUS, AS PER THIS MOU, RRRDA WILL KEEP THE FUNDS FO R THE PMGSY WORKS & INTEREST EARNED THEREON IN ONE ACCOUNT WITH THE BAN K. IT WILL NOT WITHDRAW OR APPLY OR 10 UTILIZE ANY FUNDS FROM THIS ACCOUNT EXCEPT IN THE M ANNER PERMITTED UNDER THE PMGSY [CLAUSE 3(I) & (II) OF MOU] THE BANK HAS ALSO UNDERTAKEN THAT NOTWITHSTANDING ANY GENERAL AGREEMENT OR ANY STATUTORY PROVISION IT WIL L KEEP THE FUNDS FOR THE PMGSY PROGRAMME ONLY IN ONE ACCOUNT CALLED THE PROGRAMME FUND & FOLLOW THE GUIDELINES OF GOVERNMENT OF INDIA FOR PAYMENT FROM PMGSY FUND. IT IS ALSO OBLIGED TO AUTOMATICALLY INVEST THE FUNDS IN EXCESS OF RS. 25 LACS IN THE PROGRAMME FUND IN ITS FIXED DEPOSIT OF ONE YEAR, NO INTEREST IS TO BE PAI D ON BALANCE UPTO RS. 25 LACS IN THIS ACCOUNT & SENT A CERTIFICATE OF THE BALANCE TO THE MINISTRY OF RURAL DEVELOPMENT/NRRDA & ALSO BRING ANY DISCREPANCY TO I TS NOTICE. IT IS ALSO TO ABIDE BY THE PMGSY GUIDELINES & ORDERS ISSUED BY THE MINI STRY OF RURAL DEVELOPMENT / NRRDA (CLAUSE 4 OF MOU). THE MOU NOWHERE REFERS TO THE OBLIGATION OF THE BAN K TO DEDUCT TAX AT SOURCE ON THE AMOUNT CREDITED TO T HIS FUND. AS PER CHAPTER 10 OF THE GUIDELINES ISSUED BY MORD (PB 29) , ANY INTEREST THAT COMES ON IT FUNDS WITH THE BANK BELONG TO MORD WHO PROVIDES THE FUNDS & IT IS NOT THE INCOME OF THE STATE ROAD RURAL DEVELOPMENT AGENCY I.E. RRRDA. THUS, IT CAN BE NOTED THAT THE ACCOUNT WHICH IS MAINTAINED B Y THE ASSESSEE BANK AS PER THE MOU ENTERED WITH NRRDA/MORD & RRRDA IS NOT THE PERS ONAL ACCOUNT OF RRRDA BUT ONLY AN ACCOUNT OF MINISTRY OF RURAL DEVE LOPMENT GOVERNMENT OF INDIA (MORD). RRRDA IS ONLY A NODAL AGENCY ENTRUSTED WITH THE DUTY OF OPERATING THIS ACCOUNT IN EXECUTION OF PMGSY. IT IS ONLY A TRUSTEE / AUTHORIZED SIGNATORY OF THIS ACCOUNT ON BEHALF OF MORD. THE INCOME CREDITED TO T HIS ACCOUNT ALSO BELONGS TO MORD AS SPECIFIED IN CHAPTER 10 REFERRED IN PARA 3 ABOVE. THIS ACCOUNT MAINTAINED BY THE ASSESSEE BANK IS A GOVERNMENT ACCOUNT WHERE THE INTEREST CREDITED IS PAYABLE TO MORD. HENCE, LD. CIT(A) HAS RIGHTLY HELD THAT ON SUCH CREDIT/PAYMENT OF INTEREST TO THE GOVERNMENT THERE IS NO LIABILITY OF DEDUCTIO N OF TAX AT SOURCE U/S 196. SO FAR AS ACCOUNTING PROCEDURE IS CONCERNED, IT IS TO BE NOTED THAT AS PER THE FORMAT OF SCHEDULES TO THE BALANCE SHEET OF RRRDA G IVEN IN CHAPTER 15 OF THE ACCOUNTS MANUAL (PB 30-35) , THE FUNDS RECEIVED FROM NRRDA/MORD HAS TO BE SHOWN SEPARATELY AS LIABILITY OF RRRDA IN THE NAME OF PROGRAMME FUND & THE INTEREST RECEIVED IS TO BE SHOWN AS INCIDENTAL FUND . FROM THE PERUSAL OF THE ACCOUNTS FILED BY RRRDA WITH ITS RETURN OF INCOME (PB 36-46) , IT CAN BE NOTED THAT THE 11 RRRDA HAS ONLY PREPARED THE BALANCE SHEET OF PROGRA M FUND IN WHICH UNDER SCHEDULE 1, THE AMOUNT RECEIVED FROM GOV. OF INDIA, MINISTRY OF RURAL DEVELOPMENT (MORD) IS CREDITED AND THE INTEREST RECEIVED ON THI S FUND IS ALSO SHOWN IN THE BALANCE SHEET AS ACCRUAL TO THIS FUND. RRRDA HAS NO T PREPARED ANY INCOME & EXPENDITURE ACCOUNT OF ITS OWN NOR IT HAS TAKEN THE INTEREST IN THESE FUNDS AS ITS OWN INCOME. THUS, IT IS CLEAR THAT INTEREST PAID BY THE ASSESSEE BANK IN THE PROGRAMME FUND IS NOT AN INCOME OF RRRDA. IT IS ONLY A PAYMEN T OF INTEREST ON THE GOVERNMENT FUNDS WHICH IS NOT LIABLE FOR DEDUCTION AT SOURCE U /S 196 OF THE ACT. IT MAY BE NOTED THAT SEC. 196 NOT ONLY COVERS ANY SUM PAYABLE TO TH E GOVT. BY WAY OF INTEREST BUT ALSO COVERS ANY AMOUNT PAID BY WAY OF INTEREST IN WHICH IT HAS FULL BENEFICIAL INTEREST. THEREFORE, ASSESSEE BANK CANNOT BE MADE LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194A ON INTEREST CREDITED TO SUCH PROGRAMME FUND MA INTAINED BY MORD WITH IT. THE ADDL. CIT (TDS) HAS REFERRED TO CHAPTER 4 OF PM GSY ACCOUNTS MANUAL (PB 47-54) WHICH OUTLINE THE ACCOUNTING SYSTEM OF PROGRAMME FU ND. AS PER PARA 4.1.2 OF THIS CHAPTER (PB 47) PROGRAMME FUND IS CONSTITUTED OF THE FUNDS RECEIVE D FROM MORD OR THE STATE GOVERNMENT & ALSO COVERS INT EREST EARNED ON SURPLUS FUND IN THE BANK, LIQUIDATED DAMAGES, RECOVERY OF COST F ROM CONTRACTORS, ETC. THIS PROGRAMME FUND IS A BALANCE SHEET ITEM OF SRRRDA. A S PER THE CHART OF ACCOUNTS OF PROGRAMME FUND IN ITEM NO. 19.1 (PB 49) , THERE IS A REFERENCE OF TAX DEDUCTED AT SOURCE BY BANK ON THE INVESTMENT. IN THE EXPLANATOR ILY NOTES (PB 53), IT IS CLARIFIED THAT TAX DEDUCTED AT SOURCE BY SRRRDAS BANK FROM T HE INTEREST SHALL BE DEBITED TO THIS ACCOUNT & REFUND FOR THE SAME SHALL BE CLAIMED FROM THE INCOME TAX DEPARTMENT. ON THIS BASIS, IT IS INFERRED THAT BANK IS LIABLE TO DEDUCT TAX AT SOURCE ON THE INTEREST CREDITED TO THIS FUND. THE INFERENCE S O DRAWN IS INCORRECT. THIS IS BECAUSE THIS ACCOUNTING HEAD IS PROVIDED TO COVER A SITUATI ON WHERE THE BANK HAS FOR SOME REASON DEDUCTED THE TAX AT SOURCE. PROVIDING FOR SU CH ACCOUNTING HEAD CANNOT OVERRIDE THE PROVISIONS OF THE ACT. THEREFORE, ON THIS BASIS BANK CANNOT BE MADE LIABLE FOR DEDUCTION OF TAX AT SOURCE ON THE INTEREST CREDITED TO THE PROGRAMME FUND IGNORING THAT IT IS AN INTEREST PAYABLE TO THE GOVERNMENT U/ S 196 AS GOVERNMENT HAS FULL BENEFICIAL INTEREST IN THIS FUND. THE CIT(A) HAS TH EREFORE RIGHTLY APPRECIATED THAT CHAPTER 15 OF THE ACCOUNTS MANUAL CANNOT OVERRIDE C HAPTER 10 OF THE MANUAL AND 12 THEREFORE NO TAX IS REQUIRED TO BE DEDUCTED ON SUCH INTEREST WHICH BELONGS TO GOVERNMENT. AS REGARDS LIABILITY TO DEDUCT TDS U/S 194A ON INTE REST ACCRUED/ PAID ON FUNDS RECEIVED BY RRRDA FROM GOVERNMENT OF INDIA AND OTHE RS BY TREATING THE SAME AS GRANTS IN THE HAND OF RRRDA IS CONCERNED, IT IS TO BE NOTED THAT FUNDS RECEIVED BY RRRDA FROM MORD/ NRRDA, GOVERNMENT OF INDIA ARE PRO GRAMME FUNDS AND NOT A GRANT IN AID SIMPLICITOR IN THE HANDS OF RRRDA. E VEN IN THE RELEASE LETTER OF FUNDS ISSUED BY THE MINISTRY OF RURAL DEVELOPMENT (PB 55) , IT IS SPECIFICALLY MENTIONED THAT AMOUNT IS RELEASED TO RRRDA, WHICH IS THE AUTO NOMOUS AGENCY FOR RECEIVING THE FUNDS FOR THE PROGRAMME. SUCH FUND IS TO BE KEPT IN A SEPARATE ACCOUNT AND SHALL NOT BE TRANSFERRED TO ANY OTHER ACCOUNT OF AGENCY. THE FUND HELD IN THE SPECIFIED ACCOUNT IS ALLOWED TO BE UTILIZED ONLY FOR THE PURPOSE OF A PPROVED WORKS UNDER PMGSY. THUS, THE SO CALLED GRANT IS NOT A GRANT TO RRRDA B UT IS ONLY THE PROGRAMME FUND FOR SPECIFIC PURPOSE WHICH IS ADMINISTERED BY RRRDA AS A NODAL AGENCY. WITHOUT PREJUDICE TO ABOVE, IT MAY BE NOTED THAT U/ S 194A(3)(III)(F) ANY INCOME CREDITED OR PAID TO AN INSTITUTION, ASSOCIAT ION OR BODY WHICH THE CENTRAL GOVERNMENT NOTIFY IN THE OFFICIAL GAZETTE IS NOT LI ABLE OF DEDUCTION OF TAX AT SOURCE. AS PER STANDING ORDER SO 3489 DT. 22.10.1970, ANY U NDERTAKING OR BODY INCLUDING A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 FINANCED WHOLLY BY THE GOVERNMENT IS AN INSTITUTION COVERED BY THE SAID CL AUSE. SINCE RRRDA IS A SOCIETY REGISTERED UNDER THE RAJASTHAN SOCIETIES ACT, 1958 WHICH IS PROMULGATE UNDER THE SOCIETIES REGISTRATION ACT, AND IS WHOLLY FINANCED BY GOV., ANY INTEREST PAID TO IT IS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER THE AFORESAID CLAUSE. COPY OF NOTIFICATION IS AT PB 56-58. THIS FACT IS ACCEPTED BY THE ITO (TDS)/ ADDL. CIT (TDS). THE OBSERVATION OF THE ADDL. CIT (TDS) THAT EVEN SU CH NOTIFIED INSTITUTIONS U/S 194A(3)(III)(F) WILL ALSO NOT BE AUTOMATICALLY EXEM PTED FROM TDS UNLESS THEY FURNISH TO THE PAYER A DECLARATION IN THE PRESCRIBED FORMAT I.E. FORM NO. 15G IS INCORRECT IN AS MUCH AS WHEN THERE IS NO LIABILITY TO DEDUCT TDS ON INTEREST CREDITED/ PAID TO RRRDA BEING COVERED U/S 194A(3)(III)(F), THERE IS NO REQU IREMENT TO FURNISH DECLARATION AS PER SECTION 197A(1A). THE DECLARATION UNDER THIS SECTIO N IS REQUIRED TO BE FURNISHED ONLY WHEN THERE IS A LIABILITY TO DEDUCT TAX AT SOURCE. ONCE THERE IS NO LIABILITY TO DEDUCT TAX 13 AT SOURCE U/S 194A(3) WHICH PROVIDES FOR THE CASES WHERE THE PROVISION OF SUB SECTION1 OF SECTION 194A SHALL NOT APPLY, QUESTION OF FURNISHING OF DECLARATION DO NOT ARISE. HENCE, IN VIEW OF SECTION 194A(3)(III)(F) AL SO THE BANK CANNOT BE MADE LIABLE TO DEDUCT TAX AT SOURCE ON THE INTEREST CREDITED TO TH E PROGRAMME FUND IF IT IS HELD TO BE INCOME OF RRRDA. IT MAY BE STATED THAT RRRDA IS REGISTERED U/S12A. I T HAS ALREADY FILED ITS RETURN FOR AY 2004-05 TO AY 2010-11 AT NIL INCOME. THUS NO TAX IS PAYABLE BY IT. COPY OF ACKNOWLEDGEMENT OF RETURNS IS ENCLOSED. THU S WHEN THERE IS NO LIABILITY OF PAYMENT OF TAX UNDER THE ACT ON RRRDA NO LIABILITY OF TAX U/S 201(1) AND INTEREST U/S 201(1A) CAN BE IMPOSED ON THE ASSESSEE IN VIEW OF T HE DECISION OF SUPREME COURT IN THE CASE OF HINDUSTAN COCO COLA (P) LTD. VS. CIT 29 3 ITR 226.(PB 66-69), CIT VS. BHARTI CELLULAR LTD. 330 ITR 239 (PB 70-71) AND DEC ISION OF KARNATKA HIGH COURT IN THE CASE OF SOLAR AUTOMOBILES INDIA (P) LTD. VS. DC IT 64 DTR 34. IN VIEW OF ABOVE THE LD. CIT(A) HAS RIGHTLY HELD TH AT THE ASSESSEE IS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE ON INTEREST CREDITED TO THE ACCOUNT OF RRRDA AND THEREFORE GROUND OF THE DEPARTMENT BE DISMISSED. 11. THE ABOVE OBSERVATIONS AND FINDING OF LD. CIT ( A), IN OUR CONSIDERED VIEW, ARE CORRECT. NEITHER THE FINDING OF LD. CIT (A) COULD BE CONTROVERTED NOR ANY OTHER MATERIAL WAS BROUGHT ON RECORD TO ESTABLISH OTHERWISE. THE LD. CIT (A) HAS TAKEN INTO CONSIDERATION VARIOUS ASPECTS AND WHILE GIVING HIS FINDING, HAS DECIDED ON THREE ISSUES. HOWEVER, ALL THE THREE ISSUES HAVE NOT BEEN CHALLEN GED HERE BEFORE THE TRIBUNAL BY THE DEPARTMENT AS DEPARTMENT IS CHALLENGING THAT SINCE THE INCOME OF THE ASSESSEE WAS EXEMPT AND, THEREFORE, IT CANNOT BE SAID THAT PROVI SIONS OF SECTION 194A ARE NOT APPLICABLE. IT HAS ALSO STATED THAT THE RAJASTHAN RURAL ROAD DEVELOPMENT AGENCY IS NOT COVERED BY THE CIRCULAR NO. 4/2002 WHICH WAS IN RES PECT OF BOARDS OR BODIES WHOSE INCOME WERE EXEMPT UNDER SECTION 10. HOWEVER, RAJA STHAN RURAL ROAD DEVELOPMENT 14 AGENCY IS NOT A BODY BUT IT IS A SOCIETY WHICH IS R EGISTERED UNDER SECTION 12A. WE FURTHER NOTED THAT LD. CIT (A) HAS NOT RELIED ON TH E CIRCULAR NO. 4/2002 IN DELETING THE DEMAND UNDER SECTION 201(1) AND 201(1A). RAJASTHAN RURAL ROAD DEVELOPMENT AGENCY IS A NODAL AGENCY UNDER MINISTRY OF RURAL DEVELOPME NT, GOVERNMENT OF INDIA TO MONITOR THE EXPENDITURE INCURRED BY THE PWD IN IMPLEMENTING OF PRADHAN MANTRI GRAM SADAK YOJNA. FOR THIS PURPOSE FUNDS WERE RELEASED BY MIN ISTRY OF RURAL DEVELOPMENT WHICH WAS DEPOSITED IN A SEPARATE BANK ACCOUNT OPENED AND OPERATED BY RAJASTHAN RURAL ROAD DEVELOPMENT AGENCY AND THE FUNDS HELD IN THIS ACCOU NT ARE ALLOWED TO BE UTILIZED ONLY FOR THE PURPOSE OF APPROVED WORK UNDER PRADHAN MANT RI GRAM SADAK YOJNA. WHATEVER THE INTEREST ACCRUED THAT IS ALSO INCLUDED IN THE F UNDS TRANSFERRED BY MINISTRY OF RURAL DEVELOPMENT AND, THEREFORE, THERE IS NO CONTROL OVE R THE AMOUNT BY RAJASTHAN RURAL ROAD DEVELOPMENT AGENCY, NEITHER THE BANK INTEREST IS IN COME OF RAJASTHAN RURAL ROAD DEVELOPMENT AGENCY AS THE SAME IS ACCRUED TO THE MI NISTRY OF RURAL DEVELOPMENT, GOVERNMENT OF INDIA. THEREFORE, FOR THIS REASON AL SO THERE IS NO QUESTION OF DEDUCTING TDS UNDER SECTION 194A. IT IS FURTHER SEEN THAT UN DER SECTION 194A(3)(III)(F) ANY INCOME CREDITED OR PAID TO AN INSTITUTION/ASSOCIATION OR B ODY WHICH THE CENTRAL GOVERNMENT NOTIFIED IN THE OFFICIAL GAZETTE IS NOT LIABLE TO D EDUCT TAX AT SOURCE. UNDISPUTEDLY RAJASTHAN RURAL ROAD DEVELOPMENT AGENCY IS AN INSTI TUTION/SOCIETY WHICH IS CREATED FOR SPECIFIC PURPOSE AND ATTACHED WITH THE MINISTRY OF RURAL DEVELOPMENT TO MONITOR THE EXPENDITURE INCURRED BY PWD ON PRADHAN MANTRI GRAM SADAK YOJNA. THEREFORE, FOR THIS REASON ALSO THE BANK WAS NOT LIABLE TO DEDUCT TAX U NDER SECTION 194A. THERE WAS NO QUESTION OF DECLARATION AS PER SECTION 197A(1A) AS BANK WAS NOT LIABLE TO DEDUCT TAX AT SOURCE UNDER SECTION 194A(3) WHICH PROVIDES FOR THE CASES WHERE THE PROVISIONS OF SUB 15 SECTION (1) OF SECTION 194A SHALL NOT APPLY. IN VI EW OF THE ABOVE FACTS AND CIRCUMSTANCES AND IN VIEW OF THE DETAILED REASONING GIVEN BY LD. CIT (A) WHICH IS REPRODUCED SOMEWHERE ABOVE IN THIS ORDER, WE ARE OF THE VIEW T HAT THE ORDER OF LD. CIT (A) DOES NOT SUFFER FROM ANY INFIRMITY AND ACCORDINGLY WE CONFIR M THE ORDER OF LD. CIT (A) FOR ALL THE YEARS AS FACTS AND ISSUES ARE COMMON. 12. IT WAS STATED BY LD. A/R THAT IF THE APPEALS OF THE DEPARTMENT ARE DISMISSED THEN CROSS OBJECTIONS OF THE ASSESSEE MAY BE TREATED AS NOT PRESSED. SINCE WE HAVE REJECTED THE GROUNDS OF APPEAL OF THE DEPARTMENT, THEREFORE, THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED AS NOT PRESSED. 13. IN THE RESULT, APPEALS OF THE DEPARTMENT AS WEL L AS CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. 14. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 10 .02.2012. SD/- SD/- ( SANJAY ARORA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE ITO WARD (TDS)-2, JAIPUR. BRANCH MANAGER, SBBJ, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 966(16)/JP/2011) BY ORDER, AR ITAT JAIPUR. 16