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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV & SHRI PRADIP KUMAR KEDIA
PER PRADIP KUMAR KEDIA - AM:
The captioned appeals have been filed at the instance of the assessee against the order of the CIT(A)-I, Baroda (‘CIT(A)’ in short), dated 21.10.2011 arising in the assessment orders dated 07.01.2011 passed by the Assessing Officer (AO) under s. 201(1)/201(1A) of the Income Tax Act, 1961 (the Act) in both cases concerning A.Ys. 2007- 08 and 2008-09.
ITA Nos.2969 & 2970/Ahd/2011 [Gujarat State Electricity vs. ACIT] A.Ys. 2007-08 & 2008-09 - 2 -
Grounds of Appeal raised by the assessee reads as under:
“1. The Ld. Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the interest of 337.25 lacs under section 201(1A) of the I T Act for the alleged non-deduction of tax at source on the interest actually paid to Banks/Financial Institutions but considered as paid to GUVNL.”
When the matter was called for hearing the Ld. AR for the
assessee pointed out at the outset that assessee has credited/paid
interest on loan/bonds payable to a government company M/s. Gujarat
Urja Vikas Nigam Ltd. (GUVNL). A dispute has been raised by the
Revenue that interest payable to the government company noted above
is also susceptible to interest u/s. 201(1A) for default committed in
not deducting tax deducted at source in terms of sec. 194A of the Act.
The Ld. AR in this regard straight away submitted that the lender to
whom the interest was payable namely Gujarat Urja Vikas Nigam
Limited (GUVNL) is a wholly owned undertaking of Government of
Gujarat and100% of share holding of Gujarat Urja Vikas Nigam
Limited (GUVNL) is held by Government of Gujarat as certified by
the lender company as per confirmation dated 13.03.2019 which
certificate albeit was not furnished before the lower authorities. The
Ld. Authorised Representative pointed that the lender to whom the
interest is payable being a Government company, the assessee is
exempted u/s. 194A(3)(iii)(f) of the Act from its obligation to deduct
taxes at source. The Ld. Authorised Representative for the assessee
for this purpose referred to notification S.O. 3489 [No. 170 (F. No.
ITA Nos.2969 & 2970/Ahd/2011 [Gujarat State Electricity vs. ACIT] A.Ys. 2007-08 & 2008-09 - 3 - 12/164/68-ITCC/ITJ0.] dated 22.10.1970. The text of the notification
is quoted here under:
“(i) any corporation established by a Central, State or Provincial Act; (ii) any company in which all the shares are held (whether singly or taken together) by the Government or the Reserve Bank of India or a Corporation owned by that Bank; and (iii) any undertaking or body, including a society registered under the Societies Registration Act, 1860 (21 of 1860), financed wholly by the Government.”
In view of the express notification pointed out on behalf of the
assessee, the obligation to deduct tax deducted at source u/s. 194A(iii)
towards interest payments has been obliterated. In this view of the
matter, we will find merit in the case of the assessee for non-
application of sec. 201(A) as the assessee cannot be treated as
assessee in default for the purposes of charging of interest
In the result, appeal of the assessee is allowed.
In parity, appeal of the assessee in ITA No. 2970/Ahd/2011 is
also allowed for the same reasoning.
In the combined results both the appeals of the assessees are
allowed.
This Order pronounced in Open Court on 27/03/2019
Sd/- Sd/- (RAJPAL YADAV) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 27/03/2019 Tanmay True Copy आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue
ITA Nos.2969 & 2970/Ahd/2011 [Gujarat State Electricity vs. ACIT] A.Ys. 2007-08 & 2008-09 - 4 - 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file.
By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।
1.Date of dictation on 15.03.2019 2.Date on which the typed draft is placed before the Dictating Member 25.03.2019 3.Date on which the approved draft comes to the Sr.P.S./P.S. 26.03.2019 4.Date on which the fair order is placed before the Dictating Member for pronouncement 26.03.2019 5.Date on which the fair order comes back to the Sr.P.S./P.S 27.03.2019 6.Date on which the file goes to the Bench Clerk 27.03.2019 7.Date on which the file goes to the Head Clerk…………. 8.The date on which the file goes to the Asstt. Registrar for signature on the order…………………… 9.Date of Despatch of the Order………