GUJARAT STATE ELECTRICITY CORPORATION LTD.,BARODA vs. THE ACIT,TDS CIRCLE, BARODA

PDF · subscribers
ITA 2969/AHD/2011Status: DisposedITAT Ahmedabad27 March 2019AY 2007-084 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since GUVNL is a government company, the assessee is exempt from deducting TDS under Section 194A(3)(iii)(f) of the Act, as per a relevant notification. Therefore, the assessee cannot be treated as being in default.

What were the facts?

The assessee paid interest on loans/bonds to Gujarat Urja Vikas Nigam Ltd. (GUVNL), a government company. The Revenue sought to levy interest under Section 201(1A) for alleged non-deduction of TDS on this interest.

What were the issues?

Whether interest paid to a government company is subject to TDS provisions, and if the assessee is liable for interest under Section 201(1A) for non-deduction.

Which sections of the Income-tax Act were involved?

Section 201(1A),Section 194A,Section 194A(3)(iii)(f)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI RAJPAL YADAV & SHRI PRADIP KUMAR KEDIA

For Appellant: DR यथ क ओर से /

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 -

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.”

3.

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.”

4.

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

5.

In the result, appeal of the assessee is allowed.

6.

In parity, appeal of the assessee in ITA No. 2970/Ahd/2011 is

also allowed for the same reasoning.

7.

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………

More judgments on Section 201(1A)

All 4,608 judgments and leading authorities on Section 201(1A) →

Recent GST High Court judgments

Search GST case law →