WELSPUN AUNTA SIMARIA PROJECT PRIVATE LIMITED,DELHI vs. DCIT, CIRCLE-78(1), DELHI

ITA 6559/DEL/2025Status: DisposedITAT Delhi06 October 2026AY 2019-2016 pages
AI SummaryAllowed

What were the facts?

The assessee, Welspun Aunta Simaria Project Pvt. Ltd., is in appeal against the order of the CIT(A) upholding the AO's action treating the assessee as an assessee-in-default for non-deduction of tax at source on interest paid to the National Highways Authority of India (NHAI). The assessee paid Rs. 67,19,486/- as interest on mobilization advances to NHAI. The AO raised a demand of Rs. 6,71,948/- under section 201(1) and consequential interest of Rs. 5,64,437/- under section 201(1A), totaling Rs. 12,36,385/-. The CIT(A) relied on CBDT Circular No. 18/2017 to uphold the AO's order.

What did the Tribunal hold?

The Tribunal held that the assessee was not liable to deduct tax at source on the interest payment made to NHAI. The Tribunal reasoned that NHAI is a corporation established by a Central Act, and therefore, it falls within the scope of S.O./Notification No. 3489 dated 22.10.1970, issued under section 194A(3)(iii)(f). This notification specifically exempts payments to any corporation established by a Central Act from the TDS requirement under section 194A. The Tribunal found the submissions of the assessee to be cogent and forceful, agreeing that Circular No. 18/2017 cannot impose additional conditions beyond the statutory provisions and notifications. The Tribunal stated that applying the circular in the manner suggested by the revenue would render Notification No. 3489 redundant, which is not legally permissible. The Tribunal rejected the revenue's arguments regarding the applicability of Circular No. 18/2017. Consequently, the demand raised under section 201(1) and the consequential interest under section 201(1A) were directed to be deleted. The ratio is that a statutory notification exempting payments to a corporation established by a Central Act under section 194A(3)(iii)(f) takes precedence over a CBDT circular that attempts to impose additional conditions not present in the statute or notification.

What were the issues?

1. Whether the assessee committed any default under section 201(1)/201(1A) for non-deduction of tax at source on interest paid to NHAI, considering the provisions of section 194A of the Income-tax Act, 1961. Assessee's contentions: The assessee argued that no tax was deductible at source on interest paid to NHAI as it falls within the statutory exception under section 194A(3)(iii)(f) read with S.O./Notification No. 3489 dated 22.10.1970. NHAI is a corporation established by a Central Act (National Highways Authority of India Act, 1988). The assessee relied on the decisions in CIT vs. Canara Bank ([2016] 386 ITR 504 (All.)), upheld by the Supreme Court ([2018] 406 ITR 161 (SC)), and Punjab National Bank vs. ACIT ([2023] 153 taxmann.com 280 (Mum.-Trib.)). The assessee also argued that section 196(iii) exempts payments to corporations established by a Central Act. The assessee contended that CBDT Circular No. 18/2017 cannot override statutory provisions and notifications. Revenue's contentions: The revenue relied on CBDT Circular No. 18/2017 to contend that exemption from TDS is available only to entities whose income is unconditionally exempt under section 10, and NHAI is not such an entity. The revenue argued that payments to NHAI should be subjected to TDS.

Which sections of the Income-tax Act were involved?

Section 194A,Section 201(1),Section 201(1A),Section 194A(3)(iii)(f),Section 196(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI

Before: Sh. S. Rifaur Rahman & Sh. Raj Kumar Chauhan

Hearing: 08.07.2026Pronounced: 06.10.2026

Per Raj Kumar Chauhan, Judicial Member:

The appeal of the assessee is directed against the order dated 18.08.2025 of ld. CIT(A)/Addl./JCIT(A)-10, Mumbai passed u/s 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’)arising out of the order dated 24.03.2025 passed u/s 201(1)/201(1A) of the Act wherein the assessee was treated as an assessee-in-default for non- deduction of tax at source on interest paid to the National Highways Authority of India (NHAI).

2.

Brief facts as culled out from the orders of the authorities below are that the assessee is engaged in infrastructure development of Four/Six Laning of Aunta Sim

The order continues below.

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