COMMISSIONER OF INCOME TAX vs. M/S KRISHNA CONTINENTAL LTD.

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ITA - 422 / 2006HC Delhi27 March 20061 pages
For Petitioner: P.L.BANSAL,VISHNU SHARMA
AI SummaryPartly Allowed

What did the High Court hold?

The High Court has admitted the appeal and formulated a substantial question of law. The question posed is whether the ITAT was correct in law in holding that the Tourism Finance Corp. of India is covered by Section 194A(3)(iii)(b) of the Income Tax Act, 1961, and that the assessee was not liable to deduct tax at source under Section 194A. The High Court has not yet decided on the merits of the case; it has only admitted the appeal for further hearing. The operative direction is to list the appeal for hearing. No finding on the substantial question of law has been made at this stage.

What were the facts?

The Commissioner of Income Tax (Appellant) has filed an appeal against the order of the Income Tax Appellate Tribunal (ITAT). The assessee is M/s Krishna Continental Ltd. (Respondent). The appeal concerns the assessment year(s) not explicitly stated in this excerpt. The core issue revolves around the ITAT's decision that the Tourism Finance Corp. of India is covered by Section 194A(3)(iii)(b) of the Income Tax Act, 1961, thereby exempting the assessee from deducting tax at source under Section 194A. The High Court has admitted the appeal and formulated a substantial question of law.

What were the issues?

1. Whether the ITAT was correct in law in holding that the Tourism Finance Corp. of India is covered by the provisions of Section 194A(3)(iii)(b) of the Income Tax Act, 1961, and consequently, the assessee was not liable to deduct tax at source under Section 194A of the Act? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. The ITAT's decision, which is under challenge, implies that the assessee likely argued that the Tourism Finance Corp. of India falls under the specified exemption, relieving the assessee of the TDS obligation. Revenue's Contention: The appeal by the Commissioner of Income Tax indicates that the revenue's contention is that the ITAT erred in its interpretation of Section 194A(3)(iii)(b) and that the assessee was indeed liable to deduct tax at source.

Which sections of the Income-tax Act were involved?

Section 194A,Section 194A(3)(iii)(b)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 422/2006 . . COMMISSIONER OF INCOME TAX ..... Appellant Through Ms. P.L. Bansal and . . . Mr. Vishnu Sharma, Advs. . versus . M/S KRISHNA CONTINENTAL LTD. ..... Respondent Through None. . . CORAM: HON'BLE MR. JUSTICE T.S.THAKUR HON'BLE MR. JUSTICE J.M. MALIK . . O R D E R 27.03.2006 . CA No.3985/2006 Heard. Allowed subject to just exceptions. ITA No. 422/2006 Admit. The following substantial question of law is formulated for determination : ?Whether ITAT was correct in law in holding that the Tourism Finance Corp. of India is covered by the provisions of Section 194A(3)(iii)(b) of the Income Tax Act, 1961 and that the assessee was not for that reason liable to deduct tax at source under Section 194A of the Act?? -2- . The appellant shall file the requisite number of paper books in accordance with the High Court Rules. Post for hearing at its turn with ITA No.68/2006. . . T.S.THAKUR, J . . . . J.M. MALIK, J MARCH 27, 2006 sv . .

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