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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: SHRI O.P. KANT & SHRI KULDIP SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘G’ NEW DELHI
BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER [Through Video Conferencing]
ITA No.6612/Del/2017 Assessment Year: 2014-15
ACIT, Vs. UNITECH LTD., CIRCLE-78(1), 6, UNITECH HOUSE, NEW DELHI COMMUNITY CENTRE, SAKET, NEW DELHI PAN :AAACU1482H (Appellant) (Respondent)
Appellant by Sh. H.K. Choudhary, CIT(DR) Respondent by None
Date of hearing 07.07.2021 Date of pronouncement 16.07.2021
ORDER PER O.P. KANT, AM:
This appeal by the Revenue is directed against order dated 25/08/2017 passed by the learned Commissioner of Income Tax (Appeals)-41 [in short ‘the Ld. CIT(A)’] in relation to order passed under section 201(1)/201(1A) of the Income-tax Act, 1961 (in short ‘the Act’) by the Assessing Officer for non-deduction of tax at source on certain payments to Noida Authorities for
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assessment year 2014-15. The grounds raised by the Revenue are reproduced as under: 1. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in holding that the NOIDA is covered under the exemption from TDS in View of provisions of section 194A(3)(iii)(f) read with notification no. 3489 dated 20.10.1970, and ignoring the Hon’ble Allahabad High Court’s decision dated 28.02.2011 in Writ Petition No. 1338/2005 in the case of NOIDA wherein it has been held that NOIDA is not a local authority within the meaning of section 10(2) of the Income Tax Act hence, not eligible for exemption TDS u/s 194A(3)(iii)(f) of the Income Tax Act, 1961? 2. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in placing reliance on the jurisdictional High Court’s decision dated 16.10.2017 in the case of M/s Rajesh Projects India Pvt. Ltd., which is apparently not only in contradiction of the judgement of the Hon’ble Allahabad High Court in Writ Petition No. 1338/2005 dated 28.02.2011 but also the decision of the Hon’ble Supreme Court in Adityapur Area Development Authority Vs UOI & Others 283 ITR 97? 3. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in holding that the assessee was not liable to deduct tax at source on payment of interest to NOIDA? 4. The order of the CIT(A) being erroneous in law and on facts needs to be vacated and the order of the ACIT be restored. 5. That the appellant craves leave to add or amend any one or more of the ground of the appeal as stated above as and when need for doing so may arise.
Briefly stated facts of the case are that during the course of survey proceedings under section 133A of the Act conducted on 29/12/2016, the Income-tax Authorities observed that no tax was deducted on payment of ₹ 121,96,86,778/- to Noida Authority. It was explained by the assessee that in view of the affidavit filed by the Noida Authorities, no tax was deducted on said sum and therefore, the assessee should not be treated as “assessee in default” under section 201 of the Act for non- deducting of tax on the interest payment made/debited to New Okhala Industrial Development Authority (Noida). The said
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request was rejected by the Assessing Officer on the ground that Noida Authority is no longer entitled to claim exemption under section 10(20) of the Act in view of the decision of the Hon’ble Allahabad High Court and rejection of the SLP by the Hon’ble Supreme Court against the said decision of the Hon’ble Allahabad High Court. Accordingly, the Assessing Officer held the assessee in default for non-deduction of tax at source on payment of interest amounting to ₹ 133,18,84,399/- and raised liability of ₹ 20,00,77,281/-. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who allowed the appeal of the assessee following the decision of the Hon’ble Delhi High Court in the case of Rajesh Projects India Private Limited Vs CIT(TDS) (2017) 78 taxmann.com 263 (Delhi). Aggrieved, the Revenue is in appeal before the Tribunal, raising the grounds as reproduced above. 3. We have heard learned Departmental Representative, who appeared through Video Conferencing facility and perused the material available on record. We find that Ld. CIT(A) has deleted the tax liability raised under section 201(1) and 201(1A) in the case of the assessee observing as under: “5. The appellant has contended that since NOIDA has been notified under the UP Industrial Area Development Act, the expression ‘any corporation established by a State Act’ shall include NOIDA Authority. Reliance in this regard is placed on the decision of the jurisdictional ITAT in the case of ACIT(TDS) v. Canara Bank [2015] 62 taxmann.com 261 (Delhi-Trib.). 6. This issue has been considered by the High Courts in the following cases:- (i) In the case of CIT(TDS) vs. Syndicate Bank, decided on 23.08.2016, the Hon’ble Allahabad High Court has further clarified:- “4. Counsel for parties also admitted that in Writ (Tax) No. 1338 of 2005, decided on 28.02.2011, issue was decided that
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NOIDA is not a “local authority” within the meaning of Section 10 (20) of the Act and this issue was answered against NOIDA. However, in present case. issue is whether NOIDA is a “Corporation” established by State Act and this question has been answered in favour of NOIDA and asainst Revenue in a subsequent matter i.e. I.T.A. No. 64 of 2016, Commissioner of Income Tax (TPS) and another Vs. Canara Bank, decided on 04.04.2016. The Division Bench in judgment dated 04.04.2016 has also considered earlier Division Bench judgment dated 28.02.2011 and distinguished the same by observing that there was a dispute whether NOIDA would be a “local authority ” or not while in a subsequent judgment the issue was whether NOIDA is ‘Corporation ’ established by State Act or not. Therefore, earlier judgment confined to the question of status of NOIDA being “local authority” would not have any application to the issue raised subsequently.
In view thereof, it cannot be said that judgment in Writ (Tax) No. 1338 of 2005 (supra) could have operated as res- judicata and Tribunal has erred in deciding the case otherwise in holding that NOIDA has been established by State Act. Considering the fact that this issue is now covered by judgments of this Court in Income Tax Appeal No. 64 of 2016 and has been answered against Revenue and in favour of NOIDA, in our view, all substantial questions of law are answered against appellant and in favour of NOIDA.
Appeal is, accordingly, dismissed.”
(ii) The Hon’ble Delhi High Court in its judgment dated 16.02.2017 in the case of Rajesh Projects (India) (P.) Ltd. vs. Commissioner of Income-tax (TDS)- II, [2017] 78 taxmann.com 263 (Delhi) wherein the facts of the case are undoubtedly similar to the case at hand. The Court has rendered judgement regarding the different components of the payments made to GNOIDA for the lease/rent/interest/other payments for acquisition a plot on rent on 99 years lease holding as under:
“20. In view of the above analysis, the court hereby concludes as follows:
(1) Amounts paid as part of the lease premium in terms of the time- schedule(s) to the Lease Deeds executed between the petitioners and GNOIDA, or bi-annual or annual payments for a limited/specific period towards acquisition of lease hold rights are not subject to TDS, being capital payments;
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(2) Amounts constituting annual lease rent, expressed in terms of percentage (e.g. 1%) of the total premium for the duration of the lease, are rent, and therefore subject to TDS. Since the petitioners could not make the deduction due to the insistence of GNOIDA, a direction issued to the said authority (GNOIDA) to comply with the provisions of law and make all payments, which would have been otherwise part of the deductions, for the periods, in question, till end of the date of this judgment. All payments to be made to it, henceforth, shall be subject to TDS.
(3) Amounts which are payable towards interest on the payment of lump sum lease premium, in terms of the Lease which are covered by Section 194-A are covered by the exemption under Section 194A (3) (f) and therefore, not subjected to TDS.
(4) For the reason mentioned in (3) above, any payment of interest accrued in favour of GNOIDA by any petitioner who is a bank - to the GNOIDA, towards fixed deposits, are also exempt from TDS.
As the facts of the case are similar to those in the case of Rajesh Projects (supra) where, similarly land had been given on similar terms by GNOIDA. Now this issue is squarely covered in favour of the assessee, following the judgements of the jurisdictional High Court given above, the payment of interest by the appellant company to NOIDA is not liable to TDS, as it is covered under exemption u/s 194A (3)(iii)(f). The assessee is not held to be an ‘assessee in default’.
The above decisions is rendered on the basis of section 194A (3)(iii)(f) and not on NOIDA Authority claiming exemption under section 10(20) of the Act. The Hon’ble Allahabad High Court while disposing off the Writ Petition vide its order dated 28th February, 2011 held that NOIDA Authority is not a local authority within the meaning of section 10(20) of the Act. This has been reiterated by the Delhi High Court in the case of Rajesh Projects (India) (P.) Ltd. vs. Commissioner of Income-tax (TDS)- II, (supra).”
3.1 In our opinion, the Ld. CIT(A) has followed binding precedents of the jurisdictional High Court while allowing the appeal of the assessee and, therefore, we do not find any infirmity
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in the said order of the learned CIT(A). Accordingly, we uphold the same and dismiss the grounds raised by the Revenue. 4. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 16th July, 2021.
Sd/- sd/- (KULDIP SINGH) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 16th July, 2021. RK/-(DTDC) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi