INCOME TAX OFFICER, SALEM vs. TIRUCHENGODE MUNICIPALITY, TIRUCHENGODE

The Revenue raised the following grounds of appeal : “1. On the farts and in the circumstances of the case and in law the d Addl/JCIT IAL RANCHI erred in deleting the entire demand of Rs. 4,89,342/- raised u/s 201(1) and 20111A) of the Income Tax Act, 1961 for FY 2022-23 without properly appreciating the fact that the assessee deductor had dearly failed to deducted as at source as per the provisions of Chapter XVII B of the Act. 2 The Ld. Addi/JCIT (AL, RANCHI failed to appreciate that the assessce deductor was clearly liable to deduct TDS u/s 1944 on Interest payments made during the year to M/S TUFIDCO & M/s TNUIFSL and the compliance furnished by the assessee deductor that there was no MOU signed between the assesse deductor and the deductee M/s. TUFIDCO & M/s TNUIFSL to deduct the TDS on interest payments made is not acceptable Hence the assessee deductor was rightly treated as an assessee in default under section 201(1) and 201(14) 3. The Ld. AddI/JCIT (A), RANCHI erred in overlooking the fact that the liability to deduct the TDS by the assessee deductor arises since the interest recipient M/s. TUFIDCO & M/s TNUIFSL is not fully owned by the Government and the provisions of Section 19-4A(3)()(f) doesn't attract in this case 4. Here, it is clarified that there are three shareholders of the M/s TUFIDCO. Out of three shareholders, State Government of Tamil Nadu having 96.7375 shares, Urban local bodies having 2.4375% shares and M/s Housing and urban Development Corporation Ltd (HUDCO) having 0.6250%. On an analysis of the provisions 194A(3)(mm)(f) of the Income tax Act 1961, it is noticed that any company, in which all the shares are held 100% of shares by the Government is exempted from TDS deductions in this case, Out of 100% of shares of M/s TUFIDCO, State Government holds 96.7375% only, balance 3.2625% shares.” 3. At the outset of hearing, no one appeared for the hearing on behalf of the assessee.

It was observed from the record that the tax effect involved in the above appeal is Rs.4,89,542/- which is less than Rs.60 lakhs. The CBDT vide Circular No.09 of 2024 dated 17.09.2024 has increased the monetary limit for filing the appeal by the Revenue before the ITAT to Rs.60 Lakhs. In the said circular, it is stated that in cases where the tax effect in the appeal to be filed before the Appellate Tribunal does not exceed Rs.60 lakhs appeals should not be filed. Thus, taking note of CBDT Circular No. 09 of 2024 dated 17.09.2024 and considering the fact that the tax effect in the instant appeal is less than Rs.60 lakhs, the present appeal deserves to be dismissed as withdrawn / not maintainable. However, we make it clear that the issues raised in the instant appeal is left open to be examined in the appropriate proceedings, if arises, in future. At the same time, we also make it clear that if the appeal fall in any of the exceptions referred to in the above said CBDT Circular, the Revenue is at liberty to move an application for recalling the order, if so advised. Accordingly, in the light of CBDT circular No.09 of 2024 dated 17.09.2024, this appeal stands dismissed.

In the result, the appeal filed by the Revenue in ITA No.3685/CHNY/2025 is dismissed.

In the result, the appeal filed by the Revenue in ITA No.3686/CHNY/2025 is dismissed.

To sum up, both appeals filed by the Revenue are dismissed. Order pronounced in the open Court on 17th March, 2026.