INCOME TAX OFFICER, TDS WARD, SALEM, SALEM vs. COMMISSIONER ATTUR MUNICIPALITY, SALEM

The appellant deductor is a local body. An information was available to the department that TDS on various expenses was not deducted and remitted the Central Government Account by the assessee. Accordingly, notice u/s 133(6) of the Act was issued to the assessee and based on the response filed by the assessee, it is noticed that interest was paid to M/s TUFIDCO without deduction of TDS as per the provisions of section 194A of the Act. The AO held that the assessee has defaulted in complying with provisions of section 194A of the Act and accordingly treated the assessee as assessee in default u/s 201(1) of the Act and charged interest u/s 201(1A) of the Act. Aggrieved, the assessee preferred appeal before the CIT(A). The CIT(A) deleted the addition made by the AO holding that since M/s TUFIDCO is a nodal agency, fully owned and controlled by the State Government the payments made by the assessee are to be considered as payments made to Government on which there is no requirement to deduct tax at source as per the provisions of section 194A(3)(iii)(f) of the Act. The revenue is in appeal before the Tribunal against the order of the CIT(A).

We heard the parties and perused the material on record. The Ld. AR, at the outset, submitted that the appeal filed by the revenue is not maintainable due to low tax effect. The Ld. DR did not controvert the said submission. We notice that the Central Board of direct taxes (CBDT) vide Circular No.09/2024 dated 17th September, 2024 has set the monetary limit of tax effect for filing the appeal by the revenue at Rs.60 lakhs. In the given case, it is an undisputed fact that the tax effect is below the said limit for both the AYs i.e. AY 2023-24 and AY 2024-25 and therefore, we are of the considered view that the appeal filed by the revenue is not maintainable on the ground of the tax effect are being below the monetary limit as fixed by the & 3737/Chny/2025 The Commissioner of Municipality :- 3 -: