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Before: SHRI G. D. AGRAWAL & MS SUCHITRA KAMBLE
PER BENCH
These appeals are filed by the assessee against the order dated 27/10/2015 passed by CIT(A)-1, Noida for A.Ys. 2013-14 and 2014-15.
The grounds of appeal are as under:-
The appellant, being aggrieved against the order of learned Commissioner of Income tax (Appeals) 1, Noida [hereinafter the learned CIT(A)] upholding order u/s 201(1) and 201(1 A) for short deduction of TDS u/s 194A plus interest demand of Rs. 1,78,945/- presents this appeal on following amongst other grounds without prejudice to one another:
1.1 It is submitted that the appellant has not committed default within the meaning of section 201(1) and section 201(1 A) on facts and law of the case
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and the order deserves to be cancelled.
1.2 The order passed u/s 201 (1J/201 (1 A) by Additional CIT (TDS), Ghaziabad is without jurisdiction, as the appellant is centrally registered for all TDS compliances and holds centralised TANs (for its Central office, Registered office, all India branches/offices) with Mumbai TDS Range.
2.1 It is submitted that the payees are statutory body constituted under Uttar Pradesh state Act and eligible for TDS exemption u/s 194A (3) (iii(f) under CBDT Notification No. 3489 dated 22-10-1970.
2.2 The learned CIT (A) has erred in law that
(a) The case of appellant is squarely covered by favourable order of Hon'ble Delhi Tribunal in the case of Canara Bank (ITA No. 1359/Del/2014) dated 7th August 2015. The said order has duly considered the Allahabad High Court ruling dated 28thFebruary 2011 in writ petition filed by NOIDA, holding that NOIDA is not a 'local authority'. The Tribunal held that there was no obligation for the bank to deduct tax on interest paid on fixed deposits to NOIDA since NOIDA was notified u/s. 194A(3) (iii) (f) vide CBDT Notification no. 3489 dated 22nd October 1970. This was a ground independent of the defence of there being no TDS obligation since NOIDA is a ‘local authority’ whose income is fully exempt. While the defence of NOIDA being an exempt ‘local authority' is not available in view of unfavourable Allahabad High Court ruling against NOIDA, the fact remains that NOIDA is exempted from TDS u/s. 194A in terms of above referred Notification which continues to be in force.
(b) It was incorrect of CIT(A) to make unsubstantiated allegations against Bank being a party to proceedings before Allahabad High Court and/or playing a fraud upon the Hon'ble Delhi Tribunal by misrepresenting facts. We strongly deny any such allegations since bare perusal of proceedings before Allahabad High Court and/or Delhi Tribunal orders make it clear that Axis Bank was not a party to any of these proceedings. As it appears, rejection of current year's appeal by CIT(A) by deviating from earlier year's appellate order in our own case appears to be influenced by these
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incorrect and erroneous assumptions and inferences by CIT(A).
(c) The CIT(A) has passed favourable orders against the Bank for earlier periods on identical issue against which no further appeal has been filed by the Tax Department before Hon'ble ITAT as per our records.
(d) Since department has accepted the order of CIT(A) in earlier year, it cannot deviate from its position in subsequent year and claim to the contrary. The proposition is well settled by Hon'ble Supreme Court (SC) ruling in the case of Kaumudini Narayan Dalai [2000 (12) TMI 101 (SC)] wherein the court held that revenue having accepted the decision of High Court in one case, it is not open to revenue to challenge the identical matter in different taxpayer's case. The Revenue must be consistent and it cannot differentiate between taxpayers. Recently Bombay High Court in the case of CIT v Vijay G Patil [2015 (11) TMI 868 (Bom)] applied the SC ratio to a fact pattern where Tax Department had accepted the decision of the Tribunal in one case whereas in identical matter of another assessee, Tax Department appealed against order of Tribunal. Bombay HC held that ratio of SC which was rendered in the context of High court decision will apply in the context of jurisdictional ITAT order. In fact, ratio of these ruling should apply with more force in our case, as order of CIT(A) in our own case has been accepted by the Tax Department.
2.3. It is submitted that (a) (a) TDS provision is tax collection machinery, is not charging section, is subordinate to charge of tax u/s 4 r.w.s. 5. The Department is not justified, in the peculiar circumstances, effectively shifting charge of tax on the payer bank, when the payee authorities are State Government statutory bodies and holding PAN. The payees in this case are in existence and in the knowledge and radar of the Department since more than 10 years, are primarily responsible to pay correct tax due, if any. (b) The Writ Petition jurisdiction challenged by the payee Authority before Hon. Allahabad HC (order dated 28-2-2011) was concerned primarily with the issue whether Noida is a local authority within the meaning of
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section 10(20) r.w. Notice u/s 142(1) requiring it to file its Return of Income (ROI).
It is, therefore, submitted that order passed u/s 201 (1) and section 201 (1 A) be cancelled. The appellant craves leave to add, to alter and/or to amend all or any of the grounds of appeal.”
The facts for both the appeals are identical therefore, we are taking up the facts of A.Y. 2013-14. During the course of verification, it was noticed by the Assessing Officer the assessee made payment of interest on FDRs to Gr. Noida Authority during F.Y 2012-13, relevant to A.Y 2013-14, but TDS was not deducted on the interest paid to Gr. Noida Authority/ Noida Authority on the FDRs, as was obligatory on the part of the bank under the provisions of Section 194A of the Income Tax Act, 1961. Notice dated 07.10.2014 issued to the assessee to furnish details of payment of interest paid on FDRs to Noida Authority/Gr. Noida Authority. The assessee bank furnished the details of interest paid, which are as under:
Sl No. Name of Name of F.Y Amt. of Amt. of Short Authority Branch Interest tax deduction/Non paid/payable. deducted deduction at source 1. Gr. Noida Axis A.y 13,76,509/- NIL 1,37,650/- Authority Bank, B- 2012-13 2 & B-3, & 2013- Sector- 14 16, Noida A show cause notice dated 7/10/2014 was issued to the assessee bank. The assessee bank during the course of proceedings stated that Gr. Noida Authority had given a declaration to banks that it is exempted from taxation since it is a local authority. Hence the assessee bank has not deducted any tax. The A.O observed that the declaration issued by Gr. Noida Authority had no legal sanctity and banks were not required to take cognizance of such an Act. If the income of Gr. Noida Authority was not taxable, they should have applied to the
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A.O. for a certificate under section 197 for lower deduction of tax and provided it to the banks. The assessee has not produced any certificate under section 197 to support NIL deduction of TDS on interest. The Assessing Officer further observed that Noida Authority/Greater Noida Authority are not covered under the exemption u/s 194A(3)(iii)(f) of the Income Tax Act, 1961. Thus, the Assessing Officer held that the exemption is allowable to only such corporation established by a State, Central or provincial Act and not under such Acts. Hence, CBDT notification No. S.O. 3489 dated 22.10,1970 is not applicable in the present case. The Assessing Officer further held that the assessee itself admitted that Noida Authority/Greater Noida Authority are formed under U.P. Industrial Area Development Act, 1976 passed by the State Govt. Thus the Assessing Officer held that Noida Authority does not fall under any exemption clause nor Noida Authority is a local Authority as has been held by the Allahabad High Court dated 28.02.2011. Hence, TDS provisions are applicable in the case of Noida Authority. Unless a certificate u/s 197 from the department is produced by the authority, banks are liable to deduct tax at source on payment of interest to the authority. As per Section 194 A of the I.T. Act, 1961 and board notification bank was liable to deduct the tax at source on interest payment credited to Greater Noida Authority. However, bank has failed to deduct the same and pay to the Central Govt. without verifying the applicability of above referred notification from the Income Tax Department. The status of Greater Noida Authority as Local Authority has also not been accepted by Hon’ble High Court Allahabad in Writ Petition Tax No. 1338 of 2005 vide order dated 28.02.2011. Therefore the assessee bank has to deduct TDS on payment of interest on FDRs to Gr. Noida Authority and pay to the Central Govt. Account. However, the assessee has not followed the provisions of Income Tax Act, 1961. The assessee did not deduct TDS on payment of interest on FDRs on the basis of the letter provided by the Gr. Noida Authority, while TDS should be deducted on this payment and deposited in the government account without any delay as per tire provisions of Income Tax Act, 1961. Thus the Assessing
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Officer held that tax is deductible @ 10% under section 194A of the Income Tax Act, 1961 which assessee failed to do so and the assessee is in default. Total short charge u/s 201(1) is computed at Rs.1,37,650/- Noida Authority and interest thereon u/s 201(1A) is Rs. 41,295/-. Thus the total demand on account of short charge and interest worked out at Rs.1,78,945/- by the Assessing Officer.
Being aggrieved by the order u/s 201(1)/201(A) the assessee filed appeal before CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that the assessee is a public sector bank. The CIT(A) grossly ignored all binding precedents specifically raised before him and held that the assessee was allegedly liable to deduct tax at source (TDS) u/s 194A from the interest payments paid/credited to NOIDA Authority and Greater NOIDA Authority and thereby CIT(A) treated the assessee bank as assessee in default by confirming order passed by the Addl. CIT(TDS) under section 201(1)/201(1A), raising a demand of Rs. 235,63,873/- for AY 2014-15 and Rs. 1,78,945/- for AY 2013-14. The Ld. AR further submitted that the assessee was not required to deduct any TDS u/s 194A because the NOIDA Authority and Greater NOIDA Authority fall in exempted category provided in Section 194A(3)(iii)(f) of the Act covered vide notification No. CBDT SO No. 3489 dated 22/10/1970; as both the above authorities are Corporation established by State Act namely U.P. Industrial Area Development Act, 1976. The Ld. AR submitted that the said matter is already examined in much details by the Tribunal, Delhi in numerous appeals as cited hereunder, wherein it is categorically held that above authorities fall in exempted category provided in section 194A(3)(iii)(f), covered vide notification No. CBDT SO No. 3489 dated 22/10/1970:- S. No. ITA No. Order dated Appellant/Respondent 1 1359/Del/2014 07/08/2015 Add. CIT(TDS) Vs. Canara Bank 2 1360 & 1362/Del/2014 07/08/2015 Add. CIT(TDS) Vs.
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Canara Bank 3 1361/Del/2014 07/08/2015 Add. CIT(TDS) Vs. Canara Bank 4 1351 to 1353/del/2014 07/08/2015 Add. CIT(TDS) Vs. Uco Bank 5 1354/Del/2014 07/08/2015 Add. CIT(TDS) Vs. Punjab & Sindh Bank 6 1355/Del/2014 07/08/2015 Add. CIT(TDS) Vs. State Bank of Patiala 7 1357 & 1358/Del/2014 07/08/2015 Add. CIT(TDS) Vs. The Corporation Bank 8 1363 & 1374/Del/2014 07/08/2015 Add. CIT(TDS) Vs. Vijaya Bank
The facts of this case are exactly the same as were in above cited appeals and therefore this case is fully covered in favour of the assessee bank by the aforesaid judgments of this Tribunal which are fully relied upon by the assessee Bank. The Ld AR submitted that the CIT-A brushed-aside the binding precedent of jurisdictional Tribunal confirmed the order of the Addl. CIT (TDS). The answer to the observation of the CIT-A has already been addressed by the Tribunal in ITA 5968 to 5974/Del/2015 in case of Central Bank of India Vs Addl. CIT(TDS). The Ld. AR pointed out that the Order of the Tribunal in ITA No. 1359/Del/2014 dated 07-08-2015 in Addl. CIT (TDS) vs. Canara Bank, stood confirmed, approved and upheld by the Hon’ble Allahabad High Court. In the case of Commissioner of Income Tax (TDS) and another Vs Canara Bank [2016] 386 ITR 504 (All) and therefore all the premise, observations and comments of the Id. CIT-A in his impugned order, under appeal, stood quashed by the Hon’ble Allahabad High Court, which is a jurisdictional High Court in relation to the present appeals and thus having binding precedent. In view of all the above facts, circumstances and the settled legal position, it becomes aptly and abundantly clear that the assessee bank was not obliged to deduct any TDS from the interest paid/credited to Noida Authority/Greater Noida Authority by virtue of the specific provisions of
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section 194A(3)(iii)(f) as held in all above cases and upheld by the jurisdictional High Court as cited above and therefore the appellant bank cannot be treated as assessee in default u/s 201(1)/201(1 A) and therefore the order passed by the. CIT-A is liable to be quashed and the assessee deserves to succeed in appeals. The Ld. AR further submitted that the issue is squarely covered by the decision of the Jurisdictional High Court i.e. Allahabad High Court in case of Canara Bank. Therefore, the appeal of the assessee be allowed.
We have heard both the parties and perused the material available on record. This issue is squarely covered by the decision of the Hon’ble Allahabad High Court in case of CIT Vs. Canara Bank 2016 386 ITR 504 (All) wherein the Hon’ble High Court is held as under:-
“We have, therefore, no manner of doubt from a reading of the provisions of the Industrial Area Development Act that the Noida has been constituted by the State Act and, therefore, entitled to exemption of payment of tax at source under section 194A(1) of the Act.
The decision of the Division Bench of this court in New Okhla Industrial Development Authority (supra), on which reliance has been placed by learned counsel for the appellants, would, therefore, not come to the aid of the appellants as it was restricted to the issue as to whether Noida would be a local authority or not and did not deal with the issue involved in this appeal as to whether the Noida is a Corporation established by a State Act.
We, therefore, answer the question of law framed by us in negative and hold that Noida is a Corporation established by the Uttar Pradesh Industrial Area Development Act, 1976. 44. The appeal is accordingly, dismissed.” The Hon’ble High Court held that Noida has been constituted by the State Act and, therefore, entitled to exemption of payment of tax at source under section
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194A(1) of the Act. From the perusal of the order u/s 201(1)/201(1A), it can be seen that the Assessing Officer has over looked the very fact that the Greater Noida Authority, the payee, is a statutory authority constituted u/s 3 of the Uttar Pradesh (UP) Industrial Area Development Act, 1976 and 100% owned by UP State Government. The CBDT Notification No. 3489 (Entry No. 39) dated 22/10/1970 issued in pursuance to Section 194A (3) (iii) (F) directs that no tax is required to be deducted from interest payment to any corporation established by a Central State or Provincial Act. Thus, it is not coming under the purview of TDS provision. This aspect was totally over looked by the Assessing Officer as well as the CIT(A). The order of the CIT(A) is set aside. For Assessment Year 2014-15, the issues are identical. Therefore, both the appeals of the assessee are allowed.
In result, both the appeals of the assessee are allowed.
Order pronounced in the Open Court on 07th June, 2018.
Sd/- Sd/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) PRESIDENT JUDICIAL MEMBER
Dated: 07/06/2018 R. Naheed * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT
ASSISTANT REGISTRAR ITAT NEW DELHI
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Date 1. Draft dictated on 05/06/2018 PS 2. Draft placed before author 05/06/2018 PS 3. Draft proposed & placed before .2018 JM/AM the second member 4. Draft discussed/approved by JM/AM Second Member. 5. Approved Draft comes to the PS/PS Sr.PS/PS 07.06.2018 6. Kept for pronouncement on PS 7. File sent to the Bench Clerk PS 07.06.2018 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order.