Appeal Dismissed: TDS Not Required for Exempt Income under Section 10(23C)(iiiab)

The appeal by the revenue against the cancellation of the order under section 201(1) for failure to deduct TDS on interest accrued on a fixed deposit was dismissed. The CIT(A) upheld the decision, stating that the income was exempt under section 10(23C)(iiiab), and therefore, there was no requirement for TDS. The judgment emphasized the importance of relevant sections such as 194A, 197A(1B), and 10(23C)(iiiab) in determining TDS applicability when income is exempt.

---

---

Issues involved: Appeal by revenue against cancellation of order u/s 201(1) for failure to deduct TDS on interest accrued on fixed deposit.

Summary:
The appeal was filed by the revenue against the order of the CIT(A) cancelling the order u/s 201(1) for failure to deduct TDS on interest accrued on a fixed deposit. The revenue contended that it was mandatory for the Manager to deduct tax u/s 194A on the interest. The assessee, however, argued that they were covered by a notification issued by the Central Government u/s 194A(3)(iii)(f), exempting them from TDS. The Assessing Officer raised a demand for not deducting tax on FDRs made by a university, claiming the income was exempt u/s 10(23C)(iiiab). The university's income was found to be exempt as it existed solely for educational purposes and was substantially financed by the Government. The CIT(A) considered relevant notifications and circulars, concluding that since the income was exempt, there was no requirement for TDS. The appeal of the revenue was dismissed, upholding the CIT(A)'s decision.

The judgment highlighted the importance of relevant sections such as 194A, 197A(1B), and 10(23C)(iiiab) of the Act in determining the applicability of TDS. It emphasized that when income is exempt, the obligation to deduct tax at source does not arise. The decision was based on a thorough consideration of the facts and legal provisions, ultimately leading to the dismissal of the revenue's appeal.

---