Tribunal: Bank not liable to deduct TDS from NOIDA & Greater NOIDA Authority interest payments

The tribunal concluded that the assessee bank was not required to deduct TDS from interest payments to NOIDA and Greater NOIDA Authority as they are exempt under Section 194A(3)(iii)(f) per CBDT Notification No. 3489. The tribunal set aside the CIT(A)'s orders and allowed the assessee's appeals, consistent with the Allahabad High Court precedent in CIT Vs. Canara Bank. The order was pronounced on 7th June 2018, in favor of the assessee.

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Issues Involved:
1. Jurisdiction of Additional CIT (TDS), Ghaziabad.
2. Exemption eligibility of NOIDA and Greater NOIDA Authority under Section 194A(3)(iii)(f) of the Income Tax Act.
3. Applicability of TDS provisions to NOIDA and Greater NOIDA Authority.
4. Consistency in the Revenue Department's stance on similar cases.
5. Validity of the assessee's reliance on CBDT Notification No. 3489 dated 22-10-1970.

Detailed Analysis:

1. Jurisdiction of Additional CIT (TDS), Ghaziabad:
The appellant contended that the order passed by the Additional CIT (TDS), Ghaziabad, was without jurisdiction since the appellant is centrally registered for all TDS compliances and holds centralized TANs with Mumbai TDS Range. The tribunal did not specifically address this issue in the judgment, focusing instead on the substantive issues of TDS applicability and exemptions.

2. Exemption Eligibility of NOIDA and Greater NOIDA Authority under Section 194A(3)(iii)(f):
The appellant argued that NOIDA and Greater NOIDA Authority are statutory bodies constituted under the Uttar Pradesh Industrial Area Development Act, 1976, and are eligible for TDS exemption under Section 194A(3)(iii)(f) as per CBDT Notification No. 3489 dated 22-10-1970. The tribunal referenced the Hon'ble Allahabad High Court's decision in CIT Vs. Canara Bank, which held that NOIDA is a corporation established by a State Act and thus entitled to exemption from TDS under Section 194A(1).

3. Applicability of TDS Provisions to NOIDA and Greater NOIDA Authority:
The Assessing Officer (AO) observed that NOIDA and Greater NOIDA Authority are not covered under the exemption u/s 194A(3)(iii)(f) and held that the bank should have deducted TDS on interest payments to these authorities. The AO's stance was based on the Allahabad High Court ruling that NOIDA is not a 'local authority.' However, the tribunal found that the AO overlooked the fact that NOIDA and Greater NOIDA Authority are statutory authorities constituted under the Uttar Pradesh Industrial Area Development Act, 1976, and thus fall under the exemption provided by the CBDT notification.

4. Consistency in the Revenue Department's Stance on Similar Cases:
The appellant highlighted that in earlier periods, the CIT(A) had passed favorable orders on identical issues, which were accepted by the Tax Department without further appeal. The tribunal acknowledged this argument, noting the principle established by the Hon'ble Supreme Court and the Bombay High Court that the Revenue must be consistent and cannot differentiate between taxpayers on identical matters.

5. Validity of the Assessee's Reliance on CBDT Notification No. 3489 dated 22-10-1970:
The appellant relied on CBDT Notification No. 3489, which exempts corporations established by a Central, State, or Provincial Act from TDS on interest payments. The tribunal upheld this reliance, citing the Hon'ble Allahabad High Court's judgment in CIT Vs. Canara Bank, which confirmed that NOIDA is a corporation established by a State Act and thus qualifies for the exemption.

Conclusion:
The tribunal concluded that the assessee bank was not obligated to deduct TDS from interest payments to NOIDA and Greater NOIDA Authority, as these authorities are exempt under Section 194A(3)(iii)(f) per CBDT Notification No. 3489. The orders of the CIT(A) were set aside, and the appeals of the assessee were allowed. The tribunal's decision was consistent with the binding precedent set by the Hon'ble Allahabad High Court in CIT Vs. Canara Bank.

Order Pronouncement:
The tribunal pronounced the order in the open court on 07th June 2018, allowing both appeals of the assessee.

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