TaxTMI 
TaxTMI 
2015 (6) TMI 201
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....ages the financial affairs of the council. The assessee received funds from various sources like Central Government, State Government and other nodal agencies under various programmes and projects meant for welfare of the public. 3. In order to verify the compliance to TDS provisions of the Act, a TDS survey u/s 133A of the Act was conducted at the office premises of the Mysore City Municipal Corporation, Mysore on 19/11/2010. Various information was called for by the Assessing Officer (AO) and it was accordingly submitted by the assessee. The AO noticed that in spite of payment of interest to KUIDFC of Bangalore, the assessee has not deducted tax at source u/s 194A of the Act. The AO was of the opinion that the assessee ought to have deducted tax at source before making payment of interest to KUIDFC. The assessee's explanation was called for and after considering the same, the AO was of the opinion that TDS provisions are applicable and since the assessee has failed to comply with the same, the assessee is to be treated as an assessee in default u/s 201 and is also liable for interest u/s 201(1A) of the Act. He, accordingly, brought it to tax. 4. Aggrieved, the assessee ....
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....o such income credited or paid to: (a)x.x.x.x.x.x.x.x.x. (b) x.x.x.x.x.x.x.x.x (c).x.x.x.x.x.x.x.x.x. (d).x.x.x.x.x.x.x.x.x (e).x.x.x.x.x.x.x.x.x. (f) such other institution, association or body (or class of institutions, associations or bodies, which the Central Govt. may for reasons to be recorded in writing, notify in this behalf in the Official Gazette. Section 196 Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations. 196. Notwithstanding anything contained in the foregoing provisions of this Chapter, no deduction of tax shall be made by any person from any sums payable to- (i) the Government, or (ii) the Reserve Bank of India, or (iii) a corporation established by or under a Central Act which is, under any law for the time being in force, exempt from income- tax on its income, or (iv) a Mutual Fund specified under clause (23D) of section 10, where such sum is payable to it by way of interest or dividend in respect of any securities or shares owned by it or in which it has full beneficial interest, or any other income accruing or arising to it.] A bare perusal of clause (f) of section 194A in....
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....olders No. of shares 1 Govt. of Karnataka, Bangalore 606476 2 Director of town planning & Member Secretary, Bangalore 200000 3 Addl. Chief Secretary to Govt. Bangalore 1 4 Addl. Chief Secretary & Principal Secretary, Finance Department, Bangalore 5 Metropolitan Commissioner, BMRDA Bangalore 1 6 Principal Secretary, UDD, Bangalore 1 7 Secretary to Govt. (M&UDA) Bangalore 1 8 Principal Secretary, Housing Deptt. Bangalore 1 9 Commissioner, BDA, Bangalore 1 10 Chairman, BWSSB Bangalore 1 11 Chairman, BDA Bangalore 1 12 Secretary to Govt. Finance Deptt. Bangalore 1 13 Dy. Director, Town Planning BMRDA Bangalore 1 14 Commissioner, Bangalore Mahanagara Paalike, Bangalore 1 5.7. As could be seen from the above, following shares do not quality to fall under the category of Govt. of Reserve Bank or corporation owned by Reserve Bank: S. No Name of share holders No. of shares 2 Director of town planning & Member Secretary, Bangalore 200000 5 Metropolitan Commissioner, BMRDA Bangalore 1 9 Commissioner, BDA, Bangalor....
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....has accorded sanction for implementation of Karnataka Urban Infrastructure Development (KUID) Project with loan from the Asian Development Bank in the cities of Mysore, Tumkur, Ramanagaram & Channapatna vide G.O read at (2) and for implementation of Karnataka Urban Development and Coastal Environment Management (KUDCEM) Project with loan for development of several tows in the coastal districts of Dakshina Kannada, Udipi & Uttara Kannada vide G.O read at (3). 3. Salient features of the guidelines formulated by the Govt. under these projects are (i) creation of a Nodal Agency (NA) to act as Funds Manager on behalf of the Govt. and facilitate flow of assistance under the projects to the implementing Agencies (IAs); (ii) NA will release assistance to IAs under loan & grant components, as per the funding pattern prescribed under the relevant projects (iii) loan recoveries from the IAs along with interest and all other earnings out of the project funds would be pooled in a Urban Infrastructure Development Fund (UIDF) by the NA to be utilised for funding similar urban development projects and maintenance of the earlier projects in consultation with the Govt. The objective of formulatin....
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.... KUID Project to evolve and approve regulations for the UIDF under the KUID and KUDCEM Projects. 3. Govt. accords approval for sanction of Management Fees (MF) to KUIDFC commending from 2002-03 for the services rendered by it on behalf of the Govt. in the implementation of the projects and funds management thereunder. However, the quantum or percentage of MF payable has to be worked out separately and KUIDFC may submit a proposal to the Govt. in this regard. 4. This order issues with the concurrence of F.D. vide its U.O note No.FD 1502/03 P.S FD dated 31.3.2003. Sd/- (F.R.Sambargi) Under Secretary to Govt. Urban Development Deptt. Project Monitering Cell" 11. On perusal of this order, it would reveal that KUIDFC has worked only as a nodal agency on behalf of the govt. It has only managed the funds of the govt. and received management fees. It has no complete control over the funds provided by the govt. The govt. has specifically observed that any interest income earned on deployment of these funds would be pooled in an urban infrastructure development fund by the nodal agency and to be utilized for funding similar urban development project and maintenance of....
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....ensation payable under any law for the time being in force and for which no other provision is made; (2) On the purchase of the undertaking, the contingencies reserve, after the deduction of the amounts drawn under sub-para (1) shall be handed over to the purchaser and maintained as such contingencies reserve : Provided that where the undertaking is purchased by the Board or State Government, the amount of the reserve computed as above shall, after further deduction of the amount of compensation, if any, payable to the employees of the outgoing licensee under any law for the time being in force, be handed over to the Board or the State Government, as the case may be." The Hon'ble Supreme Court has observed that the statute requires the electricity company to create certain reserves. If its clear profit exceed a reasonable return (clause 2, schedule vi). Again the contingencies reserve is to be created from the existing reserve or from the revenue of the undertaking. This clearly indicate that the moneys which have to be put into the contingency reserve reach the electricity company and are not diverted away from it. It is the electricity company which has to invest the....
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....& Anr. vs. CIT (1966) 62 ITR 323 (SC) held that on assignment of 50 per cent share of the assessee in the firm, it became the income of the trust by overriding title and it could not be added in the total income of the assessee. Hon'ble Supreme Court reversed the order of the Hon'ble High Court and restored that of the AO. Hon'ble Court has observed that there is a clear distinction between a case where a partner of a firm assigns his share in favour of a third person and a case where a partner constitutes a subpartnership with his share in the main partnership. The observations of the Hon'ble Supreme Court on pp. 17 and 18 are worth to note in this connection : "It is apt to notice that there is a clear distinction between a case where a partner of a firm assigns his share in favour of a third person and a case where a partner constitutes a sub-partnership with his share in the main partnership. Whereas in the former case, in view of s. 29(1) of the Indian Partnership Act, the assignee gets no right or interest in the main partnership except, of course, to receive that part of the profits of the firm referable to the assignment and to the assets in the event ....