TaxTMI 
TaxTMI 
2012 (4) TMI 573
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2. That the Ld. CIT(A) has erred in ignoring the fact that the Jammu Development Authority is not a Corporation but a Local Authority and is also filing its return of income in the status of Local Authority. 3. That the ld. CIT(A) has erred in ignoring the fact that in view of the amendment made in section 10(20) w.e.f. 01.04.2003 the benefits conferred by clause (20A) no such authority was taken away. 4. That the appellant craves the leave to add, amend, modify, delete any of the grounds of appeal before or at the time of hearing." 3. First of all, we will deal with ITA No.206(Asr)/2011 for the assessment year 2006-07. The brief facts of the case are that in the course of Inspection of TDS, ITO (TDS) noticed that the assessee failed to deduct tax at source on the interest accrued on the FDRs purchased by the Jammu Development Authority amounting to Rs. 83,24,956/- in the assessment year 2006-07. A show cause notice was issued by the AO and in response to which the assessee replied as under: " Jammu Development Authority, Jammu is a corporation established under the Jammu & Kashmir development Act, 970. In term of Notification No.3489 dated 22....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the facts of the case, the assessment order and the written submission. In my considered opinion the assessee deserves to succeed. The exceptions provided in section 194A(3) (iii)(f) of I.T. Act and as per notification u/s Jammu Development corporation is a creation of J & K Development Act and satisfied the condition at S.No.39 of such notification. The Chapter II, clause 1(2) of the J & K Development Act reads that "The authority shall be a body corporate by the name of the local Area having perpetual succession and a common seal wit power to acquire hold and dispose of......." It is quite clear that such authority is a body corporate created through a state act. The objection of AO that the year of creation of the JDA and the notification is the same is not relevant as the notification includes all the corporation created under central or state Acts, irrespective of the year of their coming into being. The discussion as to the local authorities coming into the tax net w.e.f.01.04.03 is also not relevant as the sole issue have is whether TDS was deductible or not on the interest accrued to M/s. JDA. In view of the above, I hold that no tax was deductible on accrued interest on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (iii) of sub-section (3) of section 194A of the Act, the exemption has been provided to "Any Corporation established by a Central, State or Provincial Act" at entry No.39 of the said notification. The Jammu Development Authority is not a corporation established by the State Act. It has been established under the Jammu & Kashmir Development Act, 1970. There is great difference between a corporation established under the Central or State Act and a corporation under a Central or State Act. The critical difference has been elaborated by the Hon'ble Supreme Court in the case of Dalco Engineering Pvt. Lt. Vs. Shree Satish Prabhakar Padhye & Others in Civil Appeal No.1886 of 2007 dated 31.3.2010 at para 11 of its order. As illustration of a corporation established by a Central Act, the Hon'ble Supreme Court has cited the examples of State Bank of India and Life Insurance Corporation of India and established that such corporation are established by the name notified. The Jammu Development Authority has clearly been established under the Jammu & Kashmir Development Act, 1970 and it has not been notified by its name itself. It is expressly mentioned in section 3(1) of the J & K Development ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e ld. CIT(A) erred in accepting the claim of the assessee that it is a corporation. Further, even a local authority has been taken away from the purview of exemption provided u/s 10(2) of the Act w.e.f. 1.4.2003. In view of the above submissions, it is prayed that the order of the AO may kindly be restored and that the ld. CIT(A) be vacated." 5.1. The Ld. DR also drew our attention towards Notification attached by the assessee at pages 16 & 17 of the paper book, especially entry at Sl. No.39 (Any corporation established by a Central, State or Provincial Act) and further stated that the assessee is not covered by entry at sl. No.39 of Notification No.3489 of the CBDT dated 22.10.1970 . He also stated that case laws relied upon by the ld. counsel for the assessee, as contained in paper book pages 19 to 51 are not identical to the facts of assessee's case. He requested that the appeal filed by the department be allowed by canceling the impugned order of the ld. first appellate authority. 5.2. On the contrary, Sh. R.K. Gupta, CA, the ld. counsel for the assessee, relied upon the order passed by the ld. first appellate authority and stated that the issue in dispute is square....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he said decision of the ITAT, Delhi Bench 'I'. For the sake of convenience, the order passed by the ITAT, Delhi Bench 'I' (supra) is reproduced as under: "ITA No.2228/Del/2011 for the A.Y. 2005-06, dated 15.7.2011 Chief/Senior Manager, Oriental Bank of Commerce, Ghaziabad vs. ITO (TDS & Survey) Ghaziabad. This appeal filed by the assessee arises out of the order of the CIT(Appeals) Ghaziabad dated 01.02.2011 for the assessment year 2005-06. The grounds of appeal taken by the assessee read as under: "1. That the ld. Lower Authorities erred in charging the interest u/s 201/201(1A) of the I.T Act, 1961 of Rs. 11,748/- as well as short charge of TDS amount of Rs. 35,268/- in the case of Ghaziabad Development Authorities. 2. That the assessee's case falls u/s 194A(3)(III) of the IT.Act, 1961. 3. That the interest so charged and deposited of short charge of TDS is excessive, arbitrary and uncalled for." 2. The assessee is a branch of nationalized bank. A survey conducted on 02.02.2008 at the branch of the assessee. The discrepancy in the amount of tax deduction at source noted in respect of interest paid to Ghaziabad Development Authorit....