TaxTMI 
TaxTMI 
2016 (5) TMI 570
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....Development Authority ^noida. In the present Appeal, we are concerned with the Assessment Year 2006-07. Accordingly, a notice was issued to the Bank. The contention of the Bank that NOIDA is a Corporation established by a State Act and, therefore, exempted from deduction of income tax at source in view of the notification dated 22 October 1970 issued under section 194-A(3)(iii)(f) of the Act was not accepted. The Assessing Officer also did not accept that NOIDA was a local authority even after 1 April 2003 within the meaning of section 10(20) of the Act and, therefore, entitled to exemption from payment of income-tax. The Bank was held to be an assessee in default and an order under section 201(1)/201(1-A) of the Act was passed on 28 February 2013 . A demand notice under section 156 was issued and penalty proceedings under section 271-C of the Act were directed to be initiated separately. Feeling aggrieved, the Bank filed an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals), however, after examination of the provisions of Uttar Pradesh Industrial Area Development Act, 1976 ^Industrial Act held that the NOIDA was a corporation establ....
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....-section (3) of section 194A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notify the following for the purposes of the said sub clause:- (i) any corporation established by a Central, State or Provincial Act; (ii) any company in which all the shares are held (whether singly or taken together) by the Government or the Reserve Bank of India or a Corporation owned by that Bank; and (iii) any undertaking or body, including a society registered under the Societies Registration Act, 1860 (21 of 1860), financed wholly by the Government." Sri Ashok Kumar and Sri Praveen Kumar, learned counsel appearing for the appellants submit that NOIDA is not a "local authority" within the meaning of section 10(20) of the Act after 1 April 2003 in view of a Division Bench judgment of this Court in Writ-Tax No.1338 of 2005 New Okhla Industrial Development Authority Vs. Chief Commissioner of Income Tax, Meerut Camp & Ors., decided on 28.2.2011 and, therefore, it was required to file return of income. It is also their submission that NOIDA is not a 'corporation' established by a State Act and, therefore, is also not entitled for exemption u....
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....hahr. The constitution of the Authority is as follows : (i) Secretary to the Government, Uttar Pradesh, Industries Department, Ex-officio Member Chairman. [Under clause (a)] (ii) Secretary to the Government, Uttar Pradesh, Public Works Department, Ex-officio Member [Under clause (b)] (iii) Secretary to the Government, Uttar Pradesh, Local Self-Government Department, Ex-officio Member [Under clause (c)] (iv) Secretary to the Government, Uttar Pradesh, Finance Department, Ex-officio Member [Under clause (d)] (v) Managing Director, U.P. State Industrial Development Corporation Ltd., Ex-officio Member [Under clause (e)] (vi) Chairman, U.P. State Electricity Board, Ex-officio Member [Nominated under clause (f)] (vii) Managing Director, U.P. Jal Nigam, Ex-officio Member [Nominated under clause (f)] (viii) Chief Engineer, Irrigation Department, U.P. Ex-officio Member [Nominated under clause (f)] (ix) Chief Town and Country Planner, U.P., Ex-officio Member [Nominated under clause (f)] (x) (District Magistrate), Secy. Planning, Bulandshahr, Ex-officio Member [Nominated under clause (f)] (xi) ....
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....in such form as the State Government may specify. (2) The accounts of the Authority shall be subject to audit by the examiner Local Fund Accounts. (3) ................. (4) ................. (5) ................." Section 23 provides that the Authority shall prepare for every year a report of its activities during that year and submit the report to the State Government in such form and on or before such date as the State Government may specify and such report shall be laid before both the Houses of the Legislature. Section 41 deals with the control by the State Government while section 58 deals with the dissolution of the Authority. Section 58(1) provides that where the State Government is satisfied that the purposes for which the Authority was established under this Act have been substantially achieved so as to render the continued existence of the Authority in the opinion of the State Government unnecessary, the Government may by notification in the Gazette declare that the authority shall be dissolved with effect from such date as may be specified in the notification and the Authority shall be deemed to be dissolved accordingly. The a....
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....94-A(1)(3)(iii)(f) of the Act. The notification dated 22 October 1970 exempts any Corporation established by a Central, State or Provincial Act. The Bank asserts that NOIDA is a Corporation established by a State Act and is, therefore, exempted from deduction of income tax on the basis of the notification dated 22 October 1970 issued under section 194-A(3)(iii)(f) of the Act. Learned counsel for the parties have relied upon the decision of the Supreme Court in Dalco Engineering Pvt. Ltd. (supra). Two Civil Appeals were decided. The first Civil Appeal was filed by Dalco Engineering Pvt. Ltd., a Private Limited Company incorporated under the provisions of Companies Act, 1956 ^Companies Act. The respondent Satish Prabhakar Padhye claimed the benefit of section 47 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 ^Disabilities Act and filed the writ petition in the Bombay High Court for not only quashing the order dated 12 October 2001 issued by the Disability Commissioner suggesting to the employer to undertake the essential responsibility of re-employing the said respondent to discharge any other work as he had acquire....
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....n 617 of the Companies Act, was an "establishment" as defined in section 2(k) of the Disabilities Act and as to whether the respondent was entitled to claim any relief with reference to section 47 of the Disabilities Act. It is in this context that the Supreme Court observed that the words "a corporation established by or under a Central, Provincial or State Act" is a standard term used in several enactments to denote a statutory corporation established or brought into existence by or under a statute. The Supreme Court referred to the definition of "public property" contained in the Prevention of Damage to Public Property Act, 1984 to mean any property owned by, or in the possession of, or under the control of - (i) the Central Government; or (ii) any State Government; or (iii) any local authority; or (iv) any corporation established by, or under, a Central, Provincial or State Act; or (v) any company as defined in Section 617 of the Companies Act, 1956; or (vi) any institution, concern or undertaking which the Central Government may, by notification in the Official Gazette, specify in that behalf provided that the Central Government shall not specify any institution, concern or un....
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..... Section 3 of the Life Insurance Corporation Act, 1956 provides that 3. Establishment and incorporation of Life Insurance Corporation of India.-- (1) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, there shall be established a Corporation called the Life Insurance Corporation of India." State Bank of India and Life Insurance Corporation of India are two examples of corporations established by "a Central Act". 23. We may next refer to the State Financial Corporation Act, 1951 which provides for establishment of various financial corporations under that Act. Section 3 of that Act relates to establishment of State Financial Corporations and provides that "the State Government may, by notification in the Official Gazette, establish a financial corporation for the State under such name as may be specified in the notification" and such financial corporation shall be a body corporate by the name notified. Thus, a State Financial Corporation is established under a Central Act. Therefore, when the words "by and under an Act" are preceded by the words "established", it is clear that the reference is to a ....
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....merely governed by the statutory provisions it cannot be said to be a statutory body. (emphasis supplied)" The contention of Sri Ashok Kumar and Sri Praveen Kumar, learned counsel for the appellants is that NOIDA has been created under the provisions of Industrial Act and, therefore, would not be exempted under section 194-A of the Act. The submission of learned counsel is that it is only when the corporation is established by an Act, as is contemplated under the notification dated 22 October 1970, that it would be exempted from deduction of tax at source under section 194-A(1) of the Act. In this connection, learned counsel pointed out that NOIDA has been constituted by the State Government by a notification after identifying the areas. According to them, this is an example of a corporation having been constituted under the State Act. In order to draw a distinction from a corporation having been established by a State Act, learned counsel referred to the establishment of the State Bank of India under the provisions of State Bank of India Act, 1955 as also the constitution of the Life Insurance Corporation of India under the provisions of the Life Insurance Corporation ....
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...., there is no need to meticulously examine the difference in using "by" or "under" when the Legislature itself has not considered it necessary to place such a fine distinction as is sought to be raised by learned counsel for the appellants. His contention is that in view of the exemptions granted under section 194-A(3)(iii)(f) of the Act as also the notification dated 22 October 1970, NOIDA is exempted from deduction of tax at source under section 194-A(1) of the Act. With regard to the decision of the Supreme Court in Dalco Engineering Pvt. Ltd. (supra), which deals with the State Financial Corporation Act, 1951, learned Senior Counsel submitted that the Central Act in section 3 provides that the State Government may, by notification in the Official Gazette, establish a Financial Corporation for the State under such name as may be specified in the notification, while in the case of NOIDA, the State Act itself provides for constitution of an Authority by issuance of a notification. His submission is that it is for this reason that the Supreme Court in paragraph 23 of the judgment rendered in Dalco Engineering Pvt. Ltd. (supra) observed that the State Financial Corporation had be....
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....trol of the State Government over the Authority. The dissolution of the Authority is also provided for in section 58. It can appropriately be gathered from the aforesaid provisions that NOIDA has been established by the Industrial Act and otherwise also even by necessary implications it is more than apparent that NOIDA has been established by the State Industrial Act. There is, therefore, no doubt that NOIDA owes its existence to a Statute which is the fountainhead of its powers. Even otherwise, the fine distinction sought to be made by learned counsel for the appellants losses significance when the provisions of section 194-A(3)(iii)(c) and (d) are examined. They provide that the income credited or paid to the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1952 or the Unit Trust of India established under the Unit Trust of India Act, 1963 are exempted from payment of tax at source. There is no doubt that Life Insurance Corporation of India and the Unit Trust of India are established by the Acts. The Act, therefore, does not place any emphasis on 'by' or 'under' the Act. In this view of the matter, reference to the Fi....