TaxTMI 
TaxTMI 
2016 (8) TMI 1035
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....plan through which payment of premium installment and interest thereon has to be paid to NOIDA. The Ld CIT(A) has erred in appreciating that the interest ledger shows entry dated 31/03/2010 amounting to Rs. 1,74,93,578/-. If the interest over the installment has been paid than the installment has also been paid during the year. 2) Holding that since NOIDA is a notified corporation established by Central, State or Provincial Act within the meaning of Section 194A(3)(iii)(f) of the I T Act, no TDS on the interest paid to the NOIDA is chargeable to TDS. The Corporation has been established under a Provincial Act and not by a Provincial Act. Therefore Corporation would not qualify for exemption from the provisions of Section 194A. This distinction has been made by the Apex court in the case of M/s Dalco Engineering Pvt. Ltd vs Satish Prabhakar Padhye & Ors 31 March, 2010. 3) Holding that TDS should be deducted excluding service tax on the payments made u/s 194J of the I.T. Act." B. C.O. No.161/Del/2013 (Assessee's cross objections): "1. That the learned Commissioner of Income Tax (Appeals) has failed to comprehend, that under the terms of the agreement, nature of expenditur....
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....e Paper Book). Apart from the aforesaid premium assessee was required to pay a further sum as lease rental equal to 1 % of the premium for every ten years of lease and was to be enhanced by 50% after every ten years. The first installment of such lease rental was paid by the assessee before the allotment, thus before the date of allotment i.e. before 24.3.2009, the assessee had paid a total sum of Rs. 3,33,18,829/- and incurred a sum towards a stamp duty of Rs. 92,16,000/-, thus the assessee had incurred an aggregate expenditure of Rs. 4,25,34,829/- on or before executing the lease granted for a period of 90 years on 24.03.2009. 3.4 The learned ACIT, Circle - 50 (1), New Delhi vide order dated 23.03.2012, passed order u/s 201(1)/201(1A) of the Income Tax Act, creating a tax liability of Rs. 1,41,51,561/- for purported default u/s 194A (non deduction of tax at source at the time of crediting the interest of Rs. 1,74,93,578/-), 1941 (non deduction of tax at source at Rs. 4,25,53,059/- being the cost of land), 194J (non deduction of tax at source on service tax). 3.5 The assessee being aggrieved by the aforesaid order, preferred an appeal before the ld. CIT(A) who held that the ....
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.... case of MTNL vs. Telecom regulatory authority of India has categorically stated that it is a settled law that what cannot be done directly, cannot also be done indirectly. Para 26 of the order is reproduced as under:- "26. It is settled law that what cannot be done directly, cannot also be done indirectly. No authority is required for this proposition, but if any authority is required the authorities in the case of Jagir Singh Vs. Ranbir Singh and Another and the case of District Collector, Chittor and Others Vs. Chittoor District Groundunt Traders" Association, Chittoor and Others are sufficient in Jagir Singh's case the Supreme Court has held that what cannot be done directly, cannot be allowed to be done indirectly as that would be an evasion of the statute. The Supreme Court has held that it is a well known principle of law that the provisions of law cannot be evaded by shift or contrivance. The Supreme Court has held that in an indirect or circuitous manner the objects of a statute cannot be defeated. In the District Collector's case a circular was issued under the Commodities Act purporting to impose restriction on movement of edible oil and oil seeds and to impos....
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....e said allotment letter clearly laid down the plan through which payment of premium installment and interest thereon has to be paid to NOIDA within 60 days, 12 months, 18 months and so on from the date of allotment letter along with interest at the rate of 11 % per annum and 14% interest compounded half yearly in the case of delay in any installment. It can be concluded that if interest over the installment has been paid then the installment has also been paid during the year. 2. Further definition of rent u/s 1941 of Income Tax Act 1961 requires following conditions to be satisfied in order to qualify any payment as rent:- (i) Payment should be made under any lease, sublease, tenancy or any other agreement or arrangement. ii) Payment should be for the use of land: or building (including factory building); or land appurtenant to a building or machinery; or plant; or equipment; or furniture; fittings. iii) The payment made to NOIDA is covered under this definition as it satisfy the above criterion laid down in the Act. Further relevant portion of section 194A clearly states:- Interest other than 'interest on securities'. Section 194A-(3) The provisions o....
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....rnment has power to inspect. As per Section 51, the State Government may delegate any power exercisable by it except the power to make Rules. As can be seen from the above, NOIDA Authority cannot be stated to be Government and rather it reports to the Government. d) In this regard, NOIDA Authority has issued a letter No. Finance/Taxation/2014-15/1614 dated 03.03.2014 and relevant portion of which is reproduced below: " However, as per the direction issued by the Honourable Allahabad High Court the Allottees are required to deduct tax at source from the payment of lease rent to the GNOIDA and pay to the account of the Government. Besides, Allottees have to deposit the amount equivalent to tax deducted at source to GNOIDA which shall be kept by the GNOIDA in an interest bearing account till the decision of Honourable Supreme Court of India in the Special Leave Petition filed by the Noida Authority. " As can be seen from the above, the Hon'ble Allahabad High Court has also held that the Allottees are required to deduct TDSon applicable payments to NOIDA. e) Judicial Decisions: Reliance is placed on the decision of the Hon,ble ITAT, Chennai in the case of Foxco....
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....urt in the case of Smt. Tarulata Shyam and others vs CIT, West Bengal (1997) 108 ITR 345 (SC). (iii) The decision of the Hon'ble ITA T in the case of Addl. CIT(TDS) vs. Canara Bank may not be followed as per the Doctrine of Binding Precedent as held by the Hon'ble Supreme court in : Union of India Vs. Raghubir Singh 178 ITR 548 (SC) (556 &557 ) -Surinder Kumar and others, State of Punjab and others [1992] 194 ITR 434(SC). (C) Without prejudice submission w.r.t default u/s 1941 Without prejudice to the above, the following submission is also made: 1. The Ld. CIT(A) has stated that he has verified certain ledger accounts and other documents for A.Y. 2010-11 & A.Y. 2009-10. These ledger accounts and documents are new evidence furnished by the assessee for the first time before the CIT(A), which were not furnished before the A.O. Further, the CIT(A) had also not sought for remand report from the A.O for verification of the new evidence. This is against the principles laid down by the Hon'ble Delhi High Court in the case of CIT vs. Manish Buildwell Pvt. Ltd. 2011- TIOL-756 HC- Del- IT. 2. In case the Hon'ble IT AT is of the opinion that the penalty may ....
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....ween a body created by a statute and a body which, after coming into existence, is governed in accordance with the provisions of a statute. (emphasis supplied)". 7.1 He further submitted that the decision relied upon by the Ld. D.R. in the case of Faxconn India Developers Pvt. Ltd. Vs ITO reported in (2012) 24 Taxman.com 48 passed by Chennai Bench of the Tribunal has been reversed by Hon'ble Madras High Court in case of Falcom India Developers Pvt. Ltd. Vs ITO reported in 68 Taxman.com 95. He, therefore, submitted that the issue; whether the assessee is subject to TDS u/s 194A, stands squarely covered by the decision of Hon'ble Allahabad High Court in case of CIT Vs Canara Bank (supra). 8. We have heard rival contentions and submissions advanced, perused the relevant pages of paper book referred and the judgements relied upon by both the parties. 8.1 The A.O. issued notice on 2.02.2012 for verification u/s 201(1)/201(1A) after receiving information from DGIT (Inv.), where search and seizure operation were conducted on M/s. Gardenia Group. The A.O. passed order on 23.03.2012. The Ld. A.O. computed the tax of Rs. 87,65,930/- u/s 201(1) of the Income Tax Act on the ground tha....
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....upra), 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 (P.) Ltd. (supra) observed that the State Financial Corporation had been established under a State Act. 33. What is important to notice is that in Dalco Engineering (P.) Ltd. (supra), the Supreme Court while dealing with the tat Financial Corporation, specifically observed that when the words 'by or under an Act" are preceded by the words "established", it is clear that the reference is to a corporation that it is brought into existence by an Act or under an Act. 34. It also needs to be noted is, as is also clear from the preamble to the Industrial Act, that the Act provides for the constitution of an Authority....
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.... 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 empted 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. 37. In this view of the matter, reference to the Financial Corporation Act by learned counsel for the appellants to substantiate that NOIDA has been established under a State Act is not of significance. This apart, as has been pointed out by learned Senior Counsel for the respondent-Bank, the said Central Act authorised the State Government to issue the notification whereas the Industrial Act authorities the State Government to issue the notification. 38. In this connection, we need to remind ourselves by observations made in paragraph 9 in the judgment of 'S.S.Dhanoa (s....
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....Industrial Development Authority (supra), on which reliance has been placed by learned counsel for the appellants, would, therefore, not come to the aid of the appellants as it was restricted to the issue as to whether NOIDA would be a local authority or not and did not deal with the issue involved in this appeal as to whether the NOIDA is a Corporation established by a State Act." 8.4 Respectfully following the ratio laid down by Hon'ble Allahabad High Court in case of Canara Bank (supra), we hold that the assessee is not liable to deduct TDS u/s 194A of the Act as NOIDA would be a local authority and is a corporation established by the State Act. Accordingly, Ground No.1 of the Revenue's appeal stands dismissed. Ground No.2: 9. In respect of Ground No.2, Ld. A.R. submitted that the assessee has neither credited nor paid any rent during the year under consideration. He submitted that the amount has been paid in the previous year relevant to A.Y. 2009-10, which has been shown as the opening WIP for the year under consideration. He thus submitted that the provisions of Section 194-I of the Act are not applicable. 10. We have perused the submissions and rival contentions ....