TaxTMI 
TaxTMI 
2016 (8) TMI 1548
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....re that the AO noted that the assessee during the AY has made the following payments under various heads without deducting tax at source: S. NO. Nature of payment Amount Of payment Rate of Tax Tax ought to have been deducted u/s 201(1) Interest Chargeable u/s 201(1A) from 01/04/2006 to 31/03/2011. a Interest payments which at tract the provisions of sect ion 194A of the Act vide item no. (ii)(e) of annexure to the audit report 1155.83 lakhs 22.44% 25,93,12,825 15,55,87,680 b Lease rental payments which attract the provisions of sect ion 194I of the Act 54.4 Lakhs 22.44% 12,20,736 7,32,420 c Lease rental payments by virtue of issuing shares to APIIC which attract the pro....
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....on established under Central, State or Provincial Act are exempt from TDS. He, therefore, held that since APIIC is a state govt. undertaking, no TDS is leviable on payment to APIIC. 5.1 As regards Lease Premium & Rental Payments of Rs. 16.04 crores (15.50 crores of premium + 54.40 lakhs of rent) was paid to APIIC, before the CIT(A), the assessee made the following submissions: (a) That with the motive of giving boost to industrial development in Vizag region, the government of A.P. had created Special Purpose Vehicle to provide water supply to the industries in Visakhapatnam region. In this process, the Government of A.P., had to provide 1000 plus acres of land to the appellant. This land was to be acquired from farmers, industr....
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.... company received the land as consideration towards issue of shares, thus it amounts to capital contribution by APIIC which is again beyond the purview of TDS. (f) That Government of A.P. accorded status of local authority to APIIC, hence, any payment made to such local authority are not liable to TDS. (g) The Hon'ble ITAT in ITA No. 1471/Hyd/2010 for A.Y. 2007-08 dated 22.11.2011 held that APIIC is entitled for exemption u/s. 11 of the I.T. Act, 1961, therefore, the income of payee is exempt under Income-tax Act and therefore, there is no need to deduct TDS. 5.2 After considering the submissions of the assessee, the CIT(A) observed that the lease hold land allotted by the Government to the appellant was shown under....
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....ding the payments made to Sri Jagananda Rao of Rs.l,40,450/- and audit fees of Rs. 3,40,328/- the assessee admitted that TDS was deducted and paid to Government Account. The CIT(A) held that , the provisions of section 201(lA) are applicable on the late payment, if any. 6. Aggrieved by the order of the CIT(A), the revenue is in appeal before us raising the following grounds of appeal: "(1) The learned CIT(A) has erred in holding that there is no need to deduct TDS on payments made to an exempt entity like M/s. APIIC, in whose respect eligibility for exemption u/s. 11 has been held by the Hon'ble ITAT. (2) The learned C1T(A) failed to appreciate that the eligibility for exemption u/s. 11 is to be decided by the AD fr....
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....t the exemption certificate, the concern seeking exemption from the deductee, it has to apply to the DIT (Exemption) with the request in proper form, only upon approval from DIT (Exemption) in writing, the exemption is allowed not otherwise. In our considered view, the grounds raised by the revenue are correct. In the present case, the CIT(A) has made the passing comment that APIIC is a exempt entity, but, the CIT(A) has allowed the ground of assessee treating the transaction as capital in nature. CIT(A) has not adjudicated this ground mainly on exemption of entity. Hence, the ground raised by the revenue is dismissed. 9.2 With regard to ground No. 3, APIIC is a corporation established by state govt. of AP and not by Central Govt., to en....