TaxTMI 
TaxTMI 
2026 (10) TMI 675
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....4.741 to KM 209.945 (existing chainage) (total design length 8.150 KM) in State of Bihar. During the year under consideration, the assessee had paid interest of Rs.67,19,486/- to NHAI on mobilization advances. The Assessing Officer/TDS Officer held that the assessee was liable to deduct tax at source u/s 194A of the Act and accordingly raised a demand of Rs.6,71,948/- u/s 201(1) of the Act. Consequential interest of Rs.5,64,437/- was also charged u/s 201(1A) of the Act, resulting in total demand of Rs.12,36,385/-. 3. Aggrieved by the assessment order, the assessee preferred an appeal before the ld. CIT(A)who relying on CBDT Circular No. 18/2017 dated 29.05.2017, upheld the action of the AO and dismissed the appeal. 4. Aggrieved by the impugned order, the assessee is in appeal before us and has raised the following grounds of appeal: "1. The Addl./Joint CIT(A) failed to appreciate that the appellant had not committed any default u/s 201(1)/201(1A), and hence, Addl./Joint CIT(A) erred in upholding the order of the AO holding the appellant as assessee-in-default for an amount of Rs.12,36,385/-." 5. We have heard the ld. AR and the ld. DR. The ld. AR at the very ou....
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....nsolidates all such Standing Orders/ Notifications issued by the Govt., and also refers to the abovementioned Notification No. 3489 dated 22.10.1970 @ pg. 28 of Assessee Paperbook (second-last entry @ Pg- 29). iv. NHAI is a corporation established under Section 3 of the National Highways Authority of India Act, 1988 (the "NHAI Act") which is a Central Act vic. an act of the Parliament (Bare Act @ pg. 46 of Assessee Paperbook). II. Even as per Section 196(10), no tax was required to be deducted at source as NHAI is "a corporation established by or under a Central Act" i. Sec. 196(iii) provides that a person is not required to deduct tax at source from payments made to a corporation established by or under a Central Act. ii. Since NHAI is a corporation established under section 3 of the NHAI Act as stated above, even sec. 196 exempted the Appellant from deducting tax on the payment to NHAI. 5. Therefore, the Appellant was not required by law to deduct tax at source on interest paid to NHAI. Judgements relied on by the Appellant 6. The ratio of the following judgements is squarely applicable to the present case: i....
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....nditionally exempt under Section 10. It ought to be read harmoniously with the statutory provisions and other Notifications; iv. If the interpretation of the Ld. DR is accepted, then it would render S.O./Notification No. 3489 dated 22.10.1970 completely otiose. Hence, such an interpretation must be avoided; v. The submission of the Ld. DR amounts to stating that a circular can override or restrict the unambiguous language of statutory provisions (sec. 196), which is contrary to the basic principles of interpretation." 8. The ld. DR, on the other hand, relying upon the orders of the lower authorities and CBDT Circular No.18/2017 dated 29.05.2017, submitted that NHAI was not eligible for exemption from TDS and, therefore, the assessee was liable to deduct tax u/s 194A and was rightly treated as an assessee-in-default u/s 201(1) of the Act. 9. We have considered the rival submissions and perused the material available on record. The undisputed fact is that the assessee has paid interest of Rs.67,19,486/- to NHAI on mobilization advances. The controversy before us is whether the said payment was liable for deduction of tax at source u/s 194A of the Act and conse....
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....he Board. 2. Examination of the eligibility of entities for exemption from TDS on the principle of unconditional exemption and no requirement to file return revealed that Circulars No. 4/2002 and 7/2015 are required to be updated to make the following changes: * Entities that meet both the above mentioned conditions but are not mentioned in the aforesaid Circulars need to be included in the list of exempted entities. * Entities that are mentioned in Circular No. 4/2002 but their exemption from income tax has since been withdrawn need to be removed from the list of exempted entities. * Entities that are mentioned in Circular No. 4/2002 but because of subsequent amendment they are now required to mandatorily file their returns of income u/s 139 need to be removed from the list of exempted entities. 3. In view of the above, a revised list of entities exempted from TDS has been drawn by adding entities in the first category listed above to the entities mentioned in Circular No. 4/2002 and Circular No. 7/2015 and removing entities in second and third categories from the list of existing entities eligible for exemption from TDS. 4. Ac....
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.... association established for promoting interests of members of Scheduled Castes or ScheduIed Tribes or backward classes referred to in clause (26B); (xv) Corporation established for promoting interests of members of a minority community referred to in clause (26BB); (xvi) Corporation established for welfare and economic upliftment of ex-servicemen referred to in clause (26BBB); (xvii) New Pension System Trust referred to in clause (44). 4. This circular supersedes earlier Circulars on this issue e.g. Circular No. 4/2002 dated 16.07.2002 and Circular No. 7/2015 dated 23.04.2015 with effect from the date of issue of this Circular. 5. Hindi version shall follow. (Sandeep Singh) Under Secretary to the Govt. of India Tele: 2309 4182 Email: [email protected] 12. The Hon'ble Allahabad High Court in CIT vs. Canara Bank (supra) had considered the applicability of Notification No.3489 dated 22.10.1970 in the context of a corporation established under a statutory enactment and held that the payment made to such corporation was outside the purview of the TDS obligation under section 194A. The said decision was subsequently affirm....
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....ory provisions do not impose; ii. Circular No. 18/ 2017 deals only with all "entities whose income is exempted under section 10". It cannot be interpreted to mean that unless an entity's income is unconditionally exempt under Section 10, then payments made to it have to be mandatorily subjected to TDS notwithstanding other statutory provisions and Notifications; iii. Circular No. 18/ 2017 only lays down an additional relaxation/ exemption from TDS provisions if the payee's income is unconditionally exempt under Section 10. It ought to be read harmoniously with the statutory provisions and other Notifications; iv. If the interpretation of the Ld. DR is accepted, then it would render S.O./Notification No. 3489 dated 22.10.1970 completely otiose. Hence, such an interpretation must be avoided; v. The submission of the Ld. DR amounts to stating that a circular can override or restrict the unambiguous language of statutory provisions (sec. 196), which is contrary to the basic principles of interpretation." 14. We have considered the above rival submissions. In the given facts and circumstances while relying upon the coordinate bench of Mumbai Tribun....
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....ill apply its income, or accumulate for application, wholly and exclusively to the objects for which it is established and in a case where more than fifteen per cent of its income is accumulated on or after Ist day of April, 2002, the period of the accumulation of the amount exceeding fifteen per cent of its income shall in no case exceed five years; (b) The assessee will not invest or deposit its funds (other than voluntary contributions received and maintained in the form of jewellery, furniture etc.) for any period during the previous years relevant to the assessment years mentioned above otherwise than in any one or more of the forms or modes specified in sub-section (5) of Section 1 1; (c) The assessee will not apply any income outside India. (d) This order will not apply in relation to any income being profits and gains of business unless the business is incidental to the attainment of . the objectives of the assessee and separate books of accounts are maintained in respect of such business; (e) The assessee will regularly file its return of income before the Income-tax authority in accordance with the provisions of the Income-tax Act, 1961; (f) That in the eve....