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Income Tax Appellate Tribunal - Delhi

State Bank Of India, Noida vs Addl. Cit (Tds), Ghaziabad on 11 April, 2018

         IN THE INCOME TAX APPELLATE TRIBUNAL
               DELHI BENCH 'G', NEW DELHI
        Before Sh. N. K. Saini, AM and Sh. K. N. Chary, JM
            ITA No. 4524/Del/2016 : Asstt. Year : 2012-13
State Bank of India,              Vs Addl. CIT(TDS),
Sector-2,                            Ghaziabad
Noida-201301
(APPELLANT)                            (RESPONDENT)
PAN/GIR No. AAACS8577K
                 Assessee by : Sh. Saurabh S. Kumar, CA
                 Revenue by : Sh. S. S. Rana, CIT DR
Date of Hearing : 02.04.2018        Date of Pronouncement : 11.04.2018

                                  ORDER
Per N. K. Saini, AM:

This is an appeal by the assessee against the order dated 29.07.2016 of the ld. CIT(A)-I, Noida.

2. The only grievance of the assessee in this appeal relates to the confirmation of addition of Rs.23,30,00,000/- made by the AO on account of tax not deducted at source on the interest of FDRs to M/s New Okhla Industrial Develop ment Authority (NOIDA).

3. Facts of the case in brief are that a TDS survey was conducted at the office of Greater Noida Authority for verifying proper ta x deduction and deposition to the Central Government. It was gathered that the banks were not deducting tax in respect of the payment on FDRs to the New Okhla Industrial Development Authority (NOIDA), Greater Noida for the financial year 2011-12. Therefore, a show cause notice for non-deduction of tax at source 2 ITA No. 4524/Del/2016 State Bank of India was issued to the assessee with the presumption that it was not deducting tax against the payment of interest under the false impression of treating the New Okhla Industrial Develop ment Authority (NOIDA) as a local authority or exe mpted entity unde r the inco me tax. In response, the assessee stated that New Okhla Industrial Develop ment Authority (NOIDA) was having 20 FDRs o f Rs.100 crore each (total Rs.2000 Crore) issued on 06.03.2012 o n which TDS of Rs.15,67,140/- was remitted on interest accrued for 2011-12. However, the AO was not satisfied from the reply of the assessee and held the assessee in default u/s 201(1) and 201(1A) o f interest of the Inco me Tax Act, 1961 (hereinafter referred to as the Act) for a sum of Rs.23,30,00,000/-.

4. Being aggrieved the assessee carried the matter to the ld. CIT(A) who confirmed the view taken by the AO by following his earlier order.

5. Now the assessee is in appeal. The ld. Counsel for the assessee at the very outset stated that this issue is covered in favour of the assessee vide order dated 07.08.2015 in ITA No. 1359/Del/2014 for the assessment year 2006-07 in the case of Addl. CIT(TDS), Ghaziabad Vs Canara Bank, Sector-6, Noida wherein the facts were identical. It was also stated that the Hon'ble Jurisdictional High Court vide order dated 04.04.2016 in ITA No. 64 of 2016 held that the NOIDA had been constituted by State Act and therefore, entitled to exemption of payment of tax at source u/s 194A(1) of the Act.

State Bank of India

6. In his rival sub missions, the ld. CIT DR supported the orders of the authorities below.

7. We have considered the sub missions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that an identical issue has already bee n adjudicated by the ITAT Delhi Bench 'F', New Delhi in ITA No. 1359/Del/2014 for the assess ment year 2006-07 in the case of Addl. CIT(TDS), Ghaziabad Vs Canara Bank, Sector-6, Noida wherein vide order dated 07.08.2015, it has been held as under:

"11. Adverting to the facts of the instant case, we find that the assessee is a statutory corporation established by means of the UP Industrial Area Development Act, 1976. It has been noticed above from the preamble of this Act that it has been made for development of certain areas in the State into industrial and urban township. Instead of enacting area-wise Industrial Area Development Acts, the UP Government enacted a common UP Industrial Area Development Act, 1976 to cover Authorities under different areas with its distinct name. But, for the creation of various area-wise authorities such as NOIDA and Ghaziabad Authorities, there is no other purpose of the UP Industrial Area Development Act, 1976. In other words, we can also say that this Act is nothing but a culmination of several area-wise Industrial Area Development Acts. Since NOIDA has been notified under the UP Industrial Area Development Act, we are of the considered opinion that the expression 'any corporation established by a State Act' shall include NOIDA (New Okhla Industrial Development Authority) in the given circumstances.

12. We find that identical issue involving payment of interest by some banks to Ghaziabad Development Authority without tax withholding came up for consideration before the Delhi Bench of the Tribunal in 4 ITA No. 4524/Del/2016 State Bank of India the case of Chief/Senior Manager, Oriental Bank of Commerce vs. ITO. Vide its order dated 15.7.2011 in ITA No.2228/Del/2011, the Tribunal has held that the payment of interest by Oriental Bank of Commerce to Ghaziabad Development Authority is covered within the provisions of section 194A(3)(iii)(f) and, hence, there is no obligation for deduction of tax at source. Consequently, the order passed u/s 201(1) was set aside. Similar view has been taken by the Amritsar Bench of the Tribunal in the case of ITO (TDS) vs. Branch Manager Jammu & Kashmir Bank Ltd. Vide its order dated 24.4.2012 in ITA No.206 to 210/Asr/2011, the Tribunal has held that payment of interest by the bank to Jammu Development Authority (Jammu) is exempt u/s 194A(3)(iii)(f) and, hence, there can be no liability u/s 201(1) and 201(1A) on the bank and resultantly, the bank cannot be treated as an assessee in default u/s 201(1) and 201(1A). Likewise view has been taken by the Amritsar Bench of the Tribunal in ITO vs. the Branch Manager, Jammu, Jammu & Kashmir Bank Ltd., by its order dated 2.7.2012, a copy of which has also been placed on record. All these precedents support the proposition that the payment of interest by banks to the State Industrial Development Authorities does not require any deduction of tax at source in terms of section 194A(3)(iii)(f) and, hence, the failure to deduct tax at source on such interest cannot lead to the banks being treated as assessee in default. No material has been placed on record to demonstrate that all/any of the above orders have either been reversed or modified in any manner by the Hon'ble High Courts. Further, the ld. DR failed to point out any contrary decision. In vie w of the legal position discussed supra and these precedents, we are of the considered opinion that the ld. CIT(A) was justified in reversing the order passed by the Addl. CIT (TDS), Ghaziabad declaring the assessee liable u/s 201(1) and 201(1A) of the Act. We, therefore, uphold the impugned order."

State Bank of India

8. So, respectfully following the aforesaid referred to order of the Co-ordinate Bench of the Tribunal, the issue is decided in favour of the assessee.

9. In the result, the appeal of the assessee is allowed. (Order Pronounced in the Court on 11/04/2018) Sd/- Sd/-

  (K. N. Chary)                                         (N. K. Saini)
JUDICIAL MEMBER                                    ACCOUNTANT MEMBER
Dated: 11/04/2018
*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5.DR: ITAT
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