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TMI Blog2012 (4) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue are directed against the consolidated order of the CIT(A), Jammu, dated 22.02.2011 relating to assessment years 2006-07 to 2010-11 respectively. As the issues involved in all these appeals are identical, these were heard together and are being disposed of by this common order for the sake of convenience. 2. The grounds of appeals raised by the Revenue are common in all the appeals except variation in amounts. However, the common grounds raised in ITA No.206(Asr)/2011 are as under: "1. That the Ld. CIT(A) has erred in holding that the assessee was not liable to deduct any tax at source on interest accrued on FDRs held by the Jammu Development Authority relying on the Notification No.3489 dated 22.10.1970. 2. That the Ld. CIT(A) has erred in ignoring the fact that the Jammu Development Authority is not a Corporation but a Local Authority and is also filing its return of income in the status of Local Authority. 3. That the ld. CIT(A) has erred in ignoring the fact that in view of the amendment made in section 10(20) w.e.f. 01.04.2003 the benefits conferred by clause (20A) no such authority was taken away. 4. That the appellant craves the leave to add, amend, modify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2. The AO also discussed the amendment made as to the addition of an explanation to section 10(20) of the I.T.Act to demonstrate that w.e.f. 01.04.2003 the income of local authorities was taxable. He further observed that the Jammu Development Authority was wrong in writing to Branches of the Bank that no TDS was to be deducted. The AO further stated that the Jammu Development Authority could not do so without the authorization from the Income Tax Department. Accordingly, he created a demand of ₹ 4,71,580/- u/s 201 and 201(1A) of the I.T.Act. 4. On appeal, the learned CIT(A) deleted the addition made by the AO by holding as under: "I have carefully considered the facts of the case, the assessment order and the written submission. In my considered opinion the assessee deserves to succeed. The exceptions provided in section 194A(3) (iii)(f) of I.T. Act and as per notification u/s Jammu Development corporation is a creation of J & K Development Act and satisfied the condition at S.No.39 of such notification. The Chapter II, clause 1(2) of the J & K Development Act reads that "The authority shall be a body corporate by the name of the local Area having perpetual succession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or state Acts, irrespective of the year of their coming into being. The discussion as to the local authorities coming into the tax net w.e.f.01.04.03 is also not relevant as the sole issue have is whether TDS was deductible or not on the interest accrued to M/s. JDA. In view of the above, I hold that no tax was deductible on accrued interest on FDRs of JDA with M/s. The J & K Bank Ltd. The demand created u/s 201(1A) is deleted and the assessee is not be treated in default." The Ld. CIT(A) while allowing the appeal has committed two fundamental errors of law i.e. a) He has failed to appreciate that as per notification issued in pursuance of sub-clause (f) of clause (iii) of sub-section (3) of section 194A of the Act, the exemption has been provided to "Any Corporation established by a Central, State or Provincial Act" at entry No.39 of the said notification. The Jammu Development Authority is not a corporation established by the State Act. It has been established under the Jammu & Kashmir Development Act, 1970. There is great difference between a corporation established under the Central or State Act and a corporation under a Central or State Act. The critical difference has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the creditors unless they give personal guarantees. (3) Continuity of existence as its ownership can be transferred through a sale or gift of shares. Thus, the difference between a corporation and a body corporate is too obvious. It is clear that the ld. CIT(A) could not appreciate this subtle difference and was grossly misled in holding that the Jammu Development Authority is a corporation established by the State Act and thus wrongly allowed the assessee's appeal. Without prejudice to the above, it may further be mentioned that the Jammu Development Authority has been claiming itself to be a local authority in its returns of income an as such the ld. CIT(A) erred in accepting the claim of the assessee that it is a corporation. Further, even a local authority has been taken away from the purview of exemption provided u/s 10(2) of the Act w.e.f. 1.4.2003. In view of the above submissions, it is prayed that the order of the AO may kindly be restored and that the ld. CIT(A) be vacated." 5.1. The Ld. DR also drew our attention towards Notification attached by the assessee at pages 16 & 17 of the paper book, especially entry at Sl. No.39 (Any corporation established by a Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... especially the order passed by the ld. first appellate authority alongwith written submissions filed by the ld. DR as well as the paper book filed by the ld. counsel for the assessee. We have also gone through the order of the ITAT, Delhi Bench, in the case of Chief/Senior Manager, Oriental Bank of Commerce vs. ITO (TDS & Survey), Ghaziabad, ITA No.2228/Del/2011 for the assessment year 2005-06, dated 15.7.2011 and find that exactly similar issue, which is in dispute, before us, has already been adjudicated and decided in favour of the assessee, by the said decision of the ITAT, Delhi Bench 'I'. For the sake of convenience, the order passed by the ITAT, Delhi Bench 'I' (supra) is reproduced as under: "ITA No.2228/Del/2011 for the A.Y. 2005-06, dated 15.7.2011 Chief/Senior Manager, Oriental Bank of Commerce, Ghaziabad vs. ITO (TDS & Survey) Ghaziabad. This appeal filed by the assessee arises out of the order of the CIT(Appeals) Ghaziabad dated 01.02.2011 for the assessment year 2005-06. The grounds of appeal taken by the assessee read as under: "1. That the ld. Lower Authorities erred in charging the interest u/s 201/201(1A) of the I.T Act, 1961 of ₹ 11,748/- as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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