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TMI Blog2015 (9) TMI 1674X X X X Extracts X X X X X X X X Extracts X X X X ..... excluded from its ambit. Especially so since funds of the Board was nothing but only cess collected by contractors under a statutory edict. Apart from the above, what we find is that the Board has been established through a notification issued, under section 18 of Building and other Construction Workers (Regulation and Employment and Conditions of Service) Act, 1996. This Section has been reproduced by us above at para ten above. Clause (2) thereof states that the Board shall be a body corporate. To understand what is a body corporate, when a ready definition is not available in the relevant statutes, the best place to look is the Companies Act, 1956. A body corporate is considered equivalent to a corporation. The board can thus very well be construed as a corporation. It has been constituted to exercise the powers conferred on a State under the Building and other Construction Workers (Regulation and Employment and Conditions of Service) Act, 1996. Thus in our opinion the methodology in which and the purpose for which the board has been created, when seen along with the wording of SO No.3469, dt.22.10.1970, would show that it could claim itself to be falling within subclause (f) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,607/- and during the financial year 2012-13 it paid interest of ₹ 1,27,20,953/- to the said Board, on deposits placed with them. Similar interest payment made by Nandagudi Branch to the Board came to ₹ 18,04,714/- for F. Y. 2011-12 and ₹ 40,10,612/- for F. Y. 2012-13. These branches of the assessee bank had not deducted tax at source on such interest payment. 03. ITO (TDS), was of the opinion that assessee should have deducted tax at source as stipulated under Section 194A of the Act, on the interest paid by it to the Board, and as such there was a default which attracted the provisions of Section 201(1) of the Act. Notice was issued to the concerned branch managers. Submission of the assessee's branches was that the said Board which had placed deposits with them had given declaration in form 15G, as mandated under that sub-section (1A) of Section.197A of the Act. As per the respective branch managers, they had not deducted tax at source since they believed that the Board was exempt from TDS provisions. It was also stated by the branch managers that the Board had filed copies of the registration obtained by them u/s.12A of the Act. However, the ITO (TDS) was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly corporations established by central / state enactments. Though assessee Board was established under a State Act, it was not constituted by such Act. As per the CIT (A) assessee was only a procedural mechanism for implementing the activities, mentioned in notification dt.22.10.1970 (supra). For this, he placed reliance on judgment of Hon'ble Apex Court in the case of Dalco Engineering P. Ltd v. Shree Satish Prabhakar Padhy & Ors in Civil Appeal No.1886 of 2007, dt.31.03.2010. Reliance was also placed on judgment of Hon'ble Kerala High Court in the case of Kerala Toddy Workers Welfare Fund Board v. CIT in OP Nos.2131,2920, 5105, 5167, 5571 of 2003 & WP (C) No.13410 of 2008, dt.13.06.2008, wherein it was held that only a limited meaning could be given to the term 'Government corporation' established by Central / State or Provincial legislation and it would not include trusts or board of trustees constituted under any welfare legislations. CIT (A) also observed that if assessee wanted to pay interest without deducting tax at source, it should have obtained the certificate specified in Section 197(1) of the Act from the Board. He thus upheld the order of ITO (TDS). 06. Now before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed u/s.197(1) of the Act, from the Board. Board should have obtained such certificate from the AO and furnished it to the assessee. As per the Ld. DR assessee could not by itself decide that Section 194A did not apply to the interest payments effected by it when such payments did not fall within any of the clauses of sub-Section (3) of the said section. 09. We have perused the orders and heard the rival contentions. Section 194A (1) is reproduced hereunder : (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force. Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsection (1) of section 36,the aforesaid amount shall be computed with reference to the income credited or paid by a branch of the banking company or the co-operative society or the public company, as the case may be ; (iii) to such income credited or paid to-- (a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or (b) any financial corporation established by or under a Central, State or Provincial Act, or (c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or (d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or (e) any company or co-operative society carrying on the business of insurance, or (f) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette ; (iv) to such income credited or paid by a firm to a partner of the firm ; (v) to suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Reliance has also been placed on notification SO 3489 [No.170 F. No.12/164/68 - ITCC/ITJ, dt.22.10.1970]. Said GO is also reproduced hereunder : "In pursuance of sub-clause (f) of clause (iii) of sub-section 194A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notify the following for the purposes of the said sub-class. i. Any corporation established by a Central, State or Provincial Act. ii. Any company in which all the shares are held (whether singly or taken together) by the Government or the Resen'e Bank of India or a Corporation owned by that Bank. iii. Any undertaking or body, including a society registered under the Societies Registration Act, 1860 (21 of 1860), financed wholly by the Government. " 10. As per the assessee it is a corporation established by a Central, State or Provincial Act. At this juncture it is required to have a look as to how the assessee has been constituted. Admittedly assessee is a Board which came into existence through notification No. KAE 241 LET 2006, dt.18.01.2007, which notification was issued in adherence to Section 18 of Building and Other Construction Workers' (Regulation and Employment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he common genus that runs through all the three clauses is that ownership is vested with the Government either by way of holding the shares or by way of financing. If a company whose shares are held by the government is considered as one falling within sub-clause (f) of clause (iii) of section 194A of the Act, there is no reason why a welfare board constituted in accordance with the Central enactment should be excluded from its ambit. Especially so since funds of the Board was nothing but only cess collected by contractors under a statutory edict. 12. Apart from the above, what we find is that the Board has been established through a notification issued, under section 18 of Building and other Construction Workers' (Regulation and Employment and Conditions of Service) Act, 1996. This Section has been reproduced by us above at para ten above. Clause (2) thereof states that the Board shall be a body corporate. To understand what is a body corporate, when a ready definition is not available in the relevant statutes, the best place to look is the Companies Act, 1956. Definition of a body corporate as given in Section 2(11) of the Act, is reproduced hereunder : (II) "'body ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition, establishment meant a corporation established by or under a central, state or provincial Act or an authority or a body owned or controlled or aided by the government of a local authority or a government company, as defined in Section 617 of the Companies Act, 1956 and included departments of a government. Contention of the respondent was that his employer was incorporated under Companies Act, 1956 and therefore, was a corporation falling with the definition of section 2(k). Question before the Hon'ble Apex Court was therefore whether a company incorporated under the Companies Act could be construed as a corporation falling within Section 47 of the Disability Act. It was in such circumstances the Hon'ble Apex Court distinguished between a corporation established by a Central Act and a corporation established under a Central Act. A company incorporated under the companies Act can never be equated with a board constituted by a notification mandated by a central enactment. In the case of Kerala Toddy Workers Welfare Fund (supra), before Hon'ble Kerala High Court, the board of trustees constituted was only to administrate the funds in terms of the statute under which the board w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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