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TMI Blog2020 (1) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... . 201(1A) of the Act. We accordingly cancel the orders passed u/s. 201(1) 201(1A) of the Act and allow the appeal of the assessee. - ITA No.1642/Bang/2019 - - - Dated:- 30-12-2019 - Shri N.V. Vasudevan, Vice President And Shri D.S. Sunder Singh, Accountant Member For the Appellant : Shri H. Muralidhara, Advocate For the Respondent : Smt. R. Premi, Jt. CIT(DR)(ITAT) Bengaluru. ORDER PER N.V. VASUDEVAN, VICE PRESIDENT This appeal by the Assessee is against the order dated 6.9.2018 of the CIT(Appeals)-13, Bangalore relating to assessment year 2013-14. 2. There is a delay of about 239 days in filing the appeal by the assessee. The reasons for condonation of delay has been set out in an affidavit filed before the Tribunal by the Manager of Cox Town Branch of State Bank of India (SBI) [formerly of State Bank of Travancore (SBT)], the appellant in this appeal. It has been mentioned that the impugned appellate order was served on the assessee on 29.9.2018 and the appeal before the Tribunal was to be filed on or before 19.11.2018. Due to change in the office premises of this bran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u 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 financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section. Explanation - For the purposes of this section, where any income by way of interest as aforesaid is credited to any account, whether called Interest payable account or Suspense account or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. A reading of the above section would clearly show that every person who is paying to a resident, income in the nature of interest has to deduct Income-tax thereon at prescribed rates. Rigors of the said section are relaxed for certain type of interest payments mentioned in sub-section (3), which is reproduced hereunder : (3) The provisions of sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 such income credited or paid by a co-operative society to a member thereof or to any other co-operative society ; (vi) to such income credited or paid in respect of deposits under any scheme framed by the Central Government and notified by it in this behalf in the Official Gazette ; (vii) to such income credited or paid in respect of deposits (other than time deposits made on or after the 1st day of July, 1995) with a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act) ; (viia) to such income credited or paid in respect of,-- (a) deposits with a primary agricu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of Service) Act, 1996. The said section is reproduced here under : 18.Constitution of State Welfare Boards:- (1) Every State Government shall, with effect from such date as it may, by notification, appoint, constitute a Board to be known as the. . .(name of the State) Building and Other Construction Worker's Welfare Board to exercise the powers conferred on, and perform the function assigned to, it under this Act. (2) The Board shall be a body corporate by the name aforesaid, having perpetual succession and a common seal and shall, by the said name, sue and be sued. (3) The Board shall consist of a chairperson, a person to be nominated by the Central Government and such number of other members, not exceeding fifteen, as may be appointed to it by the State Government: Provided that the Board shall include an equal number of members representing the State Government, the employers and the building workers and that least one member of the Board shall be a woman. (4) The term and conditions of appointment and the salaries and other allowances payable to the chairperson and the other membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given in Section (11) of the Act, is reproduced hereunder : 13. Above definition has been extracted by us only to show that 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 sub-clause (f) of clause (iii) to sub-section (3) of Section 194A of the Act. Assessee had a bonafide reason to believe that interest payment on deposits placed by the Board did not warrant deduction of tax at source. 14. We are alive to the fact that CIT (A) had relied on the judgment of Hon ble Supreme Court in Dalco Engineering P. Ltd (supra) and Hon ble Kerala High Court in Kerala Toddy Workers Welfare Fund (supra) for considering the assessee to be a board not established by a Central Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stions raised before it. It is neither desirable nor permissible to pick out a word or sentence divorced from the context of the question raised and treat it as a complete law. 15. Thus in our opinion, assessee was justified in considering the Board to be an institution, association or body falling within sub-clause (f) of clause (iii) of sub-section (3) of Section 194A of the Act. It had every reason to hold a bonafide belief that it was not liable to deduct tax at source on the interest payments effected by it to the Board. Especially so since Board gave all details to the assessee as to how it was constituted and also explained why the interest paid to it was exempt. In the facts and circumstances of the case, we are therefore of the opinion that assessee could not be deemed to be one in default for not deducting tax at source on interest paid to the board. Accordingly we set aside the orders of the Ld. CIT (A) and that of ITO (TDS) treating the assessee as one in default u/s.201(1) and levying interest u/s.201(1A) of the Act. 7. Since this Tribunal has already taken a view that the person to whom interest was paid was falling within ..... X X X X Extracts X X X X X X X X Extracts X X X X
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