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TMI Blog2021 (9) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... . Consequently, the conclusion drawn by the ld. Commissioner, whereby deleted the addition made by the AO u/sec. 201(1) 201(1A) of the Act is liable to be affirmed. Whether APIIC is a financial corporation or not within the meaning of section 194A(3)(iii)(b)? - whether the ld. Commissioner was empowered to adjudicate the issue which was not the subject matter of the appeal and/or the original claim of the Assessee? - HELD THAT:- APIIC is also exempt from TDS provisions as APIIC is held by GoAP and is the State Government undertaking thereby covered as per section 194(3)(iii)(f) of the Act, however, this fact was not considered by the ld. Commissioner. In appeal before the Hon'ble Tribunal in the first round of litigation, the said fact was not brought to the knowledge of the Bench and therefore the same remained un-noticed, which resulted into remanding the issue to the file of the AO by the Hon'ble Tribunal to find out the applicability of section 194(3)(iii)(b) instead of section 194(3)(iii)(f) of the Act. Therefore, all sequences resulted into multi and prolonged litigations. However as the controversy has been settled by the Ld. Commissioner while considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to ₹ 17,83,45,620/- for the period from 01/04/2006 to 31/03/2011. 3. The Assessee in first round of litigation, challenged the said addition before the Ld. Commissioner and in response to the remand proceedings submitted specifically by way of written submissions dated 31/08/2012 that it is also brought to your notice that any interest payment to APIIC is also exempt from TDS provisions, as APIIC is held by GoAP as State Government undertaking, thereby covered as per section 194A(3)(iii)(f) of the Act. However the Ld. Commissioner without considering the said facts that APIIC is a State Government undertaking and thereby covered as per section 194(3)(iii)(f) of the Act, vide its order dated 02/09/2013 deleted the said additions on the other reasons by holding that no TDS with respect to interest payment of ₹ 11,55,83,000/- paid to APIIC is applicable as per the provisions of section 194A(3)(iii)(b) as any interest paid to any financial corporation established by or under a Central, State or Provincial Act is exempt from TDS. Accordingly, no TDS is leviable on the payment made to APIIC. The ld. Commissioner further held that since the income of the payee i.e. AP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a company incorporated for the purpose of the development of the infrastructure for industries in the state of Andhra Pradesh. Consequently, the AO made the addition of ₹ 25,93,12,825/- and ₹ 35,06,31,083/-. 7. The Assessee in 2nd round of litigation challenged the said order dated 14/12/2017 passed by the AO before the ld. Commissioner. The ld. Commissioner deleted the addition made by the AO u/sec. 201(1) 201(1A) of the Act by accepting the claim of the Assessee raised vide ground no. 7 specifically, to the effect that without prejudice, the AO failed to consider the submission of the appellant that the interest paid to APIIC in which all the shares are held by the Government of Andhra Pradesh is an entity covered u/s 194A(3)(iii)(f) is exempted from TDS vide Central Government notification No.SO 3489, dated 22/10/1970. For ready reference, the finding of the ld. Commissioner is reproduced herein below:- In view of the specific exemption granted to institutions as notified by the Government from the operation of the provisions of sec.194A(1) by virtue of the provisions of sec.194A(3)(iii)(f) and on a perusal of the Notification No. SO 3489 and Form 20B, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions, in order to avail the exemption from TDS, such institution should be notified by the Central Government in the Official Gazette after recording reasons whereas the Assessee company itself has admitted that there is no such notification for APIIC. 4. On the facts and circumstances of the case and in law, the ld. CIT(A) was erred in quashing the original order dated 31/03/2011 of the DCIT, TDS Circle-15(2), Hyderabad as the appeal was filed against the consequential order dated 14/12/2017. 5. Any other ground that may be urged at athe time of hearing. 9. Having heard the parties and perused the material available on record. Ground Nos. 1 5 are general in nature, hence, do not require any adjudication specifically. As the ground No.3 goes to the root of the case, therefore before proceeding to ground Nos. 2 4, we deem it appropriate to adjudicate ground No.3 first, which is reproduced herein again:- 3. The ld. CIT(A) has erred in granting relief holding that M/s. APIIC is an exempted entity u/sec. 194A(3)(iii)(f) of the Act ignoring the fact that as per the said provisions, in order to avail the exemption from TDS, such institution should be notifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: [Provided that no notification under this sub-clause shall be issued on or after the 1st day of April, 2020;] (iv) . .. 9.2 The contents of section 194A(3)(iii)(b) reflects that any financial corporation established by or under a Central, State or Provincial Act, is not liable for deduction of tax u/sec. 194A(1) of the Act. Further section 194A(3)(iii)(f) also exempted 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. We may observe that the provision of such 194A(3)(iii)(f) having vide spectrum and covering the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find out whether APIIC is a financial corporation or not within the meaning of section 194A(3)(iii)(b) of the Act. No doubt the coordinate Bench remitted the issue to the file of the AO for determination as to whether the APIIC is a financial corporation or not within the meaning of section 194A(3)(iii)(b) of the Act and the AO while following the directions of the Hon'ble Tribunal determined the status of APIIC as non-financial corporation and consequently made the additions u/sec. 201(1) 201(1A) of the Act which were challenged before the ld. Commissioner. 10.1 The Ld. Commissioner while adjudicating specific ground 7 by which the Assessee has raised the issue that APIIC is an entity covered under the provisions of section 194A(3)(iii)(f) of the Act and therefore exempted from TDS as per Notification No. SO 3489, dated 22/10/1970 issued by Central Government, accepted the claim of the Assessee and consequently deleted the addition made by the AO. 10.2 The question emerge as to whether the ld. Commissioner was empowered to adjudicate the issue which was not the subject matter of the appeal and/or the original claim of the Assessee. 10.3 The Hon ble Apex Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f law as happened in this case. Further the legal as well as factual additional/new ground(s) and fresh claim can be raised at any time before the appellate authorities and the appellate authorities are empowered to decide the additional/new ground(s) and fresh claim, raised by the parties during the course of appellate proceedings for the just and proper decision of a case. 10.9 While coming to the instant case, as it is undisputed fact that the Assessee in the first round of litigation before the ld. Commissioner vide its written submissions dated 31/08/2012 in response to the remand report proceedings in ITA No.0394/CIT(A)-II, Hyd/2011-12 dated 02/09/2013 clearly submitted that APIIC is also exempt from TDS provisions as APIIC is held by GoAP and is the State Government undertaking thereby covered as per section 194(3)(iii)(f) of the Act, however, this fact was not considered by the ld. Commissioner. In appeal before the Hon'ble Tribunal in the first round of litigation, the said fact was not brought to the knowledge of the Bench and therefore the same remained un-noticed, which resulted into remanding the issue to the file of the AO by the Hon'ble Tribunal to find ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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