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TMI Blog2016 (8) TMI 1548X X X X Extracts X X X X X X X X Extracts X X X X ..... the AY has made the following payments under various heads without deducting tax at source: S. NO. Nature of payment Amount Of payment Rate of Tax Tax ought to have been deducted u/s 201(1) Interest Chargeable u/s 201(1A) from 01/04/2006 to 31/03/2011. a Interest payments which at tract the provisions of sect ion 194A of the Act vide item no. (ii)(e) of annexure to the audit report 1155.83 lakhs 22.44% 25,93,12,825 15,55,87,680 b Lease rental payments which attract the provisions of sect ion 194I of the Act 54.4 Lakhs 22.44% 12,20,736 7,32,420 c Lease rental payments by virtue of issuing shares to APIIC which attract the provisions of sect ion 194I of the Act 15.50 Crores 22.44% 3,47,82,000 2,08,69,200 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on payment to APIIC. 5.1 As regards Lease Premium & Rental Payments of Rs. 16.04 crores (15.50 crores of premium + 54.40 lakhs of rent) was paid to APIIC, before the CIT(A), the assessee made the following submissions: (a) That with the motive of giving boost to industrial development in Vizag region, the government of A.P. had created Special Purpose Vehicle to provide water supply to the industries in Visakhapatnam region. In this process, the Government of A.P., had to provide 1000 plus acres of land to the appellant. This land was to be acquired from farmers, industries etc. etc. Lot of roads, fields, houses were to be removed and peaceful possession was to be handed over to the appellant. Since all this work was tedious, Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d status of local authority to APIIC, hence, any payment made to such local authority are not liable to TDS. (g) The Hon'ble ITAT in ITA No. 1471/Hyd/2010 for A.Y. 2007-08 dated 22.11.2011 held that APIIC is entitled for exemption u/s. 11 of the I.T. Act, 1961, therefore, the income of payee is exempt under Income-tax Act and therefore, there is no need to deduct TDS. 5.2 After considering the submissions of the assessee, the CIT(A) observed that the lease hold land allotted by the Government to the appellant was shown under fixed assets. Further, the appellant had allotted 155,00,000 shares, each at Rs. 10/ towards site lease premium. Accordingly, these amounts spent for acquiring capital asset are not liable to TDS. Moreover, since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 201(lA) are applicable on the late payment, if any. 6. Aggrieved by the order of the CIT(A), the revenue is in appeal before us raising the following grounds of appeal: "(1) The learned CIT(A) has erred in holding that there is no need to deduct TDS on payments made to an exempt entity like M/s. APIIC, in whose respect eligibility for exemption u/s. 11 has been held by the Hon'ble ITAT. (2) The learned C1T(A) failed to appreciate that the eligibility for exemption u/s. 11 is to be decided by the AD from year to year. (3) The learned CIT(A) failed to appreciate that M/s. APIIC is a corporation established by the State Government of Andhra Pradesh and not by the Central Government so as to enjoy the exemption available u/s. 196(iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the revenue are correct. In the present case, the CIT(A) has made the passing comment that APIIC is a exempt entity, but, the CIT(A) has allowed the ground of assessee treating the transaction as capital in nature. CIT(A) has not adjudicated this ground mainly on exemption of entity. Hence, the ground raised by the revenue is dismissed. 9.2 With regard to ground No. 3, APIIC is a corporation established by state govt. of AP and not by Central Govt., to enjoy exemption u/s 196(iii). There is no dispute that APIIC established under State Act. In the present case, CIT(A) has allowed the exemption by treating the APIIC as a concern u/s 194A(iii)(b) of the Act. On careful observation, the concern which is exempt u/s 194A(iii)(b) should be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as Agent by the Government of Andhra Pradesh vide its G.O.No.131dated 26-05- 1997 and, therefore, the payments were made to the APIlC and the APIlC was receiving the amount as Agent of Government of Andhra Pradesh. 3. The learned Commissioner of Income-Tax (Appeals) ought to have seen that APIlC is not the beneficiary of the amount paid by the Appellant herein and the beneficiary is the Government of Andhra Pradesh and, therefore, to have held that no tax need be deduction at source either from the payment of interest or the payment of lease rentals or the premium towards the land lease." 12. Since the grounds raised by the revenue are dismissed, the cross objections raised by assessee become infructuous, therefore, the same are dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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