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TMI Blog2023 (7) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... tituted under the provisions of Uttar Pradesh Urban Planning and Development Act, 1973 and NOIDA established under Uttar Pradesh Industrial Area Development Act, 1976. Both the aforesaid Authorities too have been constituted under the similar Development Acts legislated by the State of Uttar Pradesh. We hold that ITAT committed no error of law in confirming the order of CIT(A) deleting the non-deduction of TDS on account of interest on fixed deposits paid to the Jammu Development Authority even when JDA is a taxable entity. We further hold that the assessee was under no obligation to deduct TDS on interest payments made to the JDA on its fixed deposits in terms of Section 194A - JDA being a corporation established by the State Act. i.e the Development Act 1970 was, thus, outside the purview of sub-section (1) of Section 194A. - ITA No. 6/2017 c/w ITA No. 4/2017 - - - Dated:- 13-7-2023 - HON BLE MR. JUSTICE SANJEEV KUMAR, AND HON BLE MR. JUSTICE JAVED IQBAL WANI, For the Appellant Through :- Ms Aruna Thakur Advocate with Ms. Pariksha Parmar Advocate For the Respondent(s) Through :- Mr. Subash C. Dutta Advocate JUDGEMENT SANJEEV KUMAR, J. 1. Thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot been disputed that Jammu Development Authority stands incorporated by the J K Development Act, 1970. CBDT Notification No. 3489 dated 27.10.1970 issued in pursuance of the provisions of Section 194A(3)(f) of the Act, provides that no tax was required to be deducted on interest on deposit paid to a Corporation incorporated under a State Act. The position is not any different so far as regards JDA incorporated under the State Act, too. Therefore, the provisions of section 194A of the Act are not applicable due to which the provisions of Section 40(a)(ia) are also not attracted. 4. This is how the plea of the bank came to be finally accepted by the ITAT while deciding the appeals vide its order dated 28.02.2017. It is this order of the ITAT which is subject matter of challenge in these appeals. 5. The appeals have been preferred on multiple grounds, but this Court, after hearing both the sides, has found only one substantial question of law involved for adjudication in these appeals which we have already reproduced hereinabove. 6. Having heard learned counsel for the parties and perused the material on record, it is necessary to first set out Section 194A of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in Section 51 of that Act) ; or (b) time deposits with a co-operative society engaged in carrying on the business of banking ; (c) deposits with a public company which is formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes and which is for the time being approved by the Central Government for the purpose of Clause (viii) of Sub-section (1) of section 36. Provided further that the amount referred to in the first proviso shall be computed with reference to income credited or paid by the banking company or the cooperative society or the public company as the case may be, where such banking company or the cooperative society or the public company has adopted core banking solutions Provided also that in case of payee being a senior citizen, the provisions of sub clauses (a),(b) and (c) shall have effect as if for the words forty thousand rupees, the words fifty thousand rupees had been substituted. Explanation - For the purposes of this clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), or the Interest-tax Act, 1974 (45 of 1974). Explanation .--For the purposes of Clauses (i), (vii) and (viia), 'time deposits' means deposits (excluding recurring deposits) repayable on the expiry of fixed periods. (4) The person responsible for making the payment referred to in subsection (1) may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year . 7. From a plain reading of sub-section (1) of Section 194A of the Act, it clearly transpires that any person except when he is an individual or Hindu undivided family who is responsible for paying to a resident any income by way of interest, other than the income by way of interest on securities is under an obligation to deduct income tax at source at the time of credit of such income to the account of payee. The provisions of sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to whether the JDA is a corporation established by or under the State Act, but we would refrain from doing so, for the simple reason that the issue raised before us is no longer res integra. Hon ble Supreme Court of India has dealt with the similar issue in the case of Commissioner of Income Tax (TDS), Kanpur vs. Canara Bank, (2018) 9 SCC 322. 11. In the aforesaid case, the Apex Court was dealing with New Okhla Industrial Development Authority [ NOIDA ], constituted by a Notification dated 17.04.1976 issued under Section 3 of the Uttar Pradesh Industrial Area Development Act, 1976. The Canara Bank was the banker of the Authority. The Bank made a payment of Rupees Twenty cores ten lacs as interest to NOIDA on fixed deposits for the financial year 2005-06. The Canara Bank, however, did not deduct TDS in terms of Section 194A of the Act. The notices were issued by the Assessing Authority to Canara Bank to show cause for not deducting the TDS. The ITAT held that the payment of interest by the bank to the NOIDA did not require any TDS in terms of section 194A(3)(iii)(f). The order of the ITAT was not accepted by the revenue and the same was taken in an appeal before the Divis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the case in hand, we find that the JDA is also a statutory authority constituted under Section 3 of the Development Act 1970 which, for facility of reference, is reproduced hereunder 3. Declaration of local area and constitution of Development Authority (i) As soon as may be after the commencement of this act, the Govt. may, by notification in the Government Gazette, declare any area to be local area for purposes of this Act and constitute therefore an authority to be called the Development Authority (herein-after referred to as the Authority). (ii) The Authority shall be a body corporate by the name of the Local Area having perpetual succession and a common seal with power to acquire, hold and dispose of property, both movable and immovable, and to contract and shall in the said name sue and be used. 13. From a perusal of Section 3, it clearly transpires that it confers upon the Government power to constitute a Development Authority for an area to be declared by it, to be a local area for the purposes of this Act and this the Government would do by issuing a Notification in the Government Gazette. The Authority so constituted by the Government shall be a b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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