Brief of the case:
The Hon’ble Himachal Pradesh High Court in the case of CIT vs. State Bank of Patiala held that the exemption notification issued by Central Govt. allowing non-deduction of TDS in case of certain deductees has an automatic effect as soon as the same is issued and there is no such requirement in the act to obliging deductor to specifically apply for availing the benefit under that notification.
Facts of the case:
- The assessee banking company paid interest to M/s Biotech Biobusiness and HP SITEG, wholly financed and controlled establishment of the Government on deposits made with the assessee (bank).Assessee did not deduct tax u/s 194A on interest payment made to such government establishment.
- Revenue initiated proceedings u/s 201(1)/201(1A) by issue of show cause notice and subsequently ITO(TDS) passed order confirming the demand and penalties.
- The actions of revenue was challenged before CIT(A) who reversed the findings of revenue and the order of CIT(A) was confirmed by ITAT also.
Contention of Assessee:
- The assessee contended that the societies wholly financed by the government institution notified by the Central Govt. u/s 194A(3)(f) are exempt from the applicability of Sec 194A.
- Therefore , the interest paid to them is not subject to TDS u/s 194A.
Contention of Revenue:
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