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03-12-2018, Canara Bank, Section 201(1), 194A, 154, HIGH COURT OF ALLAHABAD
1. Heard Sri Abhinav Mehrotra, learned counsel for the petitionerBank; Sri Manish Goyal, Sri Gaurav Mahajan, Sri Praveen Kumar, Sri Krishna Agarwal & Sri Shubham Agarwal, earned counsel for the respondent-revenue.
2. The present and the connected ma ters have been filed by the different Banks against similar orders passed by the Commissioner of Income Tax (Appeals)-1, NOIDA under Section 154/250 of the Income Tax Act, 1961 (hereinafter referred to as the Act), dated 30.11.2015. For the sake of convenience, the present writ petition is being decided as the lead case. Challenge raised is to the jurisdiction of the Commissioner of Income Tax (Appeals)-1, NOIDA to pass any order under section 150/254 of the Act, in view of the order dated 02.12.2013 (order sought to be rectified) having merged in the order in the order of the Income Tax Appellate Tribunal dated 07.08.2015.
3. Admittedly, the petitioner in the normal course of its business as a banker had received deposits from the New Okhla Industrial Development Authority (NOIDA in short), for different terms at fixed/contracted rates of interest to be paid by the Bank. The interest that thus became due was also paid by the Bank to the NOIDA. On these interest payments made by the petitioner did not make any taxdeduction-at source (T.D.S. in short). The revenue claims such deduction should have been made before making payments of interest, to NOIDA. Such obligation is stated to have arisen by virtue of Section 194A of the Act. The petitioner bank on its part claimed to be exempt from that liability by virtue of Section 194 A(3)(iii)(f) of the Act, it having made payments to NOIDA, perceived to be an authority established under an enactment of the State of U.P.
4. The petitioner's assessing authority differed in its understanding of the law and by order dated 28.02.2013 he passed an order under Section 201(1)/201(1A) read with Section 194A of the Act and declared the petitioner an assessee-in-default under the Act on account of nondeduction of T.D.S. on interest payments made to NOIDA. Accordingly a demand was raised on the petitioner.
5. The petitioner-bank carried the matter in appeal before the CIT(Appeals), NOIDA who by his order dated 02.12.2013 set aside the order treating the petitioner bank to be an assessee-in-default. Arising from that order the revenue appears to have availed two remedies, by filing appeal before Income Tax Appellate Tribunal, which appeal came to be dismissed by order dated 07 08.2015, and also another remedy in the shape of rectification application under Section 154 of the Act. It was allowed by the Commissioner of Income Tax (Appeals), NOIDA by order dated 30.11.2015, more than three months after the original order dated 02 12 2013 came to be upheld by the Tribunal, by its order dated 07.08.2015
6. It has a so come on record that subsequently, the further appeal filed by the revenue against the order of the Income Tax Appellate Tribunal dated 07.08.2015 came to be dismissed by this Court vide order dated 04.04.2016 passed in Income Tax Appeal No.64 of 2016. That judgment itself became subject matter of appeal before the Supreme Court in Civil Appeal No.6020 of 2018 which appeal was also dismissed by the Supreme Court by judgment dated 02.07.2018.
7. In the aforesaid factual background, learned counsel for the petitioner has submitted that in the first place, the issue whether NOIDA is a corporation formed by a State enactment (which is a precondition for claiming exemption under section 194A(3)(iii)(f) of the Act), was considered by the CIT(Appeals) where after he had reached a conclusion that NOIDA was a corporation entitled to the benefit of Section 194A(3)(iii)(f) of the Act since it was incorporated under a notification no. 50348 dated 22.02.1979 issued by the Central Government. In any case, it has been submitted that the issue was elaborately further thrashed out at all forums starting from the Tribunal as also before this court and subsequently before the Supreme Court. In such facts, once the order of the CIT(Appeals) had merged in the order of the Tribunal on 07.08.2015, the rectification order has to necessarily fall on merits.
8. Second, even if the subsequent order passed by this Court and the Supreme Court are ignored, still, upon merger of the order of the CIT(Appeals) dated 02.12.2013 in the order of the Tribunal on 07.08.2015, it was no longer open to the CIT(Appeals) to revisit or reconsider his earlier order dated 02.12.2013 so as to reach different conclusion on the issue dealt with by the Tribunal.
9. Third, it has been submitted, in any case, the issue itself being debatable, that had been dealt with and decided in the Original Order dated 02.12.2013, even if it were to be assumed that some power of rectification survived on the CIT(Appeals), it would still fall outside the scope of jurisdiction of the CIT(Appeals) to make any alteration in the order dated 02.12.2013 being a wholly debatable issue. Reliance has been placed on the decision of the Supreme Court in the case of T.S. Balram, Income Tax Officer, Company Circle IV, Bombay Vs. Volkart Brothers, Bombay reported in 1971 82 ITR 50 (SC).
10. Responding to the above submissions, Sri Manish Goyal would concede though as on date, the order of the CIT(Appeals) dated 02.12.2013 stands merged not only in the order passed by the Income Tax Appellate Tribunal but as on date, it stands merged in the final judgment of the Supreme Court dated02.08.2018. However, in those orders an important aspect of the matter had escaped consideration. Placing reliance on the language of Section 194A(3)(iii) Clauses (a) to (f) it has been submitted, the principle of ejusedem generis had to be applied to interpret the words 'such other Institution' (which the Central Government may notify in this behalf), appearing in section 194A(3)(iii)