M/S NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY versus COMMISSIONER OF INCOME TAX APPEALS & ORS.

Citation: [2018] 7 S.C.R. 888 · Decided: 02-07-2018 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Dismissed
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M/S NEW OKHLA INDUSTRIAL DEVELOPMENT
AUTHORITY
v.
COMMISSIONER OF INCOME TAX – APPEALS & ORS.
(Civil Appeal No. 15613 of 2017)
JULY 02, 2018
[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]
Income Tax Act, 1961 – s.10(20) – Applicability of – Local
authority – Noida – Held: Noida is not a local authority within the
meaning of s.10(20) as amended by Finance Act, 2002 w.e.f
01.04.2003  by virtue of decision in Civil Appeal No. 792-793 of
2014 – Uttar Pradesh Industrial Area Development Act, 1976.
Income Tax Act, 1961 – s.194A(3)(iii)(f) – Exemption of
interest income by virtue of Notification dated 24.10.1970 – Held,
it was decided in Commissioner of Income Tax v. Canara Bank that
Noida is covered by the said notification and Noida/Greater Noida
is entitled to the benefit of s.194A(3)(iii)(f) – The said view is
approved.
Income Tax Act, 1961 – s.194-I – Deduction of tax at source
on payment of lease rent – Held: Tax is deductible at source on
payment of lease rent to the Greater Noida as per s.194-I of the Act.
Dismissing the appeals, the Court
HELD: 1. The definition of rent as contained in the
explanation to Section 194-I is a very wide definition.  Explanation
states that “rent” means any payment, by whatever name called,
under any lease, sublease, tenancy or any other agreement or
arrangement for the use of any land. The High Court has read
the relevant clauses of the lease deed and has rightly come to
the conclusion that payment which is to be made as annual rent is
rent within the meaning of Section 194-I. The High Court rightly
held that TDS shall be deducted on the payment of the lease rent
to the Greater Noida as per Section 194-I.  A perusal of circular
dated 30.01.1995 indicate that the query which has been answered
in the  circular is “Whether requirement of deduction of income-
[2018] 7 S.C.R. 888
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tax at source under Section 194-I applies in case of payment by
way of rent to Government, statutory authorities referred to in
Section 10(20A) and local authorities whose income under the
head “Income from house property” or “Income from other
sources” is exempt from income-tax.”  A perusal of the circular
indicate that circular was issued on the strength of Section 10(20A)
and Section 10(20) as it existed at the relevant time. Section 10(20)
has been amended by Finance Act, 2002 by adding an explanation
and further Section 10(20A) has been omitted w.e.f. 01.04.2003.
The very basis of the circular has been knocked out by the
amendments made by Finance Act, 2002.  Thus, the Circular
cannot be relied by Noida/Greater Noida to contend that there is
no requirement of deduction of tax at source under Section 194-
I.  Thus, deduction at source is on payment of rent under Section
194-I, which is clearly the statutory liability of the respondent-
company. [Paras 14, 16][895-G-H; 896-A-B, F-H]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 15613
of 2017.
From the Judgment and Order dated 16.02.2017 of the High Court
of Delhi at New Delhi in WP No. 1214 of 2016.
WITH
C.A. Nos. 9365/2017, 12750/2017, 15615/2017, 9199/2017, 15130/
2017, 15614/2017, 51/2018, 6115/2018 and 6113/2018.
Balbir Singh, K. Radhakrishnan, Sr. Advs., Jasmeet Singh, Naman
Joshi, Ms. Ruhsheet J. Saluja, Hemant Jain, S. N. Tayag Rajan, Kiran
Kondaparthy, Nitesh Shrivastava, R. S. Saluja, Ms. Rubal Maini, Sandeep
Chilana, Mohd. Raiz, Prbhu Dayal Chilana, Ms. Seema Joshi, D. L.
Chidananda, Arijit Prasad, Shekar Vyas, Mrs. Anil Katiyar, Ravi Prakash
Mehrotra, Debesh Panda, Neil Chatterjee, V. D. Verma, Ravindra Kumar,
Ms. Arti Singh, Ms. Pooja Singh, Jasmeet Singh, Ms. Kavita Jha, Advs.
for the appearing parties.
The Judgment of the Court was delivered by
ASHOK BHUSHAN, J. 1. Delay condoned.
2. These appeals have been filed against the common judgment
of Delhi High Court dated 16.02.2017 by which the Delhi High Court
NEW OKHLA INDUSTRIAL DEVELOP. AUTH. v. COMMNR.
OF INCOME TAX – APPEALS
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has allowed the writ petitions filed by the private respondents herein.
The appeals have been filed by New Okhla Industrial Development
Authority, Greater Noida Industrial Development Authority, Commissioner
of Income Tax as well as Income Tax Officer and others.  The facts
and issues in all the appeals being common, it shall be sufficient to refer
the facts and pleadings in Civil Appeal No. - 15130 of 2017 –
Commissioner of Income Tax (TDS) – II &
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