IMPORTANT POINTS
Greater NOIDA is not a “local authority” within meaning of Section 10(20).
Greater NOIDA is entitled to benefit u/s 194A(3)(iii)(f).
Rent under Section 194I includes payment to be made as annual lease rent to Greater NOIDA.
When legal basis of a circular is removed, the circular becomes non est.

Headnote:(a) Income Tax act, 1961 – Section 10(20) and 194A(3)(iii)(f) – NOIDA is not a “local authority” within meaning of Section 10(20). (Para 11)
       Civil Appeal No. 792793 of 2014 – Relied upon
       (b) Income Tax act, 1961 – Section 194A(3)(iii)(f) – Greater NOIDA – Entitled to benefit u/s 194A(3)(iii)(f). (Para 12)
       SLP (C) No.34530 of 2016 – Relied upon
       (c) Income Tax act, 1961 – Section 194I – Rent – Includes payment to be made as annual lease rent to Greater NOIDA – High Court rightly holding that TDS has to be deducted on such payments. (Para 14)
       (d) Income Tax Act, 1961 – Section 194I and 10(20A) – Circular dated 30.01.1995 issued on basis of section 10(20A) – Section 10(20A) omitted w.e.f. 01.04.2003 – Circular becoming non est w.e.f. 01.04.2003 – Greater NOIDA relying on circular dated 30.01.1995 to contend TDS was not deductible u/s 194I – With the basis of the circular having been removed it cannot be relied upon. (Para 16)
       Facts of the case:
       The respondent-company entered into a long-term lease for 90 years with the Greater Noida Industrial Development Authority for Plot No. GH07A for development and marketing of Group Flats.
       The company partially paid the consideration amount to Greater NOIDA at the time of execution of the lease deed and is also paying the balance lease premium annually as per the terms and conditions of the lease deed.
       The Assessing Officer passed the order for the Financial Year 2010-2011 and 2011-2012, wherein the respondent was held as “assessee-in-default” for non-deduction/non-deposit of TDS on account of payment of lease rent and interest made to Greater NOIDA.
       The respondent-company filed an appeal before the Commissioner of Income Tax Appeals. Recovery proceedings were initiated.
       The respondent company filed a Writ Petition.
       The High Court allowed the writ petitions.
       Finding of the Court:
       There is no infirmity in the impugned judgment.
       Result: Appeals dismissed

JUDGMENT :

ASHOK BHUSHAN, J.

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 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 & Ors. Vs. Rajesh Projects (India) Pvt. Ltd. & Anr. for deciding this batch of appeals.

3. The respondent Rajesh Projects (India) is a private limited company engaged in the business of real estate activities of constructing, selling residential units etc. On 03.11.2010, the respondent-company entered into a long-term lease for 90 years with the Greater Noida Industrial Development Authority for Plot No. GH07A for development and marketing of Group Flats. As per terms of the lease deed, the company partially paid the consideration amount for the acquisition of the plot to Greater Noida at the time of execution of the lease deed and is also paying the balance lease premium annually as per the terms and conditions of the lease deed. Notice under Section 201/201(A) of the Income Tax Act, 1961 was issued by the Income Tax department inquiring regarding non-deduction of tax at source under Section 194I of the Income Tax Act from the annual lease rent paid to Greater Noida. The respondent-company replied the notices. The respondents case was that it did not deduct tax at source as it was advised by Greater Noida that it is a Government authority, hence the tax deduction at source provisions are not applicable. The Assessing Officer passed the order dated 31.03.2014 for the Financial Year 2010-2011 and 2011-2012, the respondent was held as “assessee-in-default” for non-deduction/non-deposit of TDS on account of payment of lease rent and interest made to Greater Noida. Consequent demand was raised against the respondents. Aggrieved by assessment order, the respondent-company filed an appeal before the Commissioner of Income Tax Appeals. Respondents prayed to stay the demand which was refused and recovery proceedings were initiated. Aggrieved by assessment and recovery proceedings emanating therefrom, the respondent company filed a Writ Petition No. 8085 of 2014 praying for various reliefs including the relief that respondent company be not treated as “assessee-in-default” under the Income Tax Act for non-deduction/ depositing the tax at source in respect of payment of rent on lease land and in respect of other charges paid to Greater Noida. Different other entities also filed the writ petitions in the Delhi High Court praying for more or less the same reliefs relating to lease rent payment and for payment of interest to Greater Noida. All the writ petitions involving common questions of law and facts were heard together and were allowed by the Delhi High Court by its judgment dated 16.02.2017. Before the High Court, Greater Noida and the Noida authorities contended that they are local authorities within the meaning of Section 10(20) of the Income Tax Act, 1961, hence their income is exempt from the Income Tax. It was further contended that the interest received by them is exempt under Section 194A(3)(iii)(f) of the Income Tax Act and they are exempted from payment of any tax on the interest.

4. The revenue refuted the contention of Greater Noida and Noida contending that w.e.f. 01.04.2003, the Greater Noida and Noida is not a local authority within the meaning of Section 10(20) and further they are also not entitled for the benefit of notification issued under Section 194A(3)(iii)(f). It was further contended that with regard to payment of rent to the Noida and Greater Noida, the respondent-company was liable to deduct the tax on

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