Per R.M. Mehta, Accountant Member - Delhi Development Authority (hereinafter referred to as DDA was constituted by the Delhi (Control of Building Operations) Ordinance, 1955 which was later on replaced by the Delhi Development Act, 1957. The primary object was to promote and secure the development of Delhi in accordance with the Master Plan as also the Zonal Development Plans to be prepared by the "DDA" and approved by the Central Government. The further relevant fact to be recorded is that the Delhi Development Authority is working under the control and superintendence of the Ministry of Urban Development. Government of India.

2. One of the avowed objects of the DDA is to provide housing facilities to the public at large and with a view to fulfilling the aforesaid object, it has been floating various Housing Schemes from time to time. One such scheme is the Self-Financing Scheme popularly known as "SFS", the salient features being as follows:—

(1)Applications are invited for registration within a given period of time on the terms and conditions contained in the brochure issued as per prescribed norms. It also involves an Initial deposit on account of registration.

(2)By a subsequent draw of lots successful applicants are declared and Demand-cum-Allocation letters are, issued to them indicating therein the prescribed dates on which the payments are required to be made in instalments.

(3)One of the terms of allotment stipulates the period of completion of construction of the house/flat and in case the same is extended due to one reason or the other including those beyond the control of DDA, then the corresponding liability on the part of the said DDA to pay interest to the allottees on the moneys received. By the same logic in case the payment of instalments by the allottees is delayed, then the corresponding liability on the part of the allottees to pay interest to the DDA.

(4)At the time of allotment of a specific flat and prior to the physical handing over of the said flat to the allottee, the payment of the final instalment by the said allottee. This further takes into account the cost of the flat, the adjustment on account of the amount already paid, interest to be added on account of late payment of instalments and the further adjustment on account of the "interest" due to the allottee from DDA on account of the delay in construction arriving ultimately at the "net amount payable" by the allottee.

3. For the assessment years under appeal viz., 1987-88 to 1989-90 the Income-tax Officer took note of the fact that a sum of Rs. 29.63 crores was paid/credited to various allottees registered with the DDA under its SFS scheme. He also took note of the fact that no tax was deducted at source by the DDA within the meaning of section 194A of the Income-tax Act, 1961. The aforesaid information in fact came to the notice of the Income- tax Officer during the course of the assessment proceedings in the cases of an allottee.

4. On the basis of the aforesaid information, the Income-tax Officer issued a notice under section 131 to the "concerned Officers" of DDA seeking necessary information in respect of the amount "adjusted" in the accounts of various allottees on account of "interest". The objections of the DDA were solicited by the Income-tax Officer vide letter dated 19-12-1990 and a reply was furnished on 7-1-1991 raising various objections to the proposed action on the part of the Income-tax Officer, vis-a-vis, the provisions of sections 194A, 201(1) and 201(1A), all of the Income-tax Act, 1961. The stand taken by the DDA was that it was not a local authority as defined in section 2(31) of the Income-tax Act, 1961. This was rejected by the Income-tax Officer on the ground that DDA was a body corporate set up under the Delhi Development Act, 1957 and covered by the definition of the word "person" as appearing in section 2(31) which was an inclusive definition. The Income-tax Officer observed that DDA came squarely within clause (v) o