ORDER

Per: SHRI JAGADISH, A.M.:

1. This appeal is filed by the Revenue against the order dated 29.08.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for the assessment year 2012–13, arising out of the order passed under section 201(1) read with section 201(1A) of the Income-tax Act, 1961.

2. Briefly stated, the facts of the case are that the assessee, a Public Sector Undertaking engaged in the business of banking, during the year under consideration paid interest on fixed deposits amounting to ₹6,18,90,780/- to Slum Rehabilitation Authority (SRA) without deduction of tax at source. During verification proceedings, the Assessing Officer observed that the provisions of section 194A were applicable and since no tax was deducted, the assessee was treated as an assessee in default under section 201(1) and interest under section 201(1A) was also levied. Accordingly, demand of ₹61,18,780/- and interest of ₹59,41,515/- was raised.

3. The assessee contended before the Assessing Officer that SRA is an authority established under the Government of Maharashtra, its income is exempt being registered under section 12A of the Act, and further the payment is covered by Notification dated 22.10.1970 issued under section 194A(3)(iii)(f), and therefore no obligation to deduct tax at source arises. The Assessing Officer, however, rejected the contentions and passed the impugned order.

4. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who quashed the order passed under section 201(1)/201(1A) on the ground that the same is barred by limitation under section 201(3) of the Act, without adjudicating the issue on merits.

5. The Ld. Departmental Representative relied upon the order of the Assessing Officer and submitted that the Ld. CIT(A) erred in quashing the order without adjudicating the issue on merits. The Ld. Authorised Representative, on the other hand, supported the order of the CIT(A) and further submitted that the issue on merits is squarely covered in favour of the assessee by the decision of the Coordinate Bench in assessee’s own case for A.Ys. 2014–15 and 2016–17.

6. We have heard the rival submissions and perused the material available on record. The primary issue for our consideration is whether the assessee was liable to deduct tax at source under section 194A on interest paid to Slum Rehabilitation Authority.

7. We find that an identical issue has been considered by the Coordinate Bench of the Tribunal in assessee’s own case for A.Ys. 2014–15 and 2016–17 in ITA Nos. 6310 & 6312/Mum/2025, wherein it has been held that no tax is deductible at source on interest paid to SRA. The Coordinate Bench, after examining the statutory status of SRA, its constitution under the relevant State Act and the applicability of provisions of section 194A(3)(iii)(f), held that SRA is entitled to exemption from deduction of tax at source.

8. No material has been brought on record by the Revenue to demonstrate that the facts in the year under consideration are distinguishable from those considered by the Coordinate Bench. Respectfully following the said decision, we hold that the assessee was not liable to deduct tax at source on interest paid to SRA and therefore cannot be treated as an assessee in default under section 201(1) of the Act.

9. Since we have decided the issue on merits in favour of the assessee, the question of limitation under section 201(3) of the Act, on the basis of which the Ld. CIT(A) granted relief, becomes academic and does not call for adjudication.

10. In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 27/04/2026.