Can payment of interest by Canara Bank to NOIDA be exempted from the requirement of tax deduction at source u/s 194A on the ground that the same is a corporation established by or under the Uttar Pradesh Industrial Area development Act, 1976 ?
Section 194A imposes an obligation on persons such as the respondent to deduct tax at source while making interest payment.
As per section 194A(3)(iii)(f), the CG is empowered to notify payments made to a specified class institution(s) for exemption from this requirement. A notification dated 22nd October, 1970 issued by CG exempting payments made to “any corporation established by a Central, State or Provincial Act” from the requirement of tax deduction at source.
Hence, Supreme Court held in the case of:
CIT (TDS) and Anr V. Canara Bank (2018) 406 ITR 161 (SC)
that it is eligible for exemption from TDS provided u/s 194A(3)(iii)(f).