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HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE

M/s New Okhla Industrial Development Authority v. Commissioner of Income Tax - Appeals and Ors.

Civil Appeal No. 15613 of 2017 / Civil Appeal No. 9365 of 2017 / Civil Appeal No. 12750 of 2017 / Civil Appeal No. 15615 of 2017 / Civil Appeal No. 9199 of 2017 / Civil Appeal No. 15130 of 2017 / Civil Appeal No. 15614 of 2017 / Civil Appeal No. 51 of 2018 / Civil Appeal No. 6115 of 2018 / Civil Appeal No. 6113 of 2018
[2018] 7 SCR 888 ·
10(20) · 194A(3)(iii)(f) · 194-I

Mixed outcomeMixed by issue; respondent payers retained the High Court relief, while both authority and Revenue appellants failed
Download AKHB noteFive-part research note
Sources & disclosures includedDownload original judgment / order

Two-judge bench · A. K. Sikri, J. · Ashok Bhushan, J.

01 · Facts of the case

The appeals arose from the Delhi High Court's common judgment of 16 February 2017 on writ petitions by lessees and other payers. The representative company, Rajesh Projects, entered a 90-year Greater NOIDA lease on 3 November 2010 for development of group flats. After it failed to deduct tax on lease-rent and interest payments, relying on the authority's advice that it was a government authority, orders dated 31 March 2014 treated it as in default for financial years 2010-11 and 2011-12. The Commissioner (Appeals) declined to stay the demands, and recovery prompted writ proceedings. The High Court distinguished acquisition premium, recurring lease rent and interest, and adjusted the past-payment burden after Greater NOIDA had insisted on non-deduction. The authorities and Revenue appealed (paragraphs 2-5).

Source: reported judgment / paragraphs 2-5 / PDF pages 3, 4, 5 / judicial text

02 · Discussion by the Hon’ble Court

The Court rejected the authorities' principal section 10(20) contention by expressly applying its separate same-day judgment in Civil Appeal Nos. 792-793 of 2014. It then rejected Revenue's challenge to the interest withholding exception by applying the separate same-day Canara Bank judgment and approving the benefit of section 194A(3)(iii)(f) for NOIDA/Greater NOIDA. These are different statutory tests with different results (paragraphs 11-12).

For annual lease rent, the Court examined the broad section 194-I definition: the substance is payment under an agreement for use of land, however described. It approved the High Court's reading of the lease and conclusion that annual rent attracted TDS. The circular dated 30 January 1995 rested on the then-existing section 10(20) and section 10(20A) exemptions. The 2002 amendments removed the premise on which NOIDA/Greater NOIDA sought to use that circular; it could not defeat the company's statutory withholding liability (paragraphs 13-16).

The judgment reproduces the High Court's distinct treatment of acquisition-premium payments as capital and outside TDS, annual lease rent as subject to TDS, interest on deferred premium as within the section 194A exception, and bank fixed-deposit interest as similarly excepted. It preserves the equitable direction requiring Greater NOIDA to make the sums that otherwise would have been deducted for the past periods through the High Court judgment date, with future payments subject to TDS. The Supreme Court found no error in the common judgment; it did not separately formulate a universal capital-premium rule (paragraphs 4, 16-17).

Source: reported judgment / paragraphs 4 (quoted High Court conclusions), 11-17 / PDF pages 5, 6, 7, 8, 9, 10 / judicial text

03 · Judicial decision

All ten appeals, including those of NOIDA/Greater NOIDA and Revenue, were dismissed. The common Delhi High Court judgment remained undisturbed: no local-authority exemption under section 10(20), notification-based relief from interest TDS under section 194A, and TDS on annual lease rent under section 194-I, with the High Court's premium classification and past-period equitable allocation preserved (paragraphs 11-17).

Source: reported judgment / paragraphs 17 / PDF pages 10 / judicial text

04 · Outcome / in whose favour

In whose favour: Mixed by issue; respondent payers retained the High Court relief, while both authority and Revenue appellants failed

All ten numbered appeals dismissed; Delhi High Court common judgment dated 16 February 2017 affirmed

Final affirmance applying two separate same-day precedents and deciding the annual-rent/circular issue

Interest withholding relief is not an income-tax exemption. Capital acquisition-premium treatment and equitable past-period allocation are preserved as components of this High Court result, not general immunities for every premium or past TDS default. High Court paragraph 21 is mentioned but not reproduced; additional wording is not invented.

Source: reported judgment / paragraphs 4 (quoted High Court paragraph 20), 11-17 / PDF pages 5, 6, 7, 8, 9, 10 / judicial text

05 · AKHB REVIEW POINT

Classify each payment before choosing the withholding rule. Recurring lease rent, acquisition premium, deferred-premium interest and deposit interest are not interchangeable merely because the same authority receives them. Read the lease and particular statutory exception, then keep section 10(20) recipient status separate from section 194A and section 194-I payer duties.

Do not generalise the affirmed past-period equity direction into permission for another payer to omit TDS on an authority's assurance. Nor should the report's loose description of interest as exempt be recast as a substantive exemption from income tax. The note is historical: later notification, legislative and judicial changes remain to be checked.

Source: reported judgment / paragraphs 4, 12-17 / PDF pages 5, 7, 8, 9, 10 / judicial text; reported judgment / paragraphs 11, 31-32 / PDF pages 9, 22 / judicial text

Detailed disposition and connected groups

issue results
  • issue
    Section 10(20) local-authority status
    result
    Claim rejected by applying Civil Appeal Nos. 792-793 of 2014
    in whose favour
    Revenue on this issue
    pinpoints
  • issue
    Interest on deferred lease premium and bank deposits
    result
    Historical notification-based section 194A exception approved for NOIDA/Greater NOIDA
    in whose favour
    Authorities and interest payers; against Revenue's appeal
    pinpoints
    • source url
      Open cited source
      pdf pages
      5; 7
      paragraphs
      4 (quoted High Court paragraph 20(3)-(4)), 12
      source role
      judicial text
    • source url
      Open cited source
      pdf pages
      9; 22
      paragraphs
      11, 31-32
      source role
      judicial text
  • issue
    Annual lease rent
    result
    Subject to section 194-I TDS; 30 January 1995 circular does not sustain the claimed exclusion after the 2002 amendments
    in whose favour
    Revenue on statutory withholding
    pinpoints
    • source url
      Open cited source
      pdf pages
      7; 8; 9; 10
      paragraphs
      13-16
      source role
      judicial text
  • issue
    Acquisition lease premium
    result
    High Court treatment of the specified acquisition-premium payments as capital and outside TDS left undisturbed
    in whose favour
    Lessees / payers
    pinpoints
    • source url
      Open cited source
      pdf pages
      4; 5; 10
      paragraphs
      4 (quoted High Court paragraph 20(1)), 17
      source role
      judicial text
  • issue
    Past annual-rent non-deductions induced by Greater NOIDA
    result
    High Court direction requiring Greater NOIDA to make sums otherwise deductible through the High Court judgment date, and future deduction, preserved
    in whose favour
    Respondent lessees / payers on equitable allocation
    pinpoints
    • source url
      Open cited source
      pdf pages
      5; 9; 10
      paragraphs
      4 (quoted High Court paragraph 20(2)), 16-17
      source role
      judicial text

Additional statutory context, not separate holdings

10(20A); 201(1); 201(1A)

Other provisions considered

Constitution of India, Article 243Q(1) proviso; Uttar Pradesh Industrial Area Development Act, 1976, section 3; Notification under section 194A(3)(iii)(f), 22 October 1970; CBDT circular dated 30 January 1995; CBDT Circular No. 35/2016 dated 13 October 2016 (submission)

Financial years identified

2010-11; 2011-12

Judicial authorship and separate opinions

Ashok Bhushan, J.

Act identified in the reviewed source

Income-tax Act, 1961

Verified relationships between specified judgments

  • source case id
    sc-2018-07-02-noida-cit-appeals-lease-tds
    target case id
    sc-2018-07-02-noida-ccit-local-authority
    relationship
    Expressly applies the separate CCIT section 10(20) ruling
    evidence
    scope limit
    Same-day adoption of local-authority result only; mistaken case-title reference resolved by exact docket.
  • source case id
    sc-2018-07-02-noida-cit-appeals-lease-tds
    target case id
    sc-2018-07-02-canara-bank-noida-interest-tds
    relationship
    Expressly applies Canara Bank for section 194A notification exception
    evidence
    scope limit
    Interest withholding exception; not substantive income exemption or section 194-I rent exemption.

Source & verification

Download original judgment / order · Open cited source rendition

Identified source rendition: 10 PDF pages; SHA-256 d3dcf79a417747a2a9543d38b8e240f47e1ac4427114bd9accb72b1c6ef29920. Original bytes preserved. Judgment paragraphs 1-17 on physical PDF pages 2-10; preceding text is reported title, editorial headnote, case references or appearances. No adjacent judgment is included.

  • Paragraph 3 states these as financial years for the 31 March 2014 orders in the Rajesh Projects factual example. The report does not separately label assessment years or specify the period of every companion appeal; none is inferred.
  • Ten numbered appeals are listed on physical page 2. The Court uses the facts of Civil Appeal No. 15130 of 2017, CIT (TDS)-II and Ors. v. Rajesh Projects (India) Pvt. Ltd. and Anr., to decide the common batch.
  • The section 10(20) issue concerns Finance Act, 2002 changes effective 1 April 2003 and omission of section 10(20A). The section 194-I reproduction includes later textual material such as a REIT proviso, and is not represented as a fully audited historical consolidation for financial years 2010-11 and 2011-12. No current threshold/rate is recommended. The 1970 notification date is checked against Canara Bank paragraph 11.
  • Section 10(20) is resolved by applying the separate CCIT decision; section 194A by applying the separate Canara Bank decision. This judgment itself discusses annual lease rent under section 194-I and the loss of the former circular's statutory basis. The report's shorthand 201/201(A) describes default proceedings; no independent construction of section 201 is attributed to the Court.
  • The source is the unchanged eSCR reported rendition supplied through the indexed public mirror, not a separately retrieved signed original; no signed-original hash is claimed.; Editorial headnotes and case-reference tables are not treated as the Court's reasons. Physical PDF pages and numbered judicial paragraphs are separately identified.; The public URLs identify the exact cached, hash-verified PDFs. A fresh web-tool open failed during this review; current network availability is not certified.; The three same-date judgments have different dockets, texts and dispositions. They are linked only where actual judicial passages support the relationship.; Paragraph 11 misnames the separate appeal in Civil Appeal Nos. 792-793 of 2014 as one against CIT-Appeals. Its docket and separate 35-page report establish that it is the CCIT local-authority decision; this 10-page CIT-Appeals judgment remains distinct.; Paragraph 12 and the headnote sometimes state 24 October 1970, while paragraph 12 also states 22 October 1970. Canara Bank reproduces the full notification as 22 October 1970. The discrepancy is a source caution; the source is unchanged.; Phrases such as exemption of interest income are read in their section 194A withholding context; this judgment does not turn the TDS exception into exemption of the recipient's income.; High Court paragraph 20 is reproduced and paragraph 21 is mentioned without reproduction. This note records the visible allocation and does not invent further directions.; The section 194-I extract includes later provisos and insertion markers. Rates, thresholds and every quoted proviso are not certified as applicable to the earlier financial years or current payments.

Statutory scope

Historical 1961 Act provisions and instruments only. Verify the applicable year, later amendments and notifications independently. No automatic mapping or precedent carryover to the Income-tax Act, 2025.

Later treatment

Source checked 2026-10-04. Expressly identified relationships among three separate decisions of 2 July 2018 are checked against their complete bounded judicial texts. No subsequent-treatment or comprehensive current-law audit has been performed.

Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.

Identified source links

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