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of <h1>Assessee held in default under Section 201(1) for failing to deduct TDS under Section 194C on development charges</h1> <h3>Ansal Properties & Infrastructure Ltd. Versus DCIT, Circle-73 (1), New Delhi</h3> The ITAT Delhi upheld the CIT-A's order holding the assessee as an 'assessee in default' under section 201(1) for failure to deduct tax at source under ... Assessee in default u/s 201(1) - non-deduction of tax at source in terms of section 194C for External Development Charges (EDC) paid to HUDA - HELD THAT:- We find that this issue was subject matter of consideration in the case of Puri construction [2024 (2) TMI 756 - DELHI HIGH COURT] wherein it was held that provisions of section 194C of the Act would get attracted in respect of EDC paid by real estate developers to HUDA. We find that the CIT-A had followed the decision of Hon’ble Jurisdictional High Court and held that EDC paid by the assessee without deduction of tax at source to HUDA makes the assessee as ‘assessee in default’ in terms of section 201(1) of the Act and consequentially liable for levy of interest under section 201(1A) of the Act. Decided against assessee. The Appellate Tribunal (ITAT Delhi) in ITA Nos. 5645 to 5648/Del/2024 for AYs 2015-16 to 2017-18 and 2019-20 addressed whether the assessee was an 'assessee in default' under section 201(1) of the Income-tax Act, 1961, for non-deduction of tax at source under section 194C on External Development Charges (EDC) paid to Haryana Urban Development Authority (HUDA). The Tribunal noted that pursuant to a survey under section 133A, the TDS wing found EDC payments made without TDS deduction. The Assessing Officer initiated proceedings under sections 201(1)/201(1A), treating HUDA as a taxable entity and EDC as income liable to TDS. The issue was governed by the Delhi High Court's decision in Puri Construction (159 taxmann.com 444), which held that section 194C applies to EDC payments by real estate developers to HUDA. The Tribunal upheld the Commissioner of Income Tax (Appeals)'s order, which followed the High Court ruling, confirming the assessee as 'assessee in default' under section 201(1) and liable for interest under section 201(1A). The Tribunal found no infirmity in the CIT(A)'s decision and dismissed all grounds raised by the assessee. Accordingly, all appeals were dismissed. The order was pronounced on 30/07/2025.
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