EDC payments to DTCP held liable for TDS under section 194C; ITAT upholds disallowance, dismisses assessee appeal

The ITAT Delhi dismissed the assessee's appeal concerning non-deduction of TDS on External Development Charges (EDC) paid to the Department of Town & Country Planning (DTCP). The Revenue had treated EDC as payments covered by s.194C, attracting TDS liability and consequent disallowance. The CIT(A) upheld this view relying on binding HC precedent holding EDC liable to TDS under s.194C. The Tribunal, finding no infirmity in the CIT(A)'s order and following the HC ruling, sustained the disallowance and rejected the assessee's contentions.

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The assessee appealed against an order passed under sections 201(1)/201(1A) of the Income-tax Act, 1961, wherein the Assessing Officer treated the assessee as an assessee-in-default for failure to deduct tax at source on External Development Charges (EDC) paid to the Department of Town & Country Planning (DTCP), by invoking section 194C. Despite repeated notices, no one appeared for the assessee before the Tribunal, and no further opportunity was granted. The core dispute concerned whether EDC payments constitute payments to a contractor for carrying out any "work" within the meaning of section 194C and are therefore subject to TDS. The Commissioner (Appeals) had relied on the Delhi High Court decision in Puri Construction (P.) Ltd. v. Addl. CIT, which held "EDC payments liable to TDS u/s 194C of the Act." The Tribunal, following this binding precedent, found no reason to interfere and dismissed the assessee's appeal.

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