2024 (1) TMI 113

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....as not liable to deduct tax at source on External Development Charges (EDC) is in contravention to CBDT's Office Memorandum vide F.No. 370133/37/2017-TPL dated 23.12.2017, wherein, it has been clearly mentioned that the TDS provisions would applicable on EDC payable to HUDA. 2. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in not appreciating the fact that the definition of contract provided u/s 194C is wide enough to cover EDC payments. EDC payments are in nature of contract u/s. 194C and therefore are required to be subjected to TDS accordingly. 3. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in not appreciating the fact that judgments relied upon by him are of no avail in the present case as subject matter of appeal in those cases before the Hon'ble Tribunal was penalty order u/s 271C of the I.T. Act, 1961, while in this case subject matter of appeal is order u/s 201(1)/201(1A) of the I.T. Act passed by AO. 3. That the order of the CIT (A) being erroneous in law and on facts and needs to be vacated." 4. We have heard the rival submissions and perus....

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....rse of appellate proceedings that the appellant has paid said external development charges for taking license for development of residential, commercial colony in Haryana in the F.Y. 2018-19. The Assessing Officer had held that EDC payment made by appellant to HUDA are covered under service contract and therefore, the appellant was liable to deduct TDS @ 2% on such payment as per section 194C of the Act. The AO further levied the interest for late payment/non-payment of TDS chargeable u/s 201(1A) of the Act @ 1% for every month on the amount of TDS in default from the date on which such tax was deducted to the date on which such tax is actually paid, the demand raised and payable by the appellant u/s 201(1) and interest u/s 201(1A) of the Act, which as follows :- S. No. EDC amount Paid (in Rs.) TDS Deductible @ 2% u/s 194C (in Rs.) Date of Payment Delay in months Interest u/s 201(1A) @ 1% p.m. (in Rs.) Total liability 1 6,34,69,312 12,69,386 31.03.2019 45 5,71,224 18,40,610 10. Further, appellant had made payment of Rs. S,69,77,249/ as "Interest on EDC & IDC charges" without deducting TDS on it during the period under consideration....

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.... land, developing it and finally handing over it for a price. EDC is fixed by HUDA from time to time. It is a fact that payment has been made to HUDA through DTCP which is a Government Department and the same is not in pursuance to any contract between the appellant and HUDA. 15. In similar case, it was held that the appellant was not assessee-in-default for not deducting TDS on the payments of EDC made to HUDA. The Hon'ble ITAT, Delhi has held in the case of M/s RPS Infrastructure Limited vs. Addl. CIT, Range-78, New Delhi reported as {2019 (9) TMI 39-ITAT Delhi}, date of order: 23.07.2019 as under: "5.0 We have heard the rival submissions and have also perused the material on record. It is seen that in Para 4.3.2, subparagraph (iv) of the order passed u/s 271 C of the Act, the AO has himself noted that the demand draft of the EDC amounts are drawn in favour of the Chief Administrator, HUDA though routed through the Director General, Town and Country Planning, Sector-18 Chandigarh. He has also referred to the notes to accounts to the financial statement wherein It has been stated that "other liabilities also include external development charges received throu....

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....cted to be deleted. 6.0 In the final result, the appeal of the assessee stands allowed." 16. Thus, it was held that the payment of EDC is not for carrying out any specific work to be done by HUDA for and on behalf of the appellant but rather Haryana Government which levies these charges for carrying out external development and engages the services of HUDA for execution of the work. Therefore, in view of the above judgement, the appellant was not required to deduct tax at source at the time of payment of EDC as the same was not out of any statutory or contractual liability towards HUDA and, therefore, the impugned addition is not sustained. 17. A similar view has been taken by the Hon'ble ITAT Delhi in the cases of Santur Infrastructure Pvt. Ltd. vs. ACIT in ITA 6844/Del/2019 vide order dated 18.12.2019, Sarv Estate Pvt. Ltd. vs. JCIT in ITA No.S337 &S338/Del/2019 vide order dated 13.09.2019 and Shiv Sai Infrastructure (Pvt.) Ltd. vs. ACIT in ITA NO.S713/Del/2019 vide order dated 11.09.2019. 18. The facts of the case are identical to the case of Perfect Constech Pvt. Ltd. vs. Addl. CIT, Range-76, Delhi (I.T.A No.6907/DeI/2019), as quoted abov....