2025 (3) TMI 985

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....sment passed u/s 201(1)/ (1A) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") dated 29.03.2022 by the Assessing Officer, DCIT, Circle- 74(1), New Delhi (hereinafter referred to as "ld. AO"). 2. The assessee has raised the following grounds of appeal before us:- "1. That having regard to the facts and circumstances of the case and in law, the order under section 263 of the Income Tax Act, 1961 ("the Act") dated 20.03.2024 passed by the Ld. Commissioner of Income Tax (TDS), Delhi-1, New Delhi ["CIT(TDS)"], setting aside the order u/s 201(1)/201(1A) of the Act dated 29.03.2022 for F.Y. 2014-15 passed by the Ld. DCIT, Circle-74(1), Delhi ["the Assessing Officer"] as erroneous and prejudicial to the interest of the....

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....f Income Tax (Appeals). 5. That having regard to the facts and circumstances of the case and in law, the Ld. CIT(TDS) erred in exercising jurisdiction under section 263 of the Act, because the Ld. Assessing Officer passed order u/s 201(1)/201(1A) of the Act computing a higher amount of TDS @ 10% of EDC Payments u/s 1941 of the Act whereas as per Ld. CIT(TDS), the liability to deduct TDS on EDC Payments should be computed @ 2% u/s 194C of the Act and hence, the said order u/s 201(1)/201(1A) cannot be termed as prejudicial to the interest of revenue. 6. That having regard to the facts and circumstances of the case and in law, the Ld. CIT(TDS) erred in exercising jurisdiction under section 263 of the Act in respect of the iss....

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.... The Learned AO show-caused the assessee vide letter dated 23-02-2022 as to why the assessee should not be treated as assessee in default under section 201(1) of the Act and consequential levy of interest under section 201(1A) of the Act for non-deduction of TDS on EDC payments made to HUDA by applying the provisions of Section 194I of the Act. The Learned AO also relied on the CBDT Office Memorandum (OM) dated 23-12-2017 in this regard. The Learned AO passed an order under Section 201(1) and 201(1A) of the Act on 29-03-2022, treating the assessee as an "assessee in default" for non-deduction of tax at source in respect of EDC charges paid to HUDA to the extent of Rs 7 lakhs and interest under Section 201(1A) of the Act was levied to the ex....

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....see is in appeal before us. 7. At the outset, it is pertinent to note that the tax to be deducted at source under section 194I of the Act is 10%, whereas the tax to be deducted at source under section 194C of the Act is 2%. The Learned PCIT says the Learned AO ought to have applied the provisions of section 194C of the Act as per the decision of the Hon'ble Jurisdictional High Court referred supra. We find that the Learned AO had erred on the revenue side by charging 10% TDS rate as per section 194I of the Act in the instant case and hence there cannot be any prejudice that could be caused to the interest of the revenue in the instant case. The order passed by the Learned AO is prejudicial to the interest of the assessee and the revision....