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TaxTMI 
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TaxTMI 
2025 (9) TMI 1375
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....st the order dated 26.03.2024 of the Ld. CIT(TDS), u/s 263 of the Act. The grounds of appeal raised by the assessee reads as under: - ITA No.- 2047/Del/2024 "1. The order of the Learned Commissioner of Income tax is against law, weight of evidence and probabilities of the case. 2. The learned Commissioner of Income Tax erred in holding the assessment order passed u/s 201(1)/201(1A) of the Income-tax Act, 1961 as erroneous and prejudicial to the interests of revenue. 3. The appellant craves leave to add, amend, delete or alter any of the grounds of appeal." 3. Brief facts of the case are: The assessee is a company and engaged in the construction and real estate sector. In its case, the order u/s 201(1)/(1A) of the Act, was passed by DCIT, Circle-74(1), Delhi (AO) vide order dated 22.03.2022 raising a demand of Rs. 1,01,73,629/- (including Rs 53,42,400/- u/s 201(1) and Rs 48,31,229/- u/s 201(1A) of the Act.). 4. While raising the said demand, the Assessing officer, held that during Financial Year 2014-15, the assessee had paid a sum of Rs. 5,34,24,000/- to the Haryana Urban Development Authority (hereinafter referred to as "HUDA") towards Ext....
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....is judgement, we also turn down the challenge to the clarification issued by Central Board of Direct Taxes dated 23 Dec 2017". 5.2 Accordingly, the Ld. CIT(TDS) held that the impugned order passed by the AO under Section 201(1)/(1A) of the Act, invoking the provisions of section 194I of the Act instead of section 194C of the Act on the payments of Rs. 5,34,24,000/- by the assessee to the HUDA was not in accordance with law, and was erroneous, and prejudicial to the interest of the Revenue. He therefore, cancelled the said order and asked the AO to pass fresh order under Section 201(1)/201A of the Act, in view of the direction given by him in the order u/s 263 of the Act to enquire and examine the applicability of TDS provision u/s 194C of the Act in respect of EDC payments made by the assessee to HUDA on which no TDS was deducted by assessee after giving due opportunity to the assessee and to decide the matter in accordance with law. 6. Aggrieved by the said order, the assessee is in appeal before us. 7. During the course of hearing, the Ld. AR submitted that the order u/s 201(1)/201A of the Act was passed on 22.03.2022, and that the assessee had filed an appeal before the....
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....he recent development forced the ld. PCIT to revise the assessment order treating the same as against the law as erroneous as well as prejudicial to the interest of Revenue. After considering the submissions of both the sides, we observed that the issue under consideration is already pending before ld. CIT(A) and the issue under consideration is not settled considering the fact that Hon'ble Supreme Court has stayed the operation of Hon'ble Delhi High Court decision in the case of Puri Construction (P.) Ltd. vs. Addl. CIT (supra). After careful consideration, we are of the view that the issue under consideration is payment of EDC to HUDA which is pending before first appellate authority where the provisions of section 194I or 194C can also be the point of adjudication. However, ld. PCIT found that it is against the law and also observed that it is against the interest of Revenue. After careful consideration, we are of the view that the slab at which the AO calculated liability u/s 201/201(1A) is at 10% considering the same as rental payment. However, Id. PCIT has cancelled the relevant assessment order following the provisions of section 194C for which slab of 2% is applicab....
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.... clarified that payment in the nature of EDC are not to the Government but to HUDA which is a Developing Authority of State Govt. of Haryana and is a taxable entity under the Income Tax Act, 1961. The Board has further clarified that TDS provisions would be applicable on EDC payment made by the Builder to HUDA. The relevant para of the CBDT OM dated 23.12.2017 is reproduced hereunder as: "In this regard it is submitted that provisions of non-deduction of tax under Section 196 of the Income-tax Act, 1961, is applicable to the Government and to the other authorities as mentioned under the Section. Accordingly, External Development Charges (EDC) if paid to Government of Haryana would be exempt from TDS provisions. However, in the instant case, it appears that the developer has made the payment in the nature of External Development Charges (EDC) not to the Government but to HUDA (Haryana Urban Development Authority) which is a development authority of State Government of Haryana and is a taxable entity under the Income-tax Act, 1961. Hence, TDS provisions would be applicable on EDC payable by the developer to HUDA."" 12. Aggrieved by the said order, the assessee filed an ap....
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....come Tax Act mandates that deductions can be made under TDS if the total payment credited to a contractor or subcontractor in a financial year exceeds Rs 30,000 in a single payment or amounts to Rs. 1 lakh in the aggregate. The TDS rate varies between 1-2 per cent, if the contractor has PAN. In case of no PAN, the rate would be 20 per cent. EDC means the charges paid by real estate builders to the municipal authorities for the creation and maintenance of civic facilities that are included in a real estate project. As per the guidelines set by the Real Estate (Regulation and Development) Act (RERA), 2016, EDC is utilised for the development of essential infrastructure such as roads, water and electricity supply, drainage and sewage systems, waste management, landscaping and other similar projects that benefit the entire project. Although the civic authorities determine the charges, the ultimate responsibility of payment lies with the homebuyer, as the developer generally transfers the cost to them. EDC is calculated based on the size of the project and can add up to 15-20 per cent of the total project cost for the homebuyers. The issue of whether EDC paid by real e....
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....ubject to TDS u/s 194C 5. The appellant craves leave to add, amend, delete or alter any of the grounds of appeal." 14. The Ld. AR submitted before us, that the provisions of section 194I of the Act were not applicable in the present case, and therefore, the order passed under section 201 was not a valid order. Accordingly, the Ld. AR submitted that addition should to be deleted. 15. The Ld. Sr. DR, on the other side, supported the orders of the authorities below and submitted that the provisions of Section 194C of the Act was applicable in respect of the payments of Rs. 5,34,24,000/- to HUDA towards EDC, in view of the decision of the Hon'ble Delhi High Court in the case of Puri Constructions Pvt. Ltd. vs. Addl. CIT (Supra). 16. We have heard the rival submissions and considered the material available on record. In this regard, the Hon'ble Delhi High Court in the case of Puri Constructions (P.) Ltd. us Addl CIT, [2024] 159 taxmann.com 444, vide order dated 13.02.2024, held in para no. 88, that invocation of section 194C of the Act, on EDC payments to Haryana Shahari Vikas Pradhikaran (earlier known as HUDA) was justified. The relevant extracts of this order are re....