TaxTMI 
TaxTMI 
2026 (9) TMI 517
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....72,66,000/- paid to Director, Town & Country Planning, Haryana (DTCP) in the name of Haryana Urban Development Authority (HUDA) even though same fell outside the provision of section 194C of the Act. 2.2 That the Ld. CIT(A) was not justified in upholding the demand ofRs.1,53,10,967/- consisting of tax of Rs. 79,45,320 under section 201(1) and interest of Rs. 73,65,64 7 u/s 201(1A) which is illegal and not devoid of merits. 2.3 That the EDC payment made to HUDA being on behalf of DTCP, which is a government organ, the Ld. CIT(A) has failed to appreciate that Section 196 bars deduction of tax from payments made to the Government. 2.4 That the Ld. CIT(A) erred in upholding the application of section 194C on payment of EDC without appreciating that there was no contractual relationship between the Appellant and HUDA. 3. That even otherwise, the HUDA being a taxable entity and having accounted for the EDC payment, the Ld. AO and CIT(A) erred in treating the Appellant as 'assessee-in-default' in total disregard of first proviso to section 201(1) of the Act. 4. That there being no case of any default in deducted of TDS, the demand u/s 2....
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....10(20), and therefore payments made to it are not exempt from TDS. On this basis, the Assessing Officer treated the assessee as assessee-in-default, computed TDS @ 2% under section 194C on the EDC payments of Rs. 39,72,66,000/- at Rs. 79,45,320/- under section 201(1), and calculated interest under section 201(1A) at Rs. 73,65,647/- up to March 2024, determining total demand of Rs. 1,53,10,967/-. 3. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A) and filed detailed submissions. Ld. CIT (A), after going through the detailed submissions, upheld the order of the AO and dismissed the appeal. 4. At the time of hearing, ld. AR of the assessee brought to our notice the relevant facts and relied on the decisions of ITAT, Delhi bench in the cases of M/s. M3M India Pvt. Ltd. Vs. JCIT in ITA Nos.5431 to 5434 & 5660/Del/2024 order dated 11.03.2026 and Deputy Gothwal Constructions (P.) Ltd. Vs. DCIT in ITA No.2862/Del/2025 order dated 17.12.2025. 5. On the other hand, ld. DR of the Revenue submitted that this issue is covered against the assessee by the decision of Hon'ble Delhi High Court in the case of M/s Puri Construction Pvt. Ltd. (supra) and the....
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....ry Planning, Govt of Haryana) after paying requisite license Fee. In addition to the license fee, as per terms of license, it had to pay External Development Charges for the infrastructural development to the Govt of Haryana. 6.2 As per section 3(3) of the Haryana Development and Regulation of Urban Areas Act, 1975,the amount of EDC is charged from developers on account of proportionate cost of infrastructure development such as water supply, sewerage/drainage, electricity supply etc. carried out by State Govt./local authority. The amount, period for the payment and manner of depositing EDC charges are regulated by the terms and condition laid in the license granted by the DCP. Accordingly, the appellant had made payments of Rs. 5,56,44,312/- on account of External Development Charges(EDC) to the DTCP upon which TDS was not deducted. 6.3 During the assessment proceedings, it was observed by the AO that the appellant had not deducted TDS on the payment of the EDC made to DCP under section 194C of the Act. Thus, the AO held the appellant as 'assessee in default within the meaning of sections 201(1)/201(1A) of the Act and raised demands accordingly. Therefore, in....
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....wherein it was held that section 194C of the Act is applicable to EDC paid by Real Estate Developers Page 22 of 24 to HUDA. It was also held that though the EDC payments were made to DCP but the funds were ultimately released to HUDA for carrying out the EDC work and thus, TDS had to be deducted on EDC payments. The Hon'ble High Court also turned out the challenge to the clarification issued by CBDT dated 23.12.2017 which is reproduced as above. Thus, it is noted that the judicial pronouncements relied upon the appellant have been superseded by the aforementioned latest judgment of Hon'ble Delhi High Court, moreover, it is also pertinent to mention that in such judicial pronouncements, CBDT memorandum has not been challenged or been discussed by the respective judicial forums. Further, it is also seen that the ratio of Hon'ble Apex Court in the case of JIT (OSD) vs DLF Home Panchkula (P) Ltd. 161 Taxmann.com 237 (SC) (2024) relates to that it was not open for revenue to now contend whether EDC charges were payment made to a contractor under a contract or rent, hence this case law is not applicable for the issue under consideration in the instant appeal. 6.5 Keeping in v....
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....Delhi)" 12. Thereafter the Coordinate bench in the case of Deputy Gothwal Construction Pvt. Ltd. (supra) has held as follows: "However, the alternative submission of the Ld.AR that HUDA would be filing its returns of income and would be showing the receipts on account of EDC thereon, has considerable persuasive value since it is not only the Hindustan Coca Cola case (supra) but also a subsequent amendment in section 201(1) where a proviso has been inserted w.e.f. 01.07.2012 where a person would not be in default in case the payee has (i) furnished his return of income u/s 139; (i) has taken into account such sum for computing income in such return of income; and (i) has paid the tax due on the income declared by him in such return of income. There is also a directive in this section that the person needs to furnish a certificate to this effect from an Accountant in such form as may be prescribed. Accordingly, we deem it fit to set aside the impugned order and remand this matter back to the file of Ld. AO for verifying whether the conditions mentioned in the first proviso to section 201(1) of the Act have been fulfilled or not. In case the said conditions have been....