TMI Blog2020 (12) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... ute that HUDA is engaged in acquiring land, developing it and finally handing it over for a price. It is also not in dispute that EDC is fixed by HUDA from time to time. However, the fact of the matter remains 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 assessee and HUDA. Thus, the payment of EDC is not for carrying out any specific work to be done by HUDA for and on behalf of the assessee but rather DTCP which is a Government Department which levies these charges for carrying out external development and engages the services of HUDA for execution of the work. Therefore, it is our considered view that the assessee was not required to deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director, Town and Country Planning, Haryana. The AO further observed that the assessee had failed to deduct/deposit tax at source as required under various applicable provisions of the Act with respect to the EDC paid to HUDA. Therefore, penalty proceedings u/s 271C of the Act were initiated and a penalty of ₹ 83,80,000/- was imposed being 2% of the EDC amount paid to HUDA on which tax was alleged to be deducted at source u/s 194C of the Act. 2.1 Aggrieved, the assessee approached the Ld. First Appellate Authority challenging the levy of penalty. The Ld. CIT (A), however, upheld the imposition of penalty. 2.2 The assessee is now before this Tribunal challenging the levy of penalty by the Ld. First Appellate Authority by raising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position of penalty was incorrect in as much as the payment of EDC had been made by the assessee in accordance with the license granted by the Department of Town and Country Planning (DTCP) and the payment to HUDA was not made in pursuance of any works contract or under any statutory obligation meaning thereby that when the assessee had no privity of contract with HUDA, the assessee cannot be held liable for imposition of penalty u/s 271C of the Act. The Ld. Authorized Representative reiterated that the assessee had privity of contract with DTCP as per the agreement and that HUDA had merely received the payment for and on behalf of the DTCP. The Ld. Authorized Representative placed reliance on numerous orders of the ITAT wherein a similar l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al development works and as and when the development works are carried out, the EDC s liabilities are reduced accordingly. It is also not in dispute that HUDA is engaged in acquiring land, developing it and finally handing it over for a price. It is also not in dispute that EDC is fixed by HUDA from time to time. However, the fact of the matter remains 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 assessee and HUDA. Thus, the payment of EDC is not for carrying out any specific work to be done by HUDA for and on behalf of the assessee but rather DTCP which is a Government Department which levies these charges for carrying out external develo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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