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2024 (5) TMI 596 - DELHI HIGH COURTPenalty u/s 271C - failure to deduct TDS u/s 194C on External Development Charges - Waiver of penalty u/s 273B - Reasonable cause - HELD THAT:- As decided in Puri Construction Pvt. Ltd [2024 (2) TMI 756 - DELHI HIGH COURT] various airlines were deducting tax at source under section 194H at that time, this does not necessarily mean that the position of law was settled. Rather, it appears to us that while one set of air carriers acted under the assumption that the Supplementary Commission would come within the ambit of the provisions of the Income-tax Act, another set held the opposite view. The assessees before us belong to the latter category. Furthermore, as we have highlighted earlier, there were contradictory pronouncements by different High Courts in the ensuing years which clearly highlights the genuine and bona fide legal conundrum that was raised by the prospect of section 194H being applied to the supplementary commission. There is nothing on record to show that the assessees have not fulfilled the criteria under section 273B of the Income-tax Act. Though we are not inclined to accept their contentions, there was clearly an arguable and “nascent” legal issue that required resolution by this court and, hence, there was “reasonable cause” for the air carriers to have not deducted tax at source at the relevant period. The logical deduction from this reasoning is that penalty proceedings against the airlines under section 271C of the Income-tax Act stand quashed. We dispose of the instant writ petition with liberty to the respondent to finalize the show cause notice proceedings bearing in mind the legal position as explained hereinabove.
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