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2022 (12) TMI 282 - AT - Income TaxCharacterization of payment - Addition for External Development Charges - expenditure as covered u/s 43B - payment of EDC to HUDA is subject to TDS @ 2% u/s 194C - HELD THAT:- In the present case, from the Rules under which payments have been made by the assessee and the order of the AO, TDS, it is amply clear that it is a charge paid by the developer and builder for obtaining the services from the HUDA authority like sewage, roads, lighting, etc. and in case the assessee does not avail such facility, he is entitled for refund or adjustment of payment. AO himself noted that the payment of EDC to HUDA is subject to TDS @ 2% u/s 194C which clearly characterize the payment as made against the facilities availed by the developer/builder/colonizer which cannot be put in the basket of mandatory or compulsory payment of duty, tax, cess or fee, therefore, section 43B does not stand attracted in the present case to the payment of EDC by the assessee. Once we come to the conclusion that section 43B of the Act does not apply to the payment of EDC, the question of applying the rigor of payment within the time schedule viz., before filing the return of income u/s 139(1) of the Act will not decide the allowability or otherwise of such payment u/s 143B - Allowability of such payment would then depend upon the method of accounting followed by the assessee and if the assessee has made provision for its payment in its books of account and has claimed it as accrued liability in the relevant financial period, then, he is entitled to get the deduction in the relevant assessment year itself without any bar or application of section 43B. We conclude that the impugned payment made by the assessee towards EDC under HDRUA Rules does not fall within the ambit of duty, tax, cess or fee. The impugned payment has been made by the assessee for acquiring the facilities on the land allotted to it by HUDA, which is not in the nature of duty, tax, cess or fee. Provisions of section 43B is not applicable to the said payment. We are incline to hold that the AO was not correct in characterizing the payment falling within the ambit of section 43B and the CIT(A) was also not justified in confirming the same. The impugned payment made by the assessee towards EDC does not attract the provisions of section 43B and the same is allowable to the assessee. Appeal filed by the assessee is allowed.
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