TMI Blog2022 (7) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... o.7251 And 7252/Del/2019 - - - Dated:- 30-6-2022 - Sh. G.S.Pannu, Hon ble President And Sh. Anubhav Sharma, Judicial Member For the Assessee : Sh. C.S.Aggarwal, Sr. Advocate and Shri Ravi Pratap Mall, Advocate For the Revenue : Sh. Parikshit Singh, Sr. DR ORDER PER ANUBHAV SHARMA, JM: These appeals have been preferred by the assessee against the appellate order dated 27.06.2019 in appeal no. 54/18-19/316/17-18 and 102/18-19/315/17-18 for assessment year 2016-17 2017-18 respectively, passed by Commissioner of Income Tax(Appeals)-31, New Delhi (hereinafter referred to as the First Appellate Authority in short Ld. F.A.A. ) in regard to appeal before it against penalty order dated 17.01.2018 passed u/s 271C of the Income Tax Act, 1961 (hereinafter referred to as The Act ) by Addl. Commissioner of Income Tax, Range-76, New Delhi (hereinafter referred as the Ld. LD.AO ). Both the appeals raise similar grounds so to avoid contradictory findings. They are adjudicated by this common order and for convenience the facts and grounds of AY 2016-17 are being taken on record. 2. The facts in brief are that a survey u/s 133A was carried out at the business/o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment of Haryana. In view of the above mentioned facts, the Ld. AO was of the view that HUDA is taxable entity who was rendering services for External Development Work and receiving the consideration for such services. Accordingly, in view of Circular No. 681 of CBDT dated 08/03/1994, the TDS was applicable on EDC charges. Thereafter, the LD.AO has reproduced various circulars dated 15.01.2002, 08.07.2002, 25.09.2009 and 14.08.1996 issued by Accounts Officer, for Chief Controller of Finance, HUDA, Panchkula vide which EDC charges were fixed. Finally, the Ld. AO was of the view the assessee has paid EDC for the works carried out by HUDA and hence the same was liable for TDS u/s 194C Ld. AO also noticed that certain tax deductor sought clarification regarding applicability of TDS provisions on EDC charges paid to HUDA and the CBDT vide OI in F.No. 370133/37/2017-TFL dated 23/12/2017 has clarified that when EDC is paid to Government of Haryana, the same would be exempt from TDS provisions. It was further clarified by the CBDT that in the instant case, it appears that the developer has made the payment in the nature of EDC not to the Government but to the HUDA which is a Developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had committed a default u/s 271C of the Act, which is seriously disputed the LD.AO could not have held that the assessee was subjected to levy of penalty u/s 271C for the Assessment Year 2016-2017. 7. That the learned CIT(A) has further erred in comprehending the provision of section 251(l)(b) of the Act. The order passed by the learned CIT(A) is in excess of the power vested with him while disposing off the appeal against the levy of penalty. 8. That the learned CIT(A) has further erred in confirming the penalty levied u/s 271C of the Act without appreciating that the proceedings initiated and penalty levied by the Addl. C1T had been imposed without satisfying the mandatory pre-requirements of section 271C of the Act. 9. That the learned CIT(A) has failed to appreciate that the penalty u/s 271C of the Act could be imposed by the Joint Commissioner of Income Tax; whereas the penalty had been imposed by the Addl. C1T who had not been appointed as Joint Commissioner of Income Tax u/s 117(1) of the Income Tax Act to perform the statutory functions of Joint Commissioner of Income Tax under the Income Tax Act. It is therefore prayed that it be held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of EDC. 7.1 As for convenience the relevant findings at para no. 5 in M/s. Perfect Constech Pvt. Ltd (supra) is reproduced; 5 . We have heard the rival submissions and have also perused the material on record. It is seen that in Para 4.3.2, subparagraph (iv) of the order passed u/s 271C of the Act, the LD.AO has himself noted that the demand draft of the EDC amounts are drawn in favour of the Chief Administrator, HUDA though routed through the Director General, Town and Country Planning, Sector-18, Chandigarh. He has also referred to the notes to accounts to the financial statements of HUDA wherein it has been stated that other liabilities also include external development charges received through DGTCP, Department of Haryana for execution of various EDC works. The expenditure against which have been booked in Development Work in Progress, Enhancement compensation and Land cost. Undisputedly, the payment of EDC was issued in the name of Chief Administrator, HUDA. It is also not in dispute that HUDA has shown EDC as current liability in the balance sheet, but in the Notes to the Accounts Forming part of the Balance Sheet, it has been shown that EDC has been receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LD.AO, HUDA is neither a local authority nor Government, thus, the payments made to it by the assessee on account of EDC charges were liable for TDS under section 194C of the Act. Since, assessee has failed to deduct the TDS; therefore, it is liable for penalty under section 271C of the Act. On the other hand, the case of the assessee is that obligation to pay EDC charges is arising out of the license granted by DTCP and these payments are to be made for obtaining the license and as per the direction of the DTCP, the same have been paid to HUDA. Further, these payments are not in the nature of payment or in pursuance of works contract. There is no privity of contract between the assessee and the HUDA. On the contrary, the agreement is between Assessee Company and the DTCP which admittedly is a Government Department as agreement has been signed by DTCP on behalf of Governor of Haryana. We are of the view that we need not go in all these issues. From the facts, it is evident that the payments have been made by the assessee to HUDA which is an authority of Haryana Government created by enactment of Legislature for carrying out developmental activities in the state of Haryana. Such Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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