TMI Blog2022 (11) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company is a builder and deals in construction activity. It had made Infrastructure Development Charges (IDC) of Rs. 4,10,85,000/- to the Director General Town and Country Planning, Haryana (DGTCP). A proposal of initiation of penalty u/s 271C for relevant F.Y. 2015-16 was received from ACIT, Circle 17(1), New Delhi and it was observed that amount of Rs. 4,10,85,000/- was paid by the appellant to DTCP, Haryana without deduction of tax at source. It was observed that since IDC/ IAC have income element, therefore, it should have being subjected to TDS. Accordingly, penalty order dated 27.02.2020 was passed and the same was challenged before Ld. CIT(A). The appeal was however dismissed by the Ld. CIT(A) on the basis that the penalty order u/s 271C of the Act has been passed by JCIT, Range-77, New Delhi and the notice of demand u/s 156 of the Act sent along with penalty order specified that appeal has to be filed before CIT(A)-41, New Delhi. Accordingly, the ld. CIT(A)-23, New Delhi dismissed the appeal being wrongly filed in that office. 3. The appellant has challenged the order of Ld. CIT(A) on following grounds :- 1. Under the facts and circumstances of the case, Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays for leave to add, amend, alter or withdraw any grounds of appeal. 4. Heard and perused the record. 5. It was submitted on behalf of the appellant that the matter in issue as to if EDC charges require deduction of TDS has been decided in favour of the assessee builders and judgment in M/s. Santur Infrastructure Pvt. Ltd. vs. ACIT, ITA No. 6844/Del/2019; Sarv Estate Pvt. Ltd., New Delhi vs. JCIT, New Delhi ITA no. 5337 5338/Del/2019 ; Shiv Sai Infrastructure, New Delhi vs. ACIT, New Delhi ITA No. 5713/Del/2019 have been relied. Ld. DR however supported the order of ld. CIT(A). 6. Appreciating the matter on record, it can be observed that ld. CIT(A) has not disposed of the first appeal before it on merits but has dismissed it as it was wrongly filed before it and the appeal was required to be heard by CIT 41. Thus, there is no finding on merits which can be appreciated in this appeal. However, if Section 251(1)(b) of the Act defining powers of Commissioner is considered it provides that in an appeal against an order imposing the penalty, CIT(A) may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty . However, here the appeal ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C of the Act. 6. Giving thoughtful consideration to the matter on record, the clarification dated 19.06.2018 available on page no. 1 of the paper book makes it very obvious that receipts on account of EDC are being deposited in the Consolidated Fund of the State, accordingly directions were issued to colonizer like present assessee, to not deduct TDS. 7. The Co-ordinate Benches in M/s. Perfect Constech P. Ltd. case and ITA No. 5805, 5806, 5349/Del/2019 title of the case RPS Infrastructure Ltd. vs. ACIT have held that assessee was not required to deduct tax at source at the time of payment 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the impugned penalty u/s 271C of the Act is not sustainable. The order of the Ld. CIT (A) is set aside and the penalty is directed to be deleted. 7.2 Similarly para no. 11 in the case RPS Infrastructure Ltd ( Supra) is also reproduced below; 11. We have heard the rival submissions, perused the relevant findings given in the orders passed by the authorities below and the various judgments and materials relied upon by both the sides. On going through the facts, we note that dispute is with regard to non-deduction of tax in respect of payment of EDC charges made by the assessee to HUDA. As per the 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 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest u/s 201(1A). The case of the assessee is that these amounts have already been paid so as to end dispute with Revenue. In the present appeals we are concerned with levy of penalty u/s 271-C for which it is necessary to establish that there was contumacious conduct on the part of the assessee. We find that on similar facts Hon'ble Delhi High Court have deleted levy of penalty u/s 271-C in the case of Itochu Corporation 268 ITR 172 (Del) and in the case of CIT v. Mitsui Company Ltd. 272 ITR 545. Respectfully following the aforesaid judgments of Hon'ble Delhi High Court and the decision of the ITAT, Delhi in the case of Television Eighteen India Ltd., we allow the assessee's appeal and cancel the penalty as levied u/s 271-C. 3. Being aggrieved, the Revenue took up the matter before the High Court of Delhi against the order of the Income Tax Appellate Tribunal. The High Court rejected the appeal only on the ground that no Substantial question of law arises in the matter. 4. On facts, we are convinced that there is no substantial question of law, the facts and law having properly and correctly been assessed and approached by the Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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