TMI Blog2023 (2) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 09.09.2019, impugned herein passed by the Ld. Commissioner of Income tax (Appeals)-30, New Delhi, (in short Ld. Commissioner ) u/s 250 of the Income Tax Act, 1961 (in short the Act ), pertaining to the assessment year 2015-16. 2. In the instant case the Assessee being a public limited company, engaged in the real estate and construction business, entered into various agreements with the Government of Haryana through its Director Town and Country Planning Haryana (in short DTCP ) for obtaining license for setting up a residential colony in Haryana in accordance with Haryana Development and Regulation Urban Area Rules, 1976. 2.1 As per the agreement entered into in Form LC-IV with DTCP, the Assessee was supposed/liable to pay proportionate External Development Charges (in short EDC ) as per rate, schedule, terms and conditions as set out in the agreement. During the year under consideration the Assessee paid EDC to the tune of Rs. 31,58,00,000/- to the Haryana Development Authority (in short HUDA ). 2.2 Subsequently, a survey/ inspection was carried out in the office of HUDA and a detailed report of the survey was forwarded to the Assessing Officer (TDS). A notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the cost of external development services such as Master Water Supply, Master Sewage, Master Roads, Master Storm Water Drainage, Master Horticulture, Master Community building and other services is determined on the basis of a price index of a particular year in respect of a particular urban estate. The cost is determined by the Engineering Wing of HUDA keeping in view the requirement of development plan of an urban estate. EDC is charged from the sectors floated by HUDA or the license granted by the Town Country Planning Department to the developers. EDC is charged from colonizers for using the developed urban infrastructure in urban estates wherein they are allowed to establish their commercial set ups. The EDC is arising out of an agreement which is in the nature of service contract wherein colonizers pay EDC to HUDA is rendering a service to colonizers for which EDC is paid. EDC is charged for development work received by HUEA from private builders and the work carried out is civil work in nature for providing amenities. EDC enhance the value of property and the value additions fetch higher price from prospective customers. Thus, EDC payments made by the builders to HUDA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing an order u/s 201(1)/201(1A) of the Act. (b) Whether the penalty u/s 271C of the Act, cannot be levied when there is any confusion/debate on the issue. (c) Whether there was reasonable cause/bonafide reason within the meaning of section 273B of the Income Tax Act, 1961. (d) Whether penalty can be levied when the conduct of the appellant is not contumacious. (e) Since on exactly the same issue, the Hon ble ITAT has decided in favour of the appellant, there is binding precedent and should be followed. (f) Whether the action of the Range head is barred by limitation as the penalty order should have been passed till 30.09.2017. 3.2 The learned Commissioner in answering the questions, whether the penalty u/s 271C of the Act is a debatable issue; whether there was reasonable cause/bona fide reason within the meaning of Section 273B of the Act for not deducting the TDS; and whether the penalty can be levied when the conduct of the appellant is not contumacious, held as under: That till date the appellant before this episode (F.Y. 2013- 14) was not required to deduct tax u/s 194C of the Act with regard to payment of External Development Charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. Firstly, for the reason that agreement was between DTCP, who is Governmental authority and licence was granted by the Government and EDC charges was directed to be paid to HUDA, therefore, this could led to reasonable cause that TDS was not required to be deducted. Secondly, DTCP had issued a clarification dated 29.06.2018 that no TDS was/is required to be deducted in respect of payments of EDC and this clarification issued by DTCP, covers both past and future as the words used are was/is. This shows that Governmental authority itself has demanded not to deduct TDS. In case even if tax was required to be deducted on such payment but not deducted under a bona fide belief then no penalty shall be leviable u/s 271C of the Act as there was no contumacious conduct by the Assessee. 3.6 The Ld. Commissioner also observed as under: The Assessee in response to issue no. F, which relates to the point of limitation as the Assessee has raised the issue that genesis of the penalty proceedings is a letter dated 21.3.2017 issued by DCIT (TDS) Panchkula, which is covered within the meaning of definition of Assessing officer a per provisions of Section 2(7A) of the Act. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int Commissioner to the assessee to which he has filed his reply. 4. That the order of CIT(A) is being bad in law and erroneous in nature. 5. That the appellant craves leave to add or amend any one or more of the ground of appeal as stated above as and when need for doing so may arise. 5. We have heard the parties and perused the material available on record. We observe that the learned Commissioner not only thoroughly examined the factual aspects of the case but also relied upon judgments of the Hon ble Supreme Court, Hon ble High Court and the Hon ble Tribunal. It is a fact that Hon ble Tribunal in the case of M/s RPS Infrastructure Ltd. vs. ACIT {ITAs no. 5805, 5806 5349/DEL/2019 decided on 23-07-2019} also dealt with the identical issue as involved in this case. 5.1 Further, the Hon ble coordinate Bench in the case of Shree Vardhman Developers Pvt. Ltd. Vs. JCIT, Range-77, New Delhi [ITA no. 1957/Del/2020 dated 7.11.2022 (2022) (11) TMI 1053 ITAT Delhi] while deciding the identical issue, has also taken into consideration the judgments passed by the coordinate benches in the case of Tulip Infratech Pvt. Ltd. vs. ACIT [ITA nos. 6734, 6735 6736/Del/2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 tax at source at the time of payment of EDC as the same was not out of any statutory or contractual liability towards HUDA and, therefore, the impugned penalty was not leviable. We note that similar view has been taken by the Coordinate Benches of ITAT Delhi in the cases of Santur Infrastructure Pvt. Ltd. vs. ACIT in ITA 6844/Del/2019 vide order dated 18.12.2019, Sarv Estate Pvt. Ltd. vs. JCIT in ITA No.5337 5338/Del/2019 vide order dated 13.09.2019 and Shiv Sai Infrastructure (Pvt.) Ltd. vs. ACIT in ITA No.5713/Dei/2019 vide order dated 11.09.2019. A similar view was also taken by the Coordinate Bench of ITAT Delhi in case of R.PS Infrastructure Ltd. vs. ACIT in 5805, 5806 5349/Del/2019 vide order dated 23.07.2019. Therefore, on an identical facts and respectfully following the orders of the Co-ordinate Benches as aforesaid, we hold that the impugned penalty u/s 271C of the Act is not sustainable. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not required to be deducted; Secondly, DTCP had issued a clarification dated 29.06.2018 to the effect that no TDS was/is required to be deducted in respect of payments of EDC and this clarification issued by DTCP, covers both past and future as the words used are was/is. This shows that Governmental authority itself has demanded not to deduct TDS. In case even if tax was required to be deducted on such payment but not deducted under a bonafide belief then no penalty shall be leviable under section 271C of the Act as there was no contumacious conduct by the assessee. Our view is fully supported from the judgment of the Hon'hle Supreme Court in the case of Commissioner of income tax vs. Bank of Nova Scotia, 380 ITR 550, wherein the Hon'hle Court has held as under: 2. The matter was pursued by the Revenue before the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal vide order dated 31.03.2006 entered the following findings: 11. We have carefully considered the rival submissions. In the instant case we are not dealing with collection of tax u/s 201(1) or compensatory interest u/s 201(1 A). The case of the assessee is that these amounts have alre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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