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TMI Blog2023 (2) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) has failed to appreciate the fact that payment of EDC by assessee - appellant is to the State Government and that too for creation of fund which is to be utilized by the said government for urban development and creation of infrastructure and there is no requirement to deduct TDS on said payments under section 196 of the Act and as such, penalty so imposed needs to be deleted. 1.2 That the adverse findings recorded by the learned AO and Commissioner of Income Tax (Appeals) are perverse and have been recorded with preconceived notions and without considering the submissions/evidences/material produced on record and also without providing fair and proper opportunity of being heard, hence such findings are vitiated and deserves to be deleted. 1.3 That without prejudice to the above, the learned CIT (A) has failed to appreciate the fact that, if the income of HUDA is assessed to tax and the said payment with regards to EDC' have also been brought to tax in the hands of HUDA, then there could be no liability to deduct tax at source in the hands of assessee, as due tax had been imposed on deductee i.e. HUDA." 3. Brief facts of the case are that a survey u/s 133A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 194C of the Act. 3. The Ed/- CIT(A) has erred in law and facts of the case in confirming the action of the Ed/- AO in disallowing the club expenses of Rs. 1,90,529/- incurred for promoting the business of the appellant company, alleging it to be of personal nature and brushing aside the justification and explanation given by the appellant, which is highly unjustified, uncalled for and bad in law. 4. The appellant company craves the right to leave, add, amend or modify any ground of appeal." 4. Heard and perused the record. 5. At the time of arguments, Ld. Counsel for the assessee stated at Bar, that ground no. 3 is not pressed and submitted that ground no. 1 is covered by judgments of Co-ordinate Benches. In regard to ground no. 2 it was submitted that Ld. Tax Authorities have failed to appreciate that the expenditures were made by the Managing Director of the company for promotion of the business and conducting of business meetings. It was submitted that no personal benefit was derived by the Managing Director. 6. On the other hand, Ld. DR submitted that the notification which is relied to give benefit to the assessee in regard to external development charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract between the assessee and HUDA. Thus, the payment of EDC is not for carrying out any specific work to be done by HUDA for and on 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 Co-ordinate 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/Del/2019 vide order dated 11.09.2019. A similar view was also taken by the Co-ordinate Bench of ITAT Delhi in case of R.P.S Infrastructure Ltd. vs. ACIT in 5805, 5806 & 5349/Del/2019 vide order dated 23.07.2019. Therefore, on an identical facts and respectfully follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 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'ble Supreme Court in the case of Commissioner of income tax vs. Bank of Nova Scotia, 380 ITR 550, wherein the Hon'ble 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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