TMI Blog2024 (1) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... r. DR ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : These appeals filed by the Revenue are directed against the order of ld. CIT (Appeals)-23, New Delhi both dated 27.06.2023 for the Assessment Years 2019-20 2020-21. 2. Since the issues are common and the appeals were heard together, these are being disposed off by this common order. 3. The Revenue has taken common grounds of appeal in both the assessment years. For the sake of brevity, we are reproducing Grounds of appeal taken by the Revenue in AY 2019-20 as under :- 1. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in not appreciating the fact that decision of Hon'ble ITAT in the judgement relied upon that the assessee was not liable to deduct tax at source on External Development Charges (EDC) is in contravention to CBDT's Office Memorandum vide F.No. 370133/37/2017-TPL dated 23.12.2017, wherein, it has been clearly mentioned that the TDS provisions would applicable on EDC payable to HUDA. 2. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in not appreciating the fact that the definition of contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 194C of the Income Tax Act, 1961. The Assessing Officer was of the view that EDC charges are in the nature of contractual payment covered u/s 194C of the Act. 8. Further, it was also held by Assessing Officer that the appellant was required to deduct TDS on the interest paid on EDC IDC charges to HUDA. According to the AO, by failing to deduct TDS on the interest payment made to HUDA, the appellant has committed a default within the meaning of section 194A of the Income Tax Act, 1961. The assessing Officer was of the view that interest paid on EDC/IDC charges are in the nature of payments covered u/s 194A of the Act. 9. In the case of the appellant, it has been stated during the course of appellate proceedings that the appellant has paid said external development charges for taking license for development of residential, commercial colony in Haryana in the F.Y. 2018-19. The Assessing Officer had held that EDC payment made by appellant to HUDA are covered under service contract and therefore, the appellant was liable to deduct TDS @ 2% on such payment as per section 194C of the Act. The AO further levied the interest for late payment/non-payment of TDS chargeable u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department which includes EDC. The EDC is arising out of an agreement which is in the nature of service contract where colonizers pay EDC to HUDA for creation, development and maintenance of External Development Works. The HUDA is rendering a service to colonizers for which EDC is paid and the work carried out is civil work in nature for providing amenities. Therefore, private builder is liable to deduct tax at source on such payments and EDC ought to be subjected to TDS by payers @2% u/s 194C of the Act and interest thereon@ 1% u/s 201(1A) of the Act. Further, the appellant paid interest component on EDC/IDC charges was also liable to deduct TDS @ 10% on such payments as per provisions of section 194A of the Act. 13. The appellant has claimed that EDC is determined and levied by Directorate of Town and Country Planning (DTCP) which is a department of state Government of Haryana and therefore, TDS provisions should not apply relying on the provision of Section 196 of the Act. 14. It is a matter of fact that the HUDA is engaged in acquiring land, developing it and finally handing over it for a price. EDC is fixed by HUDA from time to time. It is a fact that payment has been ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 17A 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 Coordinate 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 fact 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 order of the Ld. CIT (A) is set aside and the penalty is directed to be deleted. 6.0 In the final result, the appeal of the assessee stands allowed. 16. Thus, it was held that the payment of EDC is not for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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