DLF Homes Panchkula Private Limited Vs DCIT (ITAT Delhi)
Payee Paid the Tax, Payer Escapes the TDS Tag — Delhi ITAT Gives First Proviso to Section 201(1) Its Due
Summary: The Delhi ITAT dealt with an important controversy concerning TDS on External Development Charges (EDC) paid by a real-estate developer & the consequential treatment of the payer as an “assessee in default” u/s 201(1). Instead of finally deciding the larger controversy regarding applicability of section 194C, the Tribunal granted relief on the alternative & practically significant ground flowing from the first proviso to section 201(1).
Facts — ₹39.72 Crore EDC Payment Lands in TDS Trouble
DLF Homes Panchkula Pvt. Ltd. was engaged in real-estate development & held a licence from the Town & Country Planning Department, Haryana (DTCP) for development of a colony at Panchkula. During FY 2016-17, it paid EDC aggregating to ₹39,72,66,000 in the name of Haryana Urban Development Authority/Haryana Shahari Vikas Pradhikaran (HUDA/HSVP), pursuant to directions of DTCP, without deduction of TDS.
The AO initiated proceedings u/s 201(1)/201(1A) on the footing that EDC represented payment attracting TDS @ 2% u/s 194C. The assessee contended that EDC was essentially a statutory levy/fee connected with grant of licence, there was no contractor-contractee relationship with HUDA & the payment was effectively to the State Government or its instrumentality. The AO rejected these contentions relying, inter alia, upon the CBDT Office Memorandum dated 23.12.2017 & the Delhi High Court decision in Puri Construction Pvt. Ltd.
