EDC Attracts Section 194C TDS; Administrative Charges Remanded: ITAT Delhi

ITO Vs Ashutosh Infra Private Limited (ITAT Delhi)

Summary: The Delhi Bench of the Income Tax Appellate Tribunal dealt with the Revenue’s appeal for AY 2016-17 concerning tax deduction at source on payments connected with External Development Charges (EDC) and other amounts paid to Haryana authorities. The assessee, Ashutosh Infra Private Limited, was engaged in real estate activities. Following information received after a survey/inspection of Haryana Urban Development Authority (HUDA), now Haryana Sheheri Vikas Pradhikaran (HSVP), the Assessing Officer initiated proceedings under Sections 201(1) and 201(1A) of the Income-tax Act, 1961. The dispute principally concerned applicability of Section 194C.

The AO initially proceeded on the basis that the assessee had made EDC/IDC payments aggregating to Rs.1,33,28,550/- without deducting TDS. This comprised Rs.18,00,000/- admittedly paid towards EDC on 23.07.2015 and Rs.1,15,28,550/- which the assessee initially denied having paid. The AO held the assessee to be an assessee-in-default and raised demands of Rs.2,66,571/- under Section 201(1) and Rs.2,36,994/- under Section 201(1A). The CIT(A), accepting the assessee’s contentions, directed deletion of the demands.

Before the Tribunal, the Revenue relied principally on Puri Construction Pvt. Ltd., reported in (2024) 462 ITR 326 (Delhi), wherein the Delhi High Court held that EDC payments to HUDA attract TDS under Section 194C. Reliance was also placed on DCIT Vs Ireo Grace Realtech Private Limited and Trehan Promoters & Builders Pvt Ltd Vs ITO. The assessee itself accepted before the Tribunal that its Rs.18,00,000/- EDC payment was covered by the jurisdictional High Court ruling in Puri Construction and could be decided against it. It was, however, pointed out that an SLP against that judgment was pending before the Supreme Court.