Case Law Details
Pivotal Infrastructure Ltd Vs Addl. CIT (ITAT Delhi)
No TDS is required to be deducted on EDC payments made to HUDA, as these payments were made on the directions of DTCP which are deposited with the Consolidated Fund of State, which has also been clarified by DTCP vide Memo No. DTCP/ACCFTS/AO(AQ)/CAO/2894/2018 dated 19-06-2018 issued by Directorate of Town & Country Planning, Haryana. As these payments though made to HUDA, but for and on behalf of DTCP which are being further deposited with Consolidated Fund of State. This is the reason HUDA in its financial accounts showing EDC received as Current Liabilities and not being taken to income. As these payments are to State Government, and consequently not liable for which TDS is to be deducted.
A.O. was of the opinion that HUDA is taxable entity who was rendering services for External Development Work and receiving the consideration for such services, in view of Circular No. 681 of CBDT dated 08/03/1994, the TDS was applicable on EDC charges. Thereafter, the AO has reproduced various circulars dated 15.01.2002, 08.07.2002, 25.09.2009 and 14.08.1996 issued by Accounts Officer, for Chief Controller of Finance. HUDA, Panchkula vide which EDC charges were fixed. The Ld. A.O. was of the opinion that the assessee has paid EDC for the work carried out by Huda and hence the same was liable for TDS and passed penalty order u/s 271 C of the Act by imposing penalty for the year under consideration of Rs. 14,24,000/-.
Undisputedly, the payment of EDC was issued in the name of Chief Administrator, HUDA. It is also not in dispute that HUDA has shown EDC as current liability in the balance sheet, but in the ‘Notes’ to the Accounts Forming part of the Balance Sheet, it has been shown that EDC has been received for execution of various external development works and as and when the development works are carried out, the EDC’s liabilities are reduced accordingly. It is also not in dispute that HUDA is engaged in acquiring land, developing it and finally handing it over for a price. It is also not in dispute that EDC is fixed by HUDA from time to time. However, the fact of the matter remains that payment has been made to HUDA through DTCP which is a Government Department and the same is not in pursuance to any contract 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 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/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 facts and respectfully following the orders of the Coordinate 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.
FULL TEXT OF THE ORDER OF ITAT DELHI
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