IREO Private Limited Vs CIT (TDS)-1 (ITAT Delhi)
ITAT Delhi held that issue relating to deduction of TDS in case of payment of External Development Charges [EDC] is already pending before CIT(A) hence initiation of proceedings under section 263 of the Income Tax Act is unsustainable in law and hence liable to be quashed.
Facts- The issue involved in the present appeal relates to deduction of TDS in case of payment of External Development Charges [EDC]. Notably, TDS was not deducted by the assessee.
CIT (TDS), Delhi-1 on examination of records of the present case for A.Y. 2014-15 relating to EDC payment made to HUDA observed that the AO has initiated the proceedings u/s 201/201(1A) determining the penal interest u/s 194I of the Act. However, the decision of the Hon’ble Delhi High Court in the case of Puri Construction (P.) Ltd. vs. Addl.CIT (2024) 159 taxmann.com 444 (Delhi) has settled the current issue that the payment of EDC to HUDA falls u/s 194C of the Act not under section 194I of the Act as followed by the AO in the assessment order passed u/s 201/201(1A) of the Act.
Based on the settled position of law that EDC falls under payment to contractors, therefore, the provisions of section 194C are attracted. Therefore, he held that the order passed u/s 201/201(1A) of the Act by the AO is considered as erroneous and prejudicial to the interest of Revenue. Since the issue was settled by Hon’ble Delhi High Court on the date of initiating the revision proceedings, PCIT issued notice u/s 263 of the Act to the assessee. PCIT relying on the decision held that the payment of EDC charges shall attract the provisions of section 194C of the Act.
