CIT (TDS)-2 Vs SS Group Pvt. Ltd (Delhi High Court)
The Delhi High Court, in the case of CIT (TDS)-2 Vs SS Group Pvt. Ltd., dismissed the Revenue’s appeal, affirming that External Development Charges (EDC) paid by a real estate developer to the Haryana Urban Development Authority (HUDA) are not “rent” and do not attract the obligation to deduct Tax Deducted at Source (TDS) under Section 194−I of the Income Tax Act, 1961. The developer, SS Group Pvt. Ltd., was initially held to be an assessee in default by the Assessing Officer (AO) for failing to deduct tax on EDC payments, leading to a total demand of ₹2,22,46,000 under Sections 201(1) and 201(1A).
Judicial History and Precedents
The dispute’s resolution at the High Court was heavily influenced by the principle of res judicata or issue estoppel concerning the assessee’s own case. The AO initially classified EDC as “rent” for the use of land, attracting TDS under Section 194−I. The Commissioner of Income Tax (Appeals) [CIT(A)] and the Income Tax Appellate Tribunal (ITAT) had both ruled in favour of the assessee. They relied on a previous Delhi High Court judgment in DLF Homes Panchkula Pvt. Ltd. v. Joint Commissioner Of Income Tax (OSD) & Ors., a batch matter that included the respondent, SS Group Pvt. Ltd. In that earlier decision (dated 24.03.2023), the High Court explicitly held that EDC payments could not be construed as rent under Section 194−I.
