DCIT Vs Ireo Grace Realtech Private Limited (ITAT Delhi)
The Income-tax Appellate Tribunal (ITAT), Delhi, has issued a common order on two appeals filed by the Revenue for the Assessment Years 2014-15 and 2015-16, in the case of DCIT Vs Ireo Grace Realtech Private Limited. The central issue in the twin appeals was the company’s failure to deduct Tax Deducted at Source (TDS) on payments made to the Haryana Urban Development Authority (HUDA) for External Development Charges (EDC).
The dispute arose after the Commissioner of Income-tax (Appeals) [CIT(A)] ruled in the company’s favor, deleting the demand raised under Sections 201(1) and 201(1A) of the Income-tax Act, 1961. The Revenue subsequently appealed to the ITAT, arguing that the CIT(A) had erred by not considering a significant judicial precedent.
The core of the Revenue’s argument rested on the judgment of the jurisdictional Delhi High Court in the case of M/s Puri Construction Private Limited Vs. Addl. CIT & Ors. (159taxmann.com 444 (Delhi) [2024] 462 ITR 326 (Delhi)). The Revenue contended that this landmark decision had already settled the matter, establishing that EDC payments are contractual in nature and are, therefore, liable for TDS deduction under Section 194C of the Act. The Revenue further argued that the CIT(A) had failed to judiciously appreciate these facts and had not exercised the powers conferred upon it under Section 251(1) to confirm the assessment.
