DCIT Vs Splendor Landbase Limited (ITAT Delhi)
Ground Rent to DDA Needs No TDS: ITAT Rejects 194I Demand- DDA Is Local Authority: Section 196 Shields Assessee
In DCIT Vs. Splendor Landbase Ltd., ITA Nos.2408 & 2410/Del/2025, AYs 2017-18 & 2018-19, order dated 31.12.2025, Delhi ITAT dismissed Revenue’s appeals & upheld deletion of TDS demand u/s 201(1) & interest u/s 201(1A) on ground rent paid to Delhi Development Authority (DDA).
Assessee had paid ground rent of ₹5.73 crore to DDA without deducting TDS u/s 194I. AO treated Assessee as assessee in default, raising demand of ₹1.05 crore holding that DDA was not a “local authority”. CIT(A) deleted demand holding that DDA is a local authority, relying on SC in Union of India Vs. R.C. Jain (AIR 1981 SC 951), CBDT Circular No.699 dated 30.01.1995, & DDA Circular No.03/2017 dated 24.01.2017, which clarified that ground rent/Nazul land charges are collected on behalf of Central Government & are not income of DDA.
Tribunal upheld CIT(A)’s order noting that payments to Government/local authority/statutory authority are exempt from TDS u/s 196, & DDA squarely qualifies as local authority. Applying principle of consistency & statutory exemption, ITAT held that no TDS u/s 194I was deductible on ground rent paid to DDA & consequently no 201(1)/201(1A) liability could survive. Revenue’s appeals for both years were dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
These two appeals are filed by the revenue against the order of the Ld. CIT(A) -23, Delhi dated 12.02.2025 for the A.Y. 2017-18 and 2018-19.
