M3M India Pvt. Ltd. Vs JCIT (ITAT Delhi)
Summary: The appeals concerned the liability to deduct tax at source on External Development Charges (EDC) paid by the assessee in connection with real estate development. For AY 2017-18, the Assessing Officer treated the assessee as an assessee in default under Sections 201(1)/201(1A) of the Income-tax Act, 1961 for non-deduction of TDS under Section 194I, while the CIT(A) sustained the liability by applying Section 194C.
For AY 2017-18, the Tribunal followed the decision of the Delhi High Court in DLF Homes Panchkula Pvt. Ltd. and the Coordinate Bench decision in Cogent Realtors Pvt. Ltd., holding that Section 194I was not applicable to EDC charges paid to HUDA. The appeal for AY 2017-18 was accordingly allowed.
For AYs 2018-19 to 2021-22, the Tribunal considered the assessee’s contention that EDC payments were deposited into the consolidated fund of Haryana and that HUDA/HSVP was merely an executing agency. Without entering into the merits of that contention, the Tribunal relied upon the principle embodied in the first proviso to Section 201(1), as considered by the Coordinate Bench in Deputy Gothwal Construction (P) Ltd. It therefore restored the matters to the Assessing Officer to verify whether the statutory conditions for relief under the first proviso to Section 201(1) had been fulfilled. The appeals for AYs 2018-19 to 2021-22 were accordingly allowed for statistical purposes.
