Case Law Details
ITO Vs Asthetic Township Developers Pvt. Ltd. (ITAT Delhi)
EDC Payments to HUDA Attract TDS u/s 194C: ITAT Delhi Reverses CIT(A), Allows Revenue Appeal
The Delhi ITAT “B” Bench, in ITO v. Asthetic Township Developers Pvt. Ltd. (ITA No. 2492/Del/2025, AY 2014-15; order dated 29.12.2025), has allowed the Revenue’s appeal and held that payments made towards External Development Charges (EDC) to Haryana Urban Development Authority (HUDA) are liable for TDS u/s 194C, thereby restoring the demand raised u/s 201(1) and interest u/s 201(1A).
The Assessing Officer (TDS) had treated the Assessee as an assessee-in-default for non-deduction of tax on EDC payments made to HUDA, holding that such payments constituted income in the hands of HUDA and involved contractual obligations covered u/s 194C. The CIT(A), however, deleted the demand by relying on a Tribunal decision in Shiv Sai Infrastructure Pvt. Ltd., without considering binding jurisdictional High Court precedent.
The ITAT noted that the CIT(A) erred in ignoring the judgment of the Hon’ble Delhi High Court in Puri Construction Pvt. Ltd. v. Addl. CIT (159 taxmann.com 444), wherein it was categorically held that EDC payments by developers to HUDA are subject to TDS u/s 194C. Since High Court law is binding on the Tribunal, reliance on a contrary Tribunal ruling was impermissible.
Accordingly, the ITAT quashed the order of the CIT(A), upheld the applicability of section 194C on EDC payments to HUDA, and allowed the Revenue’s appeal, restoring the TDS demand and consequential interest.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is preferred by the assessee against the order dated 27.02.2025 of the Ld. Commissioner of Income Tax, Appeal, Addl./JCIT(A)- 9, Mumbai (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No : ITBA/APUS/250/2024-25/1073781605(1) arising out of the order dated 27.03.2023 u/s 201(1)/201(1A) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the ITO, TDS Ward 73(2), Delhi for AY: 2014-15.
2. None appeared for the assessee at the time of hearing though notices have been issued, no more opportunities justified. The Ld. DR was heard the issue involved is tax liability in non deduction of TDS u/s 201(1) and interest on the same u/s 201(1A) of the Act on account of payment made to Haryana Urban Development Authority (in short ‘HUDA’) for External Development Charges (in short ‘EDC’) which is income for HUDA and provision of Section 194C are applicable or not. On appreciating the impugned order we find that ld. CIT(A) has taken into consideration decision of the Tribunal in the case of M/s Shiv Sai Infrastructure Pvt. Ltd. Vs. ACIT, in ITA No. 5713/Del/2019 ignoring the decision of Hon’ble Delhi High Court in the case of M/s Puri Construction Private Limited Vs. Addl. CIT & Ors. 159 taxmann.com 444 (Delhi) wherein Hon’ble High Court has held that EDC payment by development to HUDA would be subject to TDS u/s 194C of the Act. Thus, the ground raised by revenue is sustained. The impugned order of the ld. First Appellate Authority is quashed. The appeal stand allowed. Ordered accordingly.
Order pronounced in the open court on 29.12.2025
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