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Facts
The assessee paid External Development Charges (EDC) to HUDA without deducting tax at source. A survey revealed that HUDA received EDC without TDS, and since HUDA is a taxable entity, the payments were considered income in its hands, liable for TDS.
Held
The Tribunal held that the provisions of Section 194C of the Act are attracted to EDC paid by real estate developers to HUDA. The assessee was rightly treated as an assessee in default for non-deduction of TDS.
Key Issues
Whether the assessee is liable as an assessee in default for non-deduction of TDS on EDC payments made to HUDA, and consequently liable for interest.
Sections Cited
143(3), 201(1), 201(1A), 194C, 133A
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Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI
Before: SHRI M. BALAGANESH & SHRI SUDHIR KUMAR
O R D E R PER M. BALAGANESH, A. M.: 1. The appeals in to 5648/Del/2024 for AYs 2015-16 to 2017-18 and 2019-20, arise out of the order of the ld. Commissioner of Income Tax (Appeals)-24, New Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 21.11.2024 for AY 2015-16, 2017-18, 19.11.2024 for AYs 2016-17 and 2019-20 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 31.05.2024, 29.03.2023, 29.03.2024, 06.06.2023 by the Assessing Officer, DCIT, Circle-73(1), New Delhi (hereinafter referred to as ‘ld. AO’). Identical issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience.
Though the assessee has raised several grounds before us, the only identical issue to be decided in all these appeals is as to whether the assessee could be treated as assessee in default under section 201(1) of the Act and consequential levy of interest under section 201(1A) of the Act in respect of non-deduction of tax at source in terms of section 194C of the Act for External Development Charges (EDC) paid to HUDA in the facts and circumstances of the instant case.
None appeared on behalf of the assessee. Since the issue is covered by the decision of Hon’ble Delhi High Court, these appeals were heard on hearing the Learned DR and based on materials available on record. It is not in dispute that the assessee had made payment of EDC charges to HUDA without deducting tax at source. Pursuant to the survey/ inspection carried out at the office of Haryana Urban Development Authority (HUDA) under section 133A of the Act by the TDS wing of the Income Tax Department, Panchkula on 4-12-2018, it was noticed that EDC received by HUDA from private developers / colonizers without deduction of tax at source. Accordingly, proceedings under section 201(1)/201(1A) were initiated in the case of the assessee by issuing notice on 5-7-2022 on the ground that HUDA is a taxable entity and EDC paid by assessee to HUDA has character of income in the hands of HUDA, thereby liable for deduction of tax at source. We find that this issue was subject matter of consideration by the Hon’ble Jurisdictional High Court in the case of Puri construction reported in 159 taxmann.com 444 (Del HC) vide order dated 13-2-2024 wherein it was held that provisions of section 194C of the Act would get attracted in respect of EDC paid by real estate developers to HUDA. We find that the learned CITA had followed the decision of Hon’ble Jurisdictional High Court and held that EDC paid by the assessee without deduction of tax at source to HUDA makes the assessee as ‘assessee in default’ in terms of section 201(1) of the Act and consequentially liable for levy of interest under section 201(1A) of the Act. We do not find any infirmity in the said order of the learned CITA. Accordingly, the grounds raised by the assessee are hereby dismissed.
In the result, all the appeals of the assessee are dismissed.
Order pronounced in the open court on 30/07/2025.