ACIT, CENTRAL CIRCLE-2, FARIDABAD vs. PROMPT ENGINEERING PVT. LTD., GURGAON
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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘F’ NEW DELHI
SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA No. 489/Del/2020 Assessment Years: 2012-13
ACIT, Central Circle-2, Vs. Prompt Engineering Pvt. Ltd. Faridabad GP-1, Vipul Plaza, Village: Haiderpur Viran, Sector-54, Gurgaon. PAN :AAECP0734E (Appellant) (Respondent)
Assessee by Shri Gautam Jain, Adv. Department by Sh. T. Kipgen, Sr. DR
Date of hearing 21.09.2022 Date of pronouncement 21.09.2022
ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER: This is an appeal by the Revenue against order dated 20.11.2019
of learned Commissioner (Appeals)-3, Gurgaon pertaining to
assessment year 2012-13.
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The short issue which needs to be adjudicated in the present
appeal is, whether the assessee was required to deduct tax at source
on the external development charges (EDC) paid to Haryana Urban
Development Authority (HUDA)..
Briefly, the facts are, the assessee is a resident corporate entity
engaged in the business of real estates development.
In course of assessment proceedings for the impugned
assessment year, the assessing officer noticed that assessee has paid an
amount of Rs.8,82,60,000 to HUDA towards EDC without deducting
tax at source. Being of the view that assessee was required to deduct
tax at source on payment of EDC, which the assessee has failed to do,
the assessing officer invoking the provisions of section 40(a)(ia) of the
Act disallowed 30% of the EDC paid, which works out to
Rs.2,64,78,000. Assessee was successful in contesting the aforesaid
disallowance before learned Commissioner (Appeals).
Before us, learned counsel appearing for the assessee as well as
learned Departmental Representative fairly submitted that the issue on
merits is squarely covered in favour of the assessee by the decision of
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the Hon'ble High Court in case of BPTP Ltd. vs. PCIT (2020) 421 ITR
51 and various decisions of the co-ordinate Bench.
Having carefully gone through the decision of Hon'ble Delhi
High Court in case of BPTP Ltd. vs. PCIT (supra), we find that while
dealing with an identical issue of non-deduction of TDS and EDC paid
to HUDA, the Hon'ble High Court has observed that Revenue was
unable to point out any specific provision which deals with EDC. In
other words, the Hon’ble Court held that payment of EDC was not
covered under any of the TDS provisions. In case of M/s. Splender
Land Bus Ltd. vs. Additional CIT(supra), the co-ordinate Bench, after
following the decision of another co-ordinate Bench in case of Spaze
Tower Pvt. Ltd. vs. ACIT – ITA No.5842/Del/2019 dated 26.05.2022,
has held that by not deducting tax on payment made to HUDA
towards EDC, no violation of TDS provision was made. Thus, with
due obedience to the ratio laid down in the judicial precedents cited
before us, we hold that there was no legal requirement on assessee to
deduct tax at source while making payment of EDC to HUDA.
Therefore, the disallowance made under Section 40(a)(ia) of the Act is
unsustainable on merits. Accordingly, we do not find any reason to
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interfere with the decision of learned Commissioner (Appeals),
though, based on our own reasoning.
In the result, the appeal is dismissed. Order pronounced in the open court on 21stSeptember, 2022. Sd/- Sd/- (ANADEE NATH MISSHRA ) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 21st September, 2022. Mohan Lal
