SELENE CONSTRUCTIONS LIMITED,MUMBAI vs. ACIT, OSD TDS CIRCLE-2(2), MUMBAI

The brief facts are that the assessee is a company engaged in the business of real estate development. The appellant had undertaken setting up of a group

The appellant had paid the EDC to HUDA for the relevant period without deduction of tax at source, which was the basis for initiation of proceedings by the AO. The AO found that the appellant was obliged to deduct TDS under Section 194C of the Act.

On behalf of the appellant, it was contended that Section 194C of the Act is not attracted, inasmuch as, the payment was made to the State Government, albeit through its agency, viz. HUDA. It was contended that there was no privity of contract between the appellant and HUDA as essentially the development undertaken by the appellant was in pursuance of an agreement entered into by it with the State Government through DTCP.

The AO refused to accept that there was no liability to deduct tax and accordingly found that the appellant was an “assessee in default” and made a total addition of Rs.10,03,687/-.

In appeal, the assessee again claimed that there was no liability to deduct tax under Section 194C of the Act on payment of EDC charges to HUDA. The learned CIT(A) placing reliance on the decision of Delhi High Court in Puri Constructions (P.)

We have heard parties. Perused record.

Although the learned counsel for appellant pointed out certain decisions of the co-ordinate benches of this Tribunal including ITA No. 1973/DEL/2023 in the case of Santur Builders Pvt. Ltd. decided on 07.12.2023, it was fairly submitted that there is a subsequent decision of Delhi High Court in the case of Puri Constructions (P.) Ltd. (supra) holding otherwise. It is submitted that the decision in Puri Constructions (P.) Ltd. (supra) is subject matter of challenge before the Supreme Court in SLP (Civil) No. 11448/2024.

The learned DR submitted that in almost identical facts, the Delhi High Court has found that Section 194C is applicable on payment of EDC which were paid on the directions of the DTCP. He, therefore, submitted that the appeal has no merit.

We have considered the submissions made. The issue may not detain us long in view of the decision of Delhi High court in Puri Constructions (P.) Ltd. (supra). We have carefully gone through the said decision and we find that in practically identical circumstances wherein the question was payment of EDC, in that case to Haryana Shahari Vikas Pradhikaran (HSVP) (which was earlier known as HUDA), the Delhi High court has held that such payment would fall within the ambit of Section 194C of the Act. It is trite that the decision of Delhi High Court in Puri Constructions (P.) Ltd. (supra) holds the field. The mere pendency of challenge is not sufficient. In the present case, it is not disputed that the appellant has failed to deduct the tax at source while making such payment to HUDA. Thus, no exception can be taken to