ROYALGOLF LINK CITY PROJECTS PRIVATE LIMITED,DELHI vs. CENTRAL CIRCLE 14, DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’, NEW DELHI BEFORE SH. SATBEER SINGH GODARA, JUDICIAL MEMBER AND SH. NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 1670/Del/2026 (Assessment Year : 2017-18) Royalgolf Link City Projects Vs. Central Circle - 14 Pvt. Ltd., Income Tax Office, M-4, Ground First Level Delhi – 110 049 Office No.126 Campus – 2, South Extension Part-II, Andrewsganj, S.O. Shahpur Jat, South East Delhi – 110 049 PAN No. AAHCR 0549 M (APPELLANT) (RESPONDENT) Assessee by Shri Shubham Bansal, Adv. Revenue by Shri Balkishan Gopal, Sr. D.R. Date of hearing: 03.08.2026 Date of Pronouncement: 03.08.2026

ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER : This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals), Delhi-26 [‘CIT(A)’ in short] dated 22.10.2025 arising from the penalty order dated 27.06.2024 passed under section 271A of the Act by the JCIT, Assessment Unit, New Delhi for A.Y. 2017-18.

ITA No. 1670/DEL/2026 [A.Y 2017-18] Royalgolf Link City Projects pvt. Ltd. vs. Central Circle - 14

ITA No. 1670/DEL/2026 [A.Y 2017-18] Royalgolf Link City Projects pvt. Ltd. vs. Central Circle - 14 250 of the Act wherein the addition of Rs. 89,40,785/- had been confirmed. Thereafter, the AO has imposed a penalty of Rs. 13,41,118/- u/s 270A of the Act. Aggrieved, upon appeal, the ld. CIT(A) dismissed the appeal of the assessee. 4. Aggrieved by the order of the CIT(A), the assessee is now in appeal before us. 5. Before us, the ld. Counsel for the assessee submitted that the addition was made on account of applicability of TDS provisions. Accordingly, the AO had levied penalty under section 270A of the Act. Further ld. Counsel for the assessee submitted that the addition was made on the basis of interpretation of TDS provisions. 6. Per contra, ld. DR relied on the orders of the AO and CIT(A). 7. We have heard the rival submissions and perused the material available on record. The facts are that the assessee company made lease rental payment amounting to Rs. 2,98,02,618/-, during the year, to GNIDA and claimed the same as expenses. The question was whether the assessee made TDS deduction u/s 194I and in absence of such deduction, 30% of these payment, amounting to Rs.89,40,785/-, was disallowed u/s 40a(ia) of the Income Tax Act, 1961 placing reliance on the decision of Hon’ble Supreme Court in the case of New Okhla Industrial Development Authority Vs. Commissioner of Income-tax

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ITA No. 1670/DEL/2026 [A.Y 2017-18] Royalgolf Link City Projects pvt. Ltd. vs. Central Circle - 14 [2018] 95 taxmann.com 80(SC). The hon’ble Supreme Court held that since NOIDA is not a ‘Municipality' as contemplated in clause (e) of article 243P of Constitution nor is it covered by definition of local authority as contained in Explanation to section 10(20), its income is not eligible for exemption under section 10(20). In accordance, the CIT(A) also held that since the status of ‘GNOIDA’ does not fall under ‘Government’ criteria, Section 196 of the Act is not applicable in assessee’s case and therefore, deduction of tax in accordance with Section 194I of the Act was applicable for the assessee while making payments, being lease Rent, to ‘GNOIDA’. 8. The assessee, on the other hand, explained that the assessee was under the impression that GNOIDA is a Government Authority and therefore the provisions of Section 194I of the Act was not applicable in assessee case and relied on Section 196 of the Act. 9. In such facts and circumstances, we are of the considered view that the assessee had a bona fide view that deduction of TDS, from payment made to GNOIDA, falls u/s 196 of the Act considering the GNOIDA as a government body. We find that the penalty u/s 270A has been levied on the sole ground that the quantum addition has been confirmed by the appellate authority. We find that neither the AO nor the CIT(A) has given a finding u/s 270(6)(a) that the assessee’s

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ITA No. 1670/DEL/2026 [A.Y 2017-18] Royalgolf Link City Projects pvt. Ltd. vs. Central Circle - 14 explanation is not bona fide and the assessee has not disclosed all the material facts to substantiate the explanation offered. We therefore are inclined to agree with the assessee that the deduction from payment made to GNOIDA u/s 194I was a debatable and interpretational issue relating to applicability of TDS provisions, and therefore the same could not be treated as “under-reporting of income” within the meaning of section 270A. We are also fortified by the decision of the hon’ble Supreme Court in the case of CIT v. Reliance Petroproducts Pvt. Ltd. [2010] 189 Taxmann 322/322 ITR 158 (SC), where the hon’ble court deleted the penalty u/s 271(1)(c) holding as follows: “Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract penalty. If we accept the contention of the Revenue, then in case of every return where the claim made is not accepted by the AO, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the legislature.” In view of the discussion above, the penalty imposed under Section 270A of the Income Tax Act for AY 2017-18 is deleted. Ordered accordingly. 10. In the result, appeal of the assessee in ITA No.1670/Del/2026 is allowed.

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ITA No. 1670/DEL/2026 [A.Y 2017-18] Royalgolf Link City Projects pvt. Ltd. vs. Central Circle - 14 Order pronounced in the open court on 03.08.2026

Sd/- Sd/- (SATBEER SINGH GODARA) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 17.08.2026 Priti Yadav, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

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