NANDED CITY DEVELOPMENT AND CONSTRUCTION COMPANY LIMITED,PUNE vs. DCIT, CIRCLE 2, PUNE, PUNE

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ITA 3424/PUN/2026Status: DisposedITAT Pune15 October 2026AY 2020-202146 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal allowed the grounds of appeal related to the disallowance under Section 40(a)(ia) and the consequent confirmation by the CIT(A). The Tribunal noted that similar grounds in ITA No. 3423/PUN/2026 had already been decided in favour of the assessee. Following the same reasoning, the grounds of appeal No. 1 to 9 (for ITA No. 3423/PUN/2026) and grounds No. 1 to 8 (for ITA No. 3424/PUN/2026) were allowed. This implies the Tribunal found that the assessee's contention regarding the applicability of Section 194IA over 194IC, or that it was a case of short deduction, was accepted, and thus the disallowance under Section 40(a)(ia) was not warranted. The specific reasoning for allowing these grounds is not detailed in the provided extract, but it is stated that the decision in ITA No. 3423/PUN/2026 was followed. The general grounds of appeal were dismissed. The judgment indicates that the appeals were partly allowed for statistical purposes and fully allowed in other cases.

What were the facts?

The assessee, Nanded City Development and Construction Company Limited, filed appeals against orders of the CIT(A)/NFAC for assessment years 2018-19, 2020-21, 2023-24, and 2024-25. The appeals were consolidated due to identical grounds. The Assessing Officer (AO) made additions concerning Joint Development Agreements (JDAs), ICDS compliance, and sales turnover. Specifically, the AO disallowed Rs. 44,07,92,070/- under Section 40(a)(ia) for alleged non-deduction of TDS under Section 194IC on payments for immovable property, and added Rs. 9,55,28,149/- for deferred revenue based on ICDS III. Further, an addition of Rs. 2,42,81,800/- was made for GST/service tax not offered to tax. The CIT(A)/NFAC confirmed these additions. The assessee contended that TDS was correctly deducted under Section 194IA, not 194IC, and that revenue recognition followed ICDS III.

What were the issues?

1. Whether the CIT(A) erred in confirming the disallowance of Rs. 44,07,92,070/- (and similar amounts for other AYs) under Section 40(a)(ia) for alleged failure to deduct TDS under Section 194IC on payments made under Joint Development Agreements (JDAs), when the assessee contended that TDS under Section 194IA was correctly deducted and Section 194IC was not applicable. 2. Whether the CIT(A) erred in confirming the addition of Rs. 9,55,28,149/- (and similar amounts for other AYs) for deferred revenue, by holding that the assessee failed to recognize revenue and costs correctly as per ICDS III, and did not substantiate that the outcome of construction contracts could not be estimated reliably. 3. Whether the CIT(A) erred in confirming the addition of Rs. 2,42,81,800/- (and similar amounts for other AYs) for GST/service tax not offered to tax in the income tax return. Assessee's Contentions: - TDS was correctly deducted under Section 194IA, not 194IC, as the JDA did not fall under the specified agreements for Section 194IC, and the payments were for purchase of immovable property, not consideration for development. Reliance was placed on Section 45(5A) and the fact that it was a case of short deduction, not non-deduction. - Revenue recognition followed ICDS III, and the outcome of contracts could not be reliably estimated in some projects. No disallowance was made for AY 2022-23. - One-time maintenance charges are spread over time, MSEB reimbursement is not income, and extra amenities sales are already accounted for. Revenue's Contentions: - The AO's disallowance under Section 40(a)(ia) was justified as Section 194IC was applicable to JDAs and TDS was not deducted as required. - The assessee deferred revenue and expenses to avoid tax, not recognizing the correct cost and revenue as per ICDS III.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194IC,Section 194IA,Section 45(5A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI R. K. PANDA & Ms. ASTHA CHANDRA

For Appellant: Shri Nikhil S. Pathak
For Respondent: Shri Amit Bobde, CIT-DR

आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: अपील र्थी / The Appellant; 1. 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘B’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, Sunil Kumar Digitally signed by Sunil Kumar More // True Copy // More Date: 2026.10.25 10:51:39 +05'30' Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

46 ITA Nos.3423, 3424, 3425 & 3446/PUN/2026

S.No. Details Date Initials Designation 1 Draft dictated on 07.10.2026 Sr. PS/PS 2 Draft placed before author 09.10.2026 Sr. PS/PS Draft proposed & placed before 3 JM/AM the Second Member Draft discussed/approved by 4 AM/AM Second Member Approved Draft comes to the 5 Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to 9 the Office Superintendent Date on which file goes to the 10 A.R. 11 Date of Dispatch of order

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