SH.H.P.SINGH & OTHERS,MOHALI vs. ITO (TDS-2), CHANDIGARH

आदेश/Order

Per Vikram Singh Yadav, Accountant Member:

These are three appeals filed by the assessee against the orders of the CIT(A) NFAC, for different assessment years as per following details:-

S.No. ITA Number CIT(A)/ NFAC order dated 1 236/Chd/2021 19.08.2021

2 237/Chd/2021 19.08.2021

3 238/Chd/2021 26.07.2021

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 2 2. Since common issues were involved in all these appeals,

they were heard together and are being disposed off by this

consolidated order. With the consent of both the parties, the

appeal filed by the assessee in ITA No. 236/Chd/2021 was

taken as a lead case, wherein the grounds of the appeal

taken by the assessee read as under:-

“1. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in sustaining the order passed by Assessing Officer u/s 201(1) & 201(1 A) for not deducting tax at source of Rs. 5,82,660/- on payment made as External Development Charges to Greater Mohali Development Authority (GMADA) and charging Interest u/s 201(1 A) of Rs. 5,59,353/- thereon. 2. That the learned Commissioner of Income Tax (Appeals) has erred in both law and on facts in sustaining the action of the Assessing Officer and ignored the fact that the EDC charges were collected by GMADA on behalf of the State Govt, and that the assessee was not liable to deduct tax at source. 3. That the learned Commissioner of Income-tax (Appeals) erred on both law and facts in sustaining the order of Assessing Officer that EDC paid to Greater Mohali Development Authority (GMADA) was a taxable entity and payment made without deduction of tax was in violation with the provisions of194C. 3.1 That the learned Commissioner of Income-tax (Appeals) ought to have considered the fact that GMADA only collected EDC on behalf of the State Govt, and EDC collected

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 3 was to be utilized as per the directions of the State Govt. 3.2 That the learned Commissioner of Income-tax (Appeals) ought to have considered the fact that there was no agreement between the appellant and GMADA to carry out any civil work on behalf of the assessee or any work to be carried out as per assessee's requirements. 4 That on facts and in the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals) has erred in upholding the action of the AO of charging interest u/s on 201(1 A). 5 That the appellant craves leave to add, amend, modify or alter the grounds of appeal.”

in the business of land and real estate development for

which it has sought and got approval from Punjab Urban

Planning and Development Authority and for the purposes,

the assessee has paid External Development Charges (EDC)

of Rs. 2,91,33,000/- to Greater Mohali Area Development

Authority (GMADA). During the course of TDS proceedings

before the ITO(TDS), Chandigarh, a show cause was issued to

the assessee to furnish the details of the payments made to

GMADA and compliance with the TDS provisions u/s 194C of

the Income Tax Act, 1961 (hereinafter called 'the Act').

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 4 4. In response to the show cause, the assessee submitted

that it is not required to deduct tax at source u/s 194C of

the Act on payment to GMADA and for the purposes,

reference was drawn to the letter received from GMADA

wherein it was stated that the provisions of section194C of

the Act are not applicable to EDC payments and, hence,

keeping in view the contents of the said letter, TDS was not

deducted on payment of EDC charges. The reply so filed by

the assessee was considered but not found acceptable to the

Assessing Officer (AO). As per the AO, the payment made by

the assessee on account of EDC is an advance payment for a

work which is in the nature of Civil Work that clearly

covered under Service Contract, hence, the assessee was

liable to deduct TDS on such payment under the provisions

of section194C of the Act and as the assessee has failed to

deduct TDS, the assessee was held as assessee in default

and tax liability u/s 201 read with section 201(1A) of the Act

was raised amounting to Rs. 11,42,013/- vide order dated

29.3.2018.

the Ld. CIT(A) who has confirmed the findings of the AO and

against the said order and the findings of the Ld. CIT(A),

NFAC, the assessee is in appeal before us.

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 5 6. During the course of hearing, the Ld. AR submitted that

the sole issue in dispute is whether theassessee was liable to

deduct tax u/s 194 C of the Act on the payment of EDC

charges to GMADA. Referring to the impugned order, it was

submitted that the CIT(A) has held that the EDC charges

were received by the GMADA from the assessee in pursuance

of the work contract executed between the assessee and

GMADA and for the purposes, the Ld. CIT(A) has relied on

the notification No. 17.17.2001 dated 22.6.2010, and the

policy framed by the State of Punjab for utilization of EDC,

Section 29 of the Punjab Regional and Town Planning and

Development Act and the copy of the CBDT office

Memorandum no. 23.12.2017. Thereafter, the Ld. CIT(A) has

concluded his findings at para 5.1 and 6.2 and the contents

thereof reads as under:-

“5.1 On perusal of the above notifications and policies of the Govt, also clearly reveal that for the purpose of development of infrastructure, the proportionate cost at fixed rates is got deposited by the government from the promoter as External Development Charges and the development is carried out by the local authority. The entire discussion can be summed up in the manner that though the promoter contributes towards the proportionate cost of infrastructure development, however, the works are carried out by the local authority in consequence of specific performance of the overall development of the area as per the

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 6 policy formulated by the Govt., cost of which is on the developer of project. In view of this, it implies that it is nothing but constitutes oral agreement, it shall be work / service contract, hence, the provisions of section 194C will be attracted in this case. 6.2 Therefore as such the GMADA being a development authority is kin to the HUDA, which is a development authority of State Government of Haryana & taxable entity under the Income-tax Act, and TDS provisions are applicable on EDC payable by the developer to HUDA, therefore I hold that EDC charges paid to GMADA is also liable to deduction of Tax by the developer. Thus, the Assessing Officer (TDS) has rightly held as the appellant in assessee in default under the provision of section 201(1)/201 (1A) of the Act. Therefore, the grounds of appeal raised by the appellant is hereby dismissed.”

and ground No. 3.2 taken in assessee’s appeal, the

provisions of section194C of the Act are not applicable in the

instant case since there is no contract executed by the

assessee with GMADA for payment of EDC and secondly even

otherwise there is no work / service contract. In this regard,

our reference was drawn to the agreement executed by the

assessee dated 1.6.2006 with the State Govt. It was

submitted that the background of this agreement is that the

State Govt with a view to attract investment in Punjab has

provided special package of incentives for infrastructure

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 7 projects provided the fixed capital investment in this projects

is more than 100 crores. Under the agreement, it is the

responsibility of the State Govt. to provide necessary

infrastructural support and under the said agreement, the

assessee has undertaken to deposit EDC or other charges as

fixed by State Govt. It was accordingly submitted that there

is no contract executed by the assessee with GMADA for

payment of EDC and without prejudice, even otherwise, the

Government is not carrying out any work / service to the

assessee.

up for consideration before the Chandigarh Benches of the

Tribunal in the case of Sukham infrastructure (ITA No.638,

249 & 250/Chd/2015 dated 7.6.2018). It was submitted

that the agreement in Sukham’s case is similar to that of the

assessee’s and therein the Tribunal has taken note of the

notification No. 17/17/2001 dated 22.6.2010 and the policy

framed by the State of Punjab for utilization of the External

Development Charges and it was held that section194C of

the Act is not applicable as there is no contract between the

assessee and the GMADA, rather, the agreement is between

the assessee and the State Govt. and it was further held that

even otherwise the agreement is not for work / services. It

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 8 was submitted that undisputedly the facts in assessee’s case

are identical to that of the case of Sukham Infrastructure

(supra) as is also evident from the assessment order passed

by the AO dated 3.8.2021 for assessment year 2014-15.

taken by the Coordinate Chandigarh Benches of the Tribunal

in the case of Preet Land Promoters and Developers P Ltd in

ITA No. 829/Chd/2017 dated 8.11.2017, Delhi Benches in

the case of Santur infrastructure Pvt Ltd in ITA No.

6844/Delhi/2019, M/s perfect Constech Pvt Ltd in ITA no.

6907/Delhi/2019 dated 29.12.2020.

income in the hands of the GMADA or not is not a relevant

issue for an adjudication of whether the provisions of section

194C of the Act are applicable. It was submitted that

realizing the same even in the case of Sukham infrastructure

(supra) this issue was left open by Tribunal. It was further

submitted that the provisions of section 194C are different

and cannot be equated with the provisions of section 195 of

the Act wherein the payer can examine whether the

payments are chargeable to tax in the hands of the non-

resident payee or not. It was submitted that no such

examination can be done by the payer within the ambit of

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 9 section 194C and in support reliance was placed on the

decision of Hon'ble Supreme Court in the case of PILCOM Vs.

CIT reported in 425 ITR 312 (SC) and a copy of the CBDT

Circular No.12 of 2022 dated 16.6.2022.

Senior DR are in the context of whether the EDC charges are

in the nature of income in the hands of GMADA or not and

the said issue has at all no relevance as to adjudication of

whether the provisions of section 194C are applicable or not

and as far as the issue of whether EDC charges is in the

nature of income saying can be decided while adjudication of

mater in the hands of GMADA. It was accordingly submitted

that the orders so passed by the Ld. CIT(A) NFAC be set

aside and the necesslay relief be provided to the assessee.

lower authorities and it was further submitted that where

the EDC charges is in the nature of income has been under

challenge in the case of GMADA before the Tribunal and a

copy of the submissions made therein were submitted during

the course of hearing.

perused the material on record. We find that the limited

issue under consideration is whether the provisions of

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 10 section 194C are attracted on payment of EDC Charges by

the assessee to GMADA. The provisions of section 194C

provides that-

“Any person responsible for paying any sum to any

resident (hereafter in this section referred to as the

contractor) for carrying out any work (including supply of

labour for carrying out any work) in pursuance of a

contract between the contractor and a specified person

shall, at the time of credit of such sum to the account of

the contractor or at the time of payment thereof in cash

or by issue of a cheque or draft or by any other mode,

whichever is earlier, deduct an amount equal to—

(i) one per cent where the payment is being made or credit

is being given to an individual or a Hindu undivided

family;

(ii) two per cent where the payment is being made or credit

is being given to a person other than an individual or a

Hindu undivided family,

of such sum as income-tax on income comprised therein.”

sum is paid for carrying out any work in pursuance of a

contract between the contractor and the specified person.

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 11 Whether said sum is chargeable to tax in the hands of the

payee and to what extent, is not a subject matter of

examination as far as the applicability of section 194C of the

Act. In the instant case, therefore whether EDC charges are

chargeable to tax in the hands of GMADA is not subject

matter of examination before us and the scope of the present

adjudication is therefore limited to applicability of provisions

of section 194C of the Act and we find that an identical issue

has been decided by the Coordinate Chandigarh Benches in

the case of M/s Sukham Infrastructure Pvt Ld. Chandigarh

(supra) wherein the relevant findings read as under:-

“9. We have considered the rival submissions and have gone through the records. So far as the plea that the collection of the EDC charges by the GMADA from the developer / assessee was on behalf of the state government and that it is not an income of the GMADA and that the GMADA has shown this amount as liability in its account, in our view, any finding on this issue at this stage cannot be conclusively arrived in the case of a third party (assessee before us) as the GMADA is not a party to the present litigation/appeals. Whether the EDC charges received by the GMADA would constitute income at the hands of the GMADA is an important issue which has been strongly contested by the GMADA and even by other such authorities in other appeals, but, no specific or conclusive findings, arrived at in any of such cases either by the Tribunal or any higher authority, has been brought into our knowledge. Hence, at this stage in this case of the assessee due to lack of the adequate facts and evidences and at the back of GMADA, neither it is appropriate nor possible to give any conclusive finding as to whether the receipts of the GMADA on account of EDC charges from various developers would constitute taxable income of GMADA or not? However, after hearing the Ld. representatives of the parties at length, we are of the view that these payments made by the

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 12 assessee would not attract the provisions of sections 194C and 194A of the Act on other grounds also. Hence, we proceed to discuss and adjudicate the issues in the following paras of this order.

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 13 held on 29.03.2006.

(ii) The said project shall have to be fully implemented and brought into commercial production within the said stipulated period

(iii) The company shall develop the Industrial Estate first and housing and commercial projects subsequently. Before developing or disposing off the residential and commercial pockets in any manner, the company shall not only first develop industrial pockets but also dispose offatleast 50% of the industrial plots to industrial units which will be set up in the industrial pocket and the entire project shall come up with proposed investment level in stipulated period.

(iv) The project of Information Technology Park shall be further subject to the provision of the

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 14 guidelines notified by Department of Industries & Commerce. Some of relevant provision shall be:-

a. A minimum of 60% of area will have to be developed as an Industrial Pocket, a maximum of 30% of area may be developed as residential pocket and 10% of area can be developed as commercial pocket Government, in the Department of Industries may however, reduce the permissible limits for non-industrial use in particular cases.

b. Permissible saleable area in the industrial pocket shall be 65%, in the residential pocket 60% and for the commercial pocket 40% . Balance of areashall be used for common facilities, open spaces, green bell . as per approved zoning plan and as per applicable byelaws.

c. Zoning and Layout plan will be cleared by a competent authority declared by Director of Industries & Commerce, Punjab.

d. Common facilities would include the facilities for air conditioning, roads (including approach roads water supply, sewerage facilities, common effluent treatment facilities, telecom networks, generation and distributor of power, provided that the facilities are used for more than 2 industrial units in the industrial Park

e. Infrastructure development would include roads (including approach roads) water supply and sewerage facilities, common effluent treatment facilities, telecom networks, generation and distribution of power, parking facilities parks, street lights and such other facilities as are of common use tor industrial activities which are identifiable and arc to be commonly used.

f. Industrial Parks with a residential component shall have only non- polluting units and distance between industrial area and other areas will be in.

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 15 accordance with guidelines issued by Punjab Pollution Control Board from time to lime.

g. Necessary clearances from various central/state agencies will have to be obtained by the developers as per statutory requirements and on payment of such prescribed fees as required under the law. The Department of Industries & Commerce, Government of Punjab will be the single nodal agency for approving and facilitating the projects for getting clearances etc. and will also facilitate in getting resolved various issues which will relate to Government Departments/ Agencies.

h. An Industrial Park shall come up as one unit at single geographical location and shall be developed in contiguity. However, public service which already exists such as road, canal, park etc. shall not be construed to break the unity & contiguity of the park.

i. Benefits to industrial parks under industrial policy, if provided by the Government shall be withdrawn by State Government in case the park is not put up / developed in accordance with the sanctioned plan within the prescribed time period.

(iv) The Government of Punjab has agreed to provide following reliefs and concessions to the company for implementation of aforesaid project:-

a) As per the Industrial Policy 2003 exemption will be granted on 100% stamp duty and registration lee on sale / transfer of built up space of the units or land inside the project area. Such exemption shall extend to the project area upto first sale of developed area / plot / built up space to any party by them or to any of its affiliate. There shall be no stamp duly on lease instrument of units located in the project area. Such exemption shall remain operative till the completion of the entire project

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 16 as per the agreement.

b) State Government shall acquire land as per provision of the Land Acquisition Act to the extent of 10% of the total area of the project, if requested by the company.

c) The land use change in the area falling under the control of the Punjab Periphery Control Act shall be allowed without any charges levied by the Housing and Urban Development Department in accordance with the draft master layout plan of the periphery and periphery policy of the Government of Punjab. However, if any or whole part of land of the project area is not covered in any master plan or planning zone under PUDA Act, the land use thereof shall not be changed or amended later on and shall be incorporated as such and included in any future master plan or zoning which shall be prepared under the PUDA Act. The project shall not be advertised / launched and no money will be collected from general public for allotment of land / plot / flat / any space till such time the layout / zoning plans are cleared from the competent authority.

d) Permission under Punjab State Tubewell Act, 1954 to dig Tubewell in project area for requirement of the project was allowed.

e) Permission under the provisions of Punjab Mines & Mineral Act shall be allowed within the project area for works relating to development of the project. However, due charges will be payable.

f) High-rise buildings upto 45 mtrs, shall be allowed subject to Air Safety Regulations, Traffic Circulation and Fire Safety Norms.

g) Work contract tax on construction material required for the project shall be charged at minimum floor rate.

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 17

h) FAR of 2 shall be allowed for industrial andcommercial purpose. However, the relevant building Bye-laws / regulations shall be applicable to the area. The Guidelines issued by the Department of Industries & Commerce for Industrial Parks shall also be applicable.

i) The State Government will try to ensure that connectivity to power, roads, accessibility, communication, civic and other infrastructure up to project is provided within 240 days from the date the same is applied for to the concerned department / agency / authority / local body on fulfillment of various terms and conditions required in this regard at such rates / fee etc. which shall not be less favorable to them compared to similarly placed projects / customers.

j) The project of industrial part shall be exempted from PAPR Act.

k) 50% exemption from electricity duty at current rate for 5 years shall be allowed from the date of release of connection by PSEB. This concession shall, however, be admissible only to such Industrial units which are set up within the area earmarked for industry and start production within 5 years from the date of approval of Industrial Park i.e. 27.1.2006.

l) The State Government shall allow the company to connect the project area to the State Transport Network. The State Government shall also allow them to operate their own public transport system within the project area and also for connecting the project area to the main unban center nearest to the project area subject to the fulfillment of required terms and conditions in this regard.

m) The State Government shall not allow hazardous industry as defined under Factories Act within 500

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 18 metres of the project area and industrial plots within the industrial part shall also not have any hazardous industry.

n) Pollution Control Board shall grant NOC and consent to operate to the Green Category Industry to be located in the Industrial Park in 30 days on fulfillment of all the required terms and conditions.

o) No State Agency shall erect any barrier or create hindrance in various connectivities which shall be allowed to the project except on the ground of major law and order problem or National Security considerations.

p) The Department of Industries shall be the single Nodal Agency for facilitating the project and getting clearance etc. required for the unit for the project and the project area and will also get resolved various issues which will relate to the Government Departments or Punjab Government Public Sector Undertakings/Authority/Local Body.

q) Proportionate cost of infrastructure development which will be carried out by the State Government in the area where project is located, shall be borne by all the developers of Information Technology Park/Industrial Park proportionately.

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 19 & 5(iii) above. In witness whereof the company has cause its common seal to be affixed and the Government of Punjab both hereunto set their hand and seal on the day and year first above written Sd/- Sd/- Signed on behalf of the company The state Government.

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 20 Apartment & Property Regulation Act, 1996 (PAPR Act). The Hon’ble High Court though held that the assessee was exempt from PAPR Act, yet, the assesse was liable to pay proportionate cost of infrastructure development which included EDC charges out of its contractual liability with the State Govt. However, it was established that the GMADA has no authority to assume the role of State Govt. to deny the concessions to the assessee by invoking Para 6 of the agreement. The relevant part of the order of the Hon’ble High Court is reproduced as under: “The State Government thereafter at its own has extended the time limit repeatedly and its latest policy dated 06.02.2015 (R3) conclusively establishes its inclination towards the completion of projects by granting concession/relief in the agreed time schedules, for which an offer has been made even to the petitioner also. Since the respondents themselves are not keen to adhere to the time schedule, we hold that GMADA has no authority to assume the role of State Government or to invoke Para 6 of the Agreement to say that the petitioner has lost its right to claim concessions due to the 'expiry' of time period, within which the project was required to be completed.”

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 21 125 acres of land at Mohali with an investment of Rs. 952 cores to avail the benefits/ special package of concessions. The aforesaid agreement was executed between the assessee and the Governor of Punjab on behalf of the State Government. A perusal of the whole agreement, as reproduced above, shows that the clauses (i) to (iii) along with their sub clauses relate to the obligation of the assessee to invest and develop the stipulated amount and develop the project as per policy and guidelines of the state Government. Clause (iv) further provides for the relief and concessions for which the government of Punjab agreed to provide to the assessee as per its policy of development which included exemption of 100% of stamp duty and registration fee etc., acquisition of land to the extent of 10% of the total area of project by the state government if requested by the assessee, change of land user free of cost, permission to dig tube wells, permission to construct high rise buildings up to to 45 meters etc., concession in work contract tax on construction material, FAR allowability of 2 for industrial and commercial purposes, exemption of the industrial park from PAPR Act, 50% exemption form electricity duty for five years, permission to the company / assessee to connect the project area to the state transport network and to operate its own public transport system within the project area and further commitment of the state government not to allow hazardous industry with 500 meters of the project area, NOC from the Pollution Control Board and consent to operate to the Green Category Industry within the period of 30 days and the state government’s commitment not to erect any barrier or create hindrance in various connectivities. However thee clauses (i) and (q) are seemed to be relevant for the adjudication of the issue. Clause (i) provides that the State Government will try to ensure that connectivity to power, roads, accessibility, communication, civic and other infrastructure up to project is provided within 240 days from the date the same is applied for to the concerned department / agency / authority / local body on fulfillment of various terms and conditions required in this regard at such rates / fee etc. which shall not be less favorable to them compared to similarly placed projects / customers, whereas Clause (q) provides that Proportionate cost of infrastructure development which will be carried out by the State Government in the area where project is located shall be borne by all the developers of Information Technology Park / Industrial Park proportionately.

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 22

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 23

External Development Charges (EDC) are the “3) charges for utilization and repair/ maintenance/ strengthing of existing infrastructure proposed infrastructure and License/ Permission fee is the fee for granting permission for the projects.

The External Development Charges and Licence fee shall be utilized by the concerned Local Planning and Urban Development Authorities for providing infrastructure. In case the concerned Authority feels that connectivity is required from any local body or any work is to be got executed from a local body, the proportionate amount may be deposited by the authority with the Local Body on case to case basis.”

A. EXTERNAL DEVELOPMENT WORKS WHERE EDC IS TO BE USED:

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 24 such connectivity and construction of the roads. These roads shall be only Master plan roads.

B. OTHER DEVELOPMENT WORKS FOR THE OVERALL DEVERLOPMENT OF AREA:

These works may include the up gradation and construction of major roads/ Master Plan Roads, construction of bye-passes,

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 25 provision and up gradation of educational, health and sports facilities, or any other infrastructure in the area for the benefit of area and public at large as decided by the authority.

(i) Major Road Network/Bye Pass (ii) Water Supply Network (iii) Sewerage Network and disposal sites. (iv) Power Stations (v) Social Infrastructure such as education, health, public buildings. The committee constituted to prepare & scrutinize the Action Plan for the utilization of EDC should finalize the priorities of works to be done out of EDC. However, the share for any component will not be fixed.

Note: Area means the area included within the limits of local planning area of any Master Plan for special Planning & Development Authority and Area within Municipal limits for the Urban Local Bodies.

C. Utilization of EDC These funds may also be utilized for any specific purpose/ work on the special instructions of the state government.

D. WHAT IS NOT INCLUDED IN EXTERNAL DEVELOPMENT WORKS: The provision of internal roads, water supply, sewer, storm water drainage, street lighting, development of parks, landscaping, electric supply, any electric installation (other than 66 KV electric grid station) within colony. The obligations of promoter under PAPRA will not be a liability of EDC.

Manner of Utilization. 1. At the time of approval of the project/approval of the layout plan/grant of licence the competent authority may specify the provisions which would be made or for the external development of the infrastructure according to this policy for the project. However, in case the exact detail of all the development work is not possible to be mentioned at the time of license, it may be decided as per the requirements of the project & future needs. So that the applicant/project owner is clear on what kind of infrastructure will be provided by the Authority.

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 26

“Promoter may submit suggestions regarding the works to be undertaken out of EDC around his project; However the committee constituted to prepare & scrutinize the Action Plan for the utilization of EDC should finalize the priorities after considering the suggestions of promoter.”

Preparation of Action Plan.

Annual Action Plan for up gradation of existing infrastructure and provision of proposed infrastructure in view of the proposals of Master Plan in general and for its provision to the approved projects in particular be prepared by every local Planning and development Authority. An advisory committee may be constituted in each local planning and development authority to prepare and scrutinize the Annual Action Plan. The committee shall be as follows for the Planning & Development Authority.

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 27

The committee for Corporation Cities will be as follow:- 1. Commissioner M. Corpn. Chairman 2. Addl./Joint Commissioner Member Secretary 3. . Rep. of Deputy Commissioner Member 4. S.E.M. Corpn. Member 5. XEN (PH) W/S & Sanitation Deptt., Pb. Member 6. SE, PWSS. Board Member 7. Municipal Town Planner Member 8. District Town Planner(Concerned) Member 9. Chief Engineer/SE(PSPCL) Member

The committee for the other Towns will be as follow:- 1. Regional Deputy Director(LG) Chairman 2. E.O.M.C.(Concerned) Convener 3. Rep. of C.T.P. Local Government Member 4. XEN (PH) W/S & Sanitation Deptt.,Pb. Member 5. XEN, PWSS. Board Member 6. District Town Planner (concerned) Member 7. Superintendent Engineer(PSPCL) Member 8. Any other Special Invitee Member

Maintenance of Separate Account. The separate account of amount received under the head of EDC should be maintained by every local planning and development authority or local authority. The expenditure incurred on various development works executed out of this account should also be maintained separately. The local authority should get this account audited every year and put up the report to the authority for its rectification.”

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 28 18 A perusal of the above reproduced notifications and policies of the Govt. also clearly reveal that though, in lieu of the benefits, concessions, incentives given by the government to the promoter for the purpose of development of infrastructure, the proportionate cost at fixed rates is got deposited by the government from the promoter for external development work, yet, the development is carried out by the local authority out of its own obligations/duties. The entire discussion can be summed up in the manner that though the promoter contributes towards the proportionate cost of infrastructuredevelopment, however, the works are not carried out by the local authority in consequence of specific performance of the agreement/contract but out of its own obligations and duties towards the public. In view of this, since the agreement cannot be said to be a work / service contract, hence, the provisions of section 194C will not be attracted in this case.”

held that GMADA has been authorized to collect the EDC

charges as per the policy decision of the Government and not

out of free consent of the parties to the contract which has

been executed between the assessee and the Govt. and

therefore, it cannot be said that assessee has paid the EDC

charges to GMADA out of any contractual obligations and

liability towards GMADA. It has been further held that the

though the developer contributes towards the proportionate

cost of infrastructure development by way of EDC Charges,

the work so carried out by the local authority is not in

consequence of specific performance of the contract but out

of its own obligations and duties towards the public and

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 29 thus, the contract cannot be said to be a work/service

contract and thus, on both accounts, the provisions of

section 194C are not attracted. Nothing has been brought

on record or to our notice during the course of hearing that

the aforesaid findings of the Coordinate Benches have been

disturbed by an order of a Higher Court and therefore, taking

the same into consideration and following the principle of

consistency, we are of the considered view that the

provisions of section 194C are not attracted on payment of

EDC charges to GMADA and thus, the demand raised u/s

201(1) read with Section 201(1A) of the Act are hereby set

aside.

parties submitted that the facts and circumstances of the

case are exactly identical except that in ITA

No.237/Chd/2021, the AO passed the order u/s 201(1) read

with section 201(1A), whereas in ITA No. 238/Chd/2021,

the AO had passed the order u/s 144 r.w.s. 147 of the Act

and the additions have been made u/s 40(a)(ia) of the Act on

account of non-deduction of TDS u/s 194C of the Act.

Therefore, considering these submissions made by both the

parties, our findings and directions contained in ITA

ITA Nos. 236 to 238-Chd-2021 - H.P. Singh and others, Mohali 30 No.236/Chd/2021 shall apply equally in these two matters and the matter is decided in favour of the assessee.

Order pronounced on 25/11/2022.

Sd/- Sd/- (DIVA SINGH) (VIKRAM SINGH YADAV) Judicial Member Accountant Member Dated : 25.11.2022 “आर.के.”

आदेशक ��त,ल-पअ.े-षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकरआयु/त/ CIT 4. आयकरआयु/त (अपील)/ The CIT(A) 5. -वभागीय��त�न2ध, आयकरअपील%यआ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड�फाईल/ Guard File

आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar