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Facts
The assessee, a real estate developer, was subjected to a survey which revealed non-deduction of TDS on External Development Charges (EDC) paid/payable to HUDA. The Assessing Officer (AO) subsequently issued an order under Sections 201(1) and 201(1A) for Assessment Year 2014-15, treating the assessee as 'in default'. The assessee contended that the liability for TDS arose in AY 2012-13 when the charges were credited in books, and therefore the order passed for AY 2014-15 was barred by limitation.
Held
The Tribunal held that the TDS liability on EDC arose in Assessment Year 2012-13, when the credit was made in the assessee's books, not in AY 2014-15 when the payment was eventually made. Consequently, the order passed by the AO on 25-3-2021 for AY 2014-15 was time-barred under Section 201(3), as the limitation period for AY 2012-13 expired on 31-3-2019.
Key Issues
1. Whether the liability for non-deduction of TDS on External Development Charges (EDC) to HUDA arose in Assessment Year 2012-13 (when credited) or 2014-15 (when paid). 2. Whether the order treating the assessee as 'in default' under Section 201 for AY 2014-15 was barred by limitation.
Sections Cited
194C, 201(1), 201(1A), 133A, 201(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
O R D E R PER M. BALAGANESH, A. M.: The appeal in AY 2024-15, arises out of the 1. order of the Jt. Commissioner of Income Tax (Appeals)-2, Mumbai [hereinafter referred to as ‘ld. JCIT(A)’, in short] dated 04.03.2025 against the order of assessment passed u/s 201 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 25.03.2021 by the Assessing Officer, ITO (TDS), Ward-77(2), Delhi (hereinafter referred to as ‘ld. AO’).
The assessee had filed revised ground no. 1 before us which reads as 2. under:-
That that under the facts and circumstances, the liability of deduction of TDS u/s 201(1) and under section 201(1A) on EDC (External Development Charges) payable to HUDA for Rs 10,87,04,000/- arose in F.Y.11-12 (AY 12-13) under section 194C(1), being Yr (F.Y. 11-12) in which credit for said EDC payable stood entered in the books of A/cs 31-3-12, therefore the liability u/s 201(1) Page | 1 Shiv Sai Infrastructure Pvt. Ltd and u/s 201(1A) relates to AY 12-13, however incorrectly created for AY 14-15, hence, the impugned order being passed for AY 14-15 is illegal and unsustainable in law, is barred by limitation.
Since this goes to the root of the matter, the same is hereby taken up 3. first for adjudication.
We have heard the rival submissions and perused the materials 4. available on record. The assessee is a company engaged in the business of real estate development and is developing projects in the State of Haryana. A survey under section 133A of the Act was carried out on 9-6-2017 and 14-6- 2017 at the business premises of Haryana Urban Development Authority (HUDA), located in Panchkula, Haryana by the DCIT (TDS) Panchkula. Based on the report of DCIT (TDS) Panchkula, the Learned AO issued notice under section 201(1) / 201(1A) of the Act asking various information regarding the deduction of tax at source to the assessee. The information as asked by the Learned AO were provided by the assessee company. Based on the report of DCIT (TDS), the Learned AO issued a show cause notice dated 2-3-2021 to treat the assessee as ‘assessee in default ’ as per section 201(1) and for charging interest under section 201(1A) of the Act for non- deduction of tax at source under section 194C out of the payment made to HUDA against External Development Charges (EDC).
The assessee company made representation before the Additional 5. Commissioner of Income Tax, Range 78, New Delhi, clearly stating that the provisions of TDS are not applicable on the payment made to HUDA as the amount has been paid to HUDA on behalf and under the direction of Department of Town and Country Planning (DTCP), Government of Haryana, as the assessee company is not dealing with HUDA. However, this representation did not benefit the assessee and an order stood passed under section 201(1) read with section 201(1A) of the Act on 25-3-2021 for Shiv Sai Infrastructure Pvt. Ltd assessment year 2014-15, treating the assessee as an ‘assessee in default’ for non-deduction of tax at source under section 194C of the Act in respect of EDC paid to HUDA in the sum of Rs 5,65,600 and interest of Rs 5,33,464. This action of the Learned AO was upheld by the Learned CITA.
Whether tax is deductible at source or not on EDC paid /payable to 6. HUDA is not disputed by the Learned AR before us. The Learned DR before us was given liberty to file written submissions on or before 3.12.25 as per his request. But no such written submissions were filed from the side of the revenue as committed, till the date of passing of this order. Hence we proceed to dispose of this appeal based on arguments advanced by both the parties at the time of hearing. It is not in dispute that the assessee had made payment of Rs. 1,92,80,000 on 1-6-2013 and Rs. 90,00,000 on 3-5-2013 totaling to Rs.2,82,80,000 on account of EDC charges to HUDA. But it is pertinent to note that this EDC charges was payable by the assessee as on 31-3-2012 itself and accordingly, the assessee had passed an entry in its books on account of EDC charges payable to HUDA on 31-3-2012 relevant to assessment year 2012-13. Hence, the credit of charges payable to Huda had arose first in assessment year 2012-13. The payment was deferred by the assessee till assessment year 2014-15 on account of dispute. The Learned AR placed on record evidences of the ledger account of EDC charges for assessment years 2012-13, 2013-14 and 2014-15 wherein it is found that the liability arose to the assessee in assessment year 2012-13 itself. These ledger accounts are enclosed in pages 1 to 16 of the paper book together with the audited financial statements for the years ended 31-3-2012 and 31-3-2014. These documents were also placed by the assessee before the lower authorities as per the certificate given by the assessee in the paper book. As per the provisions of section 194C of the Act, TDS provisions get triggered either at the time of credit or payment, whichever is earlier. In the instant Shiv Sai Infrastructure Pvt. Ltd case, the credit for EDC charges payable to HUDA had arose earlier i.e. in assessment year 2012-13 itself and the payment for the same had been made by the assessee in assessment year 2014-15. Hence the liability for TDS arose in assessment year 2012-13 and assessee could be treated as ‘assessee in default’ for assessment year 2012-13 under section 201(1) of the Act and consequential interest under section 201(1A) of the Act in assessment year 2012-13 only. Hence we hold that the assessee herein cannot be treated as an ‘assessee in default’ for assessment year 2014-15 in respect of EDC charges payable to HUDA in view of the aforesaid facts and provisions of the Act. Further as per the provisions of section 201(3) of the Act, no order under section 201 of the Act could be passed after the expiry of 7 years from the end of the financial year in which payment is made or credit is given. In the instant case, the order under section 201 of the Act was passed on 25-3-2021 for assessment year 2014-15. We had already held that credit of EDC charges payable to HUDA had arose earlier in assessment year 2012-13 and date of payment of EDC by the assessee in assessment year 2014-15 is of no relevance for the purpose of treating the assessee as an ‘assessee in default’. Hence the time limit to pass the order under section 201(1) /201(1A) of the Act expired on 31-3-2019. The order in the instant case had been passed by the Learned AO on 25-3-2021 for assessment year 2014-15 is barred by limitation. Accordingly, the revised ground no. 1 raised by the assessee is allowed.