The Income Tax Appellate Tribunal (ITAT), New Delhi bench deleted penalty imposed under Section 271C of the Income Tax Act 1961 and held that there is no No TDS on payment of External Development Charges (EDC) to HUDA.
The issue as to whether penalty under section 271C of the Act is leviable for non-deduction of tax on payments made for External Development Charges (EDC) to HUDA. The appeal has been preferred by Sirur Developers Pvt. Ltd against the order of the Commissioner of Income Tax (Appeals) New Delhi for the Assessment Year 2016-17 in sustaining the penalty levied under section 271C of the Income Tax Act, 1961.
The Tribunal in the case of TDI Infrastructure Ltd. vs. Addl. CIT held that “the assessee was not required to deduct tax at source at the time of payment of EDC as the same was not out of any statutory or contractual liability towards HUDA and, therefore, penalty under section 271C of the Act was not leviable. “
Similarly in the case of RPS Infrastructure Ltd, it was held that “the payment of EDC is not for carrying out any specific work to be done by HUDA for and on behalf of the assessee but rather DTCP which is a Government Department which levies these charges for carrying out external development and engages the services of HUDA for execution of the work. Therefore, the assessee was not required to deduct tax at source at the time of payment of EDC as the same was not out of any statutory or contractual liability towards HUDA and, therefore, the impugned penalty was not leviable”.
The Bench consisting of Challa Nagendra Prasad, Judicial Member and B R R Kumar, Accountant Member held that “Facts being identical, respectfully following the decision of the Tribunal in the case of TDI Infrastructure Ltd. Vs. Addl. CIT we delete the penalty levied under section 271C of the Act.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
