Delhi HC to Hear Case on Income Tax – TDS Applicability for EDC and Interest Payments to HUDA/DTCP on September 11, 2024 [Read Order]

The Delhi High Court will hear the case on the applicability of Income Tax – TDS for External Development Charges ( EDC ) and interest payments to Haryana Urban Development Authority ( HUDA ) /Director of Town and Country Planning ( DTCP ) on September 11, 2024.

The Income Tax Appellate Tribunal ( ITAT ) bench found that the only effective issue involved herein is whether assessee could be treated as assessee in default under Section 201(1) of the Income Tax Act and consequently liable for interest under Section 201( 1A ) of the Income Tax Act in respect of non-deduction of tax at source on payment of external development charges ( EDC ) to Haryana Urban Development Authority ( HUDA ).

Further, CIT(A) had granted relief by placing reliance on the decisions of the coordinate bench of this tribunal stated supra, wherein it was held that the EDC paid to HUDA would not be liable for deduction of tax at source and accordingly the assessee cannot be treated as ‘assessee in default’ in terms of Section 201(1) of the Income Tax Act and no tax could be recovered from it for non-deduction of tax at source. Consequentially the assessee could not be made liable to pay interest under Section 201(1A) of the Income Tax Act. Accordingly, the grounds raised by the revenue are dismissed.

Thus, the bench of Delhi High Court Justice Yashwanth Varma and Justice Purushaindra Kumar Kaurav upheld the view taken by the Income Tax Appellate Tribunal, bearing in mind the judgment rendered in Puri Constructions Pvt. Ltd. vs. ACIT.

The court has admitted the appeals on the following question of law:

Whether the Tribunal and Commissioner of Income Tax (Appeals) erred in deleting the applicability of provisions of Tax Deduction at Source ( TDS ) on External Development Charges ( EDC ) and interest paid on EDC to Haryana Urban Development Authority ( HUDA ) / Director of Town and Country Planning ( DTCP )?

Accordingly, the appeals were scheduled to be heard again on September 11, 2024.

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