The batch of writ petitions assailed the action initiated by the respondents predicated upon a purported failure on the part of the writ petitioners to deduct tax on payments made to the Haryana Shahari Vikas Pradhikaran1 ( earlier known as the Haryana Urban Development Authority, for short ―HUDA‖ ) under Section 194C of the Income Tax Act, 1961.
The respondents assert that the External Development Charges which were paid by the writ petitioners to HSVP albeit on the directions of the Director General, Department of Town and Country Planning , Haryana, a department functioning under the Government of Haryana, would clearly fall within the ambit of Section 194C of the Income Tax Act and as a consequence of default, the petitioners are liable to be proceeded under Section 201 as also to answer why penalty be not levied in terms of Section 271C of the Income Tax Act.
The counsel for the petitioner contended that the petitioners is only having a contractual relationship existing only between the owner/developer and DTCP. According to the counsel, since all aspects relating to the proposed development and the carrying out of external development under the HDRUA and the HDRUA Rules is regulated by the DTCP and the payment to HSVP is merely routed through that department of the Government of Haryana, the invocation of Section 194C is clearly misconceived.
It was then submitted that EDC is liable to be acknowledged as being a statutory levy since in case of a default in payment thereof, it is open to the DTCP to recover the same as areas of land revenue.
Section 194C of the Income Tax Act requires that deductions could be made under TDS if the total payment credited to a contractor or sub-contractor in a fiscal year is more than ₹30,000 in a single payment or amounts to ₹1 lakh in the aggregate.
A Division Bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav observed that “We negative the challenge raised in these writ petitions insofar as the invocation of Section 194C of the Income Tax Act is concerned and hold that EDC payments would be covered thereunder. For reasons recorded in the body of this judgment, we also turn down the challenge to the Clarification issued by the Central Board of Direct Taxes dated 23 December 2017.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
