Discrepancy in EDC Payment and Tax Liabilities: ITAT Remands Matter to AO [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the matter to the Assessing Officer (AO) regarding the discrepancy in External Development Charges ( EDC ) payment and tax liabilities.

Santur Builders Private Limited,appellant-assessee,a real estate developer, was working on a housing project in Sohana, Gurugram. The Deputy Commissioner of Income Tax (TDS), Panchkula, conducted surveys on Haryana Urban Development Authority (HUDA) and Sky-High Land Construction Pvt. Ltd. in February 2017. It was found that payments made as External Development Charges (EDC) to HUDA were subject to Tax Deduction at Source (TDS).

The Assessing Officer(AO) identified that Santur Builders had paid ₹3,57,12,500 as EDC to HUDA in January 2017. A show-cause notice was issued, alleging non-compliance with TDS requirements and raising a demand for tax and interest under Sections 201(1) and 201(1A) of the Act.

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Despite explanations provided by the assessee, the AO upheld the demand. The company appealed to the Commissioner of Income Tax (Appeals), but the appeal was dismissed.

The assessee's counsel submitted that the issue of TDS had already been decided in favor of the Revenue by the Delhi High Court in the case of Puri Construction Pvt. Ltd. & Others on February 13, 2024, and that a Special Leave Petition (SLP) against the order was still pending.

The counsel focused on the amount of EDC paid, stating that the assessee had only paid ₹1,31,62,500 on January 19, 2017, not ₹3,57,12,500 as mentioned in the orders under Sections 201(1) and 201(1A). It was argued that the additional amounts were incorrectly included by the AO and that neither the AO nor the CIT(A) considered this specific submission. The counsel requested relief, asserting that the objections raised were dismissed without proper reasoning.

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The Senior Departmental Representative(Sr.DR) requested a remand to the AO (TDS) to verify the EDC payments.

The tribunal considered the arguments and reviewed the evidence on record. It decided that the assessee should have a fair opportunity to present its case and that the Revenue must verify the EDC payments. The tribunal set aside the order and sent the matter back to the Assessing Officer (TDS) for verification and further action, directing the assessee to cooperate in the proceedings.

In short,the appeal filed by the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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