ITAT Sets Aside CIT(A) Direction on TDS Recalculation, Says Original Demand Already Nullified [Read Order]
The tribunal highlighted that the High Court had already dismissed the revenue's plea, stating that determining the nature of the payment was crucial, and diverging from the AO's reasoning was flawed
![ITAT Sets Aside CIT(A) Direction on TDS Recalculation, Says Original Demand Already Nullified [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/ITAT-ruling-on-TDS-ITAT-tax-appeal-decision-ITAT-Delhi-taxscan.jpg "ITAT Sets Aside CIT(A) Direction on TDS Recalculation, Says Original Demand Already Nullified [Read Order]")
The Income Tax Appellate Tribunal ( ITAT ) Delhi Bench has set aside an order by the Commissioner of Income Tax (Appeals) [CIT(A)] that directed the Assessing Officer (AO) to recalculate the Tax Deducted at Source (TDS) demand under Section 194C of the Income Tax Act, 1961. The ITAT ruled that the original demand had already been nullified by the Delhi High Court, making the CIT(A)'s...
The Income Tax Appellate Tribunal ( ITAT ) Delhi Bench has set aside an order by the Commissioner of Income Tax (Appeals) [CIT(A)] that directed the Assessing Officer (AO) to recalculate the Tax Deducted at Source (TDS) demand under Section 194C of the Income Tax Act, 1961. The ITAT ruled that the original demand had already been nullified by the Delhi High Court, making the CIT(A)'s directions untenable.
The case involved Emaar India Limited, which had appealed against an order passed by the AO under Sections 201(1) and 201(1A) of the Income Tax Act. The AO had treated the company as an "assessee in default" for not deducting TDS under Section 194A on payments made as External Development Charges (EDC) to the Director of Town and Country Planning (DTCP) through the Haryana Urban Development Authority (HUDA). The demand raised was Rs. 25,09,55,212, including interest. Emaar India challenged this order before both the CIT(A) and the Delhi High Court.
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The Delhi High Court, in its judgment, quashed the AO's order, and the department did not challenge this decision. Subsequently, the AO passed an order giving effect to the High Court's judgment, revising the demand to "Nil." However, the CIT(A), in its order dated March 5, 2024, disregarded the High Court's ruling and directed the AO to recompute the demand under Section 194C at a 2% TDS rate.
The ITAT, comprising Judicial Member Yogesh Kumar U.S. and Accountant Member Avdhesh Kumar Mishra, observed that once the High Court had quashed the AO's order, it became non-est (legally non-existent). The tribunal emphasized that the CIT(A)'s powers under Section 251 of the Income Tax Act are co-terminus with the AO's and can only be exercised when an enforceable order exists. Since the original demand no longer held legal validity, the CIT(A) had no jurisdiction to issue directions for recalculation.
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The ITAT also noted that the CIT(A) erred by ignoring the High Court's judgment and basing its decision on a different TDS provision (Section 194C) than the one applied by the AO (Section 194I). The tribunal highlighted that the High Court had already dismissed the revenue's plea, stating that determining the nature of the payment was crucial, and diverging from the AO's reasoning was flawed.
ITAT set aside the CIT(A)'s order and allowed Emaar India's appeal, concluding that the CIT(A) had overstepped its authority by directing a recalculation after the original demand was nullified.
To Read the full text of the Order CLICK HERE
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