The Income Tax Appellate Tribunal (ITAT) Delhi bench held that Tax deduction at source (TDS) not applicable on payments made to Haryana Urban Development Authority on account of External Development Charges (EDC). The EDC is a charge levied by the Government for carrying out External Work to be executed in the periphery of or outside colony/area for the benefit of colony/area.
Assessee, Silverglades Infrastructure Pvt. Ltd. filed the appeal before the tribunal by challenging the action of the Assessing Officer for treating the assessee as ‘assessee in default’ towards failure to deduct tax as required under the provisions of Chapter XVIIB of the Act towards amount paid as External Development Charges (EDC) to Directorate of Town and Country Planning, Haryana (Haryana Government) (DGTCP) through banking channel favoring Haryana Urban Development Authority (HUDA).
Before the bench R.S. Singhvi , counsel for the assessee submitted that the assessee is not liable to deduct TDS on payment made to HUDA on account of EDC charges. The assessee-company has not purchased any property from HUDA but has paid enhanced EDC on account of Group Housing being constructed on land at Gurgaon.
Therefore There is no TDS liability on statutory payments made to the Government of Haryana, Town and Country Planning Department is part of the Government of Haryana.
Furthermore, EDC is a charge levied by the Government for carrying out External Work to be executed in the periphery of or outside colony/area for the benefit of colony/area.
Counsel also argued that the EDC charge is deposited in the receipt head of ‘TCP Department’ being Government. As the payment of EDC was not made as a result of any statutory or contractual obligation to HUDA in particular, the assessee is not required to deduct TDS at that time.
Satya Jeet , Counsel for the revenue, supported the decision of lower authorities.
The tribunal observed that the assessee has not committed any violation of provision of Chapter XVII B of the Act by making payment towards EDC charges to DGTCP Haryana through HUDA without deduction of TDS.
After considering the facts submitted by both parties, the two member bench of Pradip Kumar Kedia,(Accountant Member ) and Saktijit Dey,( Vice President ) by observing the decision of the Supreme Court in the case of Union of India vs. Additional Commissioner of Income Tax held that Tax deduction at source (TDS) not applicable on payments made to Haryana Urban Development Authority on account of External Development Charges (EDC)
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