The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently while upholding the decision of lower authority held that no Tax Deduction at Source (TDS) is required to be deducted on payments made to Haryana Urban Development Authority (HUDA) For External Development Charges (EDC).
Anil Bhalla appeared for the Assessee and P. Praveen Sidharth appeared for the revenue
In the aforesaid case, Bharti Land Limited Company was incorporated for the purpose of acquiring, constructing, developing and leasing/sale of real estate properties in India or abroad.
This ground is directed against addition of rs.1,32,792,000/- under Section 40(A)(Ia) Income Tax Act being 30% Of Rs.44,26,40,000/- paid to HUDA Government of Haryana as External Development Charges (EDC).
Before the assessing officer, assessee submitted that payment was statutory charges made to HUDA for granting license by directorate of town and country planning,Haryana and was exempt from tds under Section 196 of Income Tax Act. Further submitted that this payment is not covered under any section of TDS and that there was no contract between the authority and the assessee. Without considering the submission, the assessing officer made the impugned addition.
The aggrieved assessee filed appeal before the CIT(A). The CIT(A) allowed the assessee appeal. Against this order, revenue filed an appeal before the tribunal.
The tribunal relied upon the decision of the BPTP Ltd. vs. PCIT and observed that EDC are in the nature of statutory fees.
Further the CIT(A) has already granted relief to the assessee on the ground that Section 40(a)(ia) applies to expenses claimed in a profit and loss account.
Since the assessee’s claim that expenses were not debited to profit and loss account is correct, the CIT(A) held that there is no question of disallowance of expenses.
Therefore, the Tribunal Of Shamim Yahya, (Accountant Member) and Astha Chandra, (Judicial Member) dismissed the appeal filed by the revenue and held that no TDS is required on payments made to HUDA for EDC.
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