2024 (1) TMI 600 - AT - Income Tax

TDS u/s 194C - assessee society paid External Development Charges(EDC) to Greater Mohali Area Development Authority(GMADA) without deduction of tax - assessee society submitted the details of the payment and submitted that TDS provisions are not applicable on the payment made to GMADA as the latter was not working as contractor on behalf of the assessee - HELD THAT - As compared to case of M/s H.P. Singh and Others 2022 (11) TMI 1439 - ITAT CHANDIGARH instant case, identical fact pattern exist wherein the payment of EDC charges has been made to GMADA by the assessee society, we are of the considered view that the provisions of section 194C are not attracted on payment of EDC charges to GMADA and thus, the demand raised u/s 201(1) read with Section 201(1A) of the Act are hereby set aside. Decided in favour of assessee.

Summary

Issues Involved:
1. Liability to deduct tax at source on payments made to GAMADA by way of external development charges.
2. Computation of tax liability and interest u/s 201(1A).
3. Denial of opportunity to the appellant by virtual mode.

Summary:

1. Liability to Deduct Tax at Source:
The primary issue was whether the appellant was liable to deduct tax at source on payments made to Greater Mohali Area Development Authority (GAMADA) for External Development Charges (EDC). The Assessing Officer (AO) held that these payments were advance payments for civil work, thus falling under the purview of Section 194C of the Income Tax Act, 1961, necessitating TDS deduction. The appellant contended that EDC payments were statutory levies, not contractual payments, and hence not subject to TDS under Section 194C. The Tribunal referenced the decision in the case of "M/s Sukham Infrastructure (P) Ltd." where it was held that payments to GAMADA were not contractual but statutory, thus not attracting Section 194C. Consequently, the Tribunal ruled that the provisions of Section 194C were not applicable to the payments made by the appellant to GAMADA.

2. Computation of Tax Liability and Interest u/s 201(1A):
The AO computed a tax liability of Rs. 47,79,260/- and interest u/s 201(1A) amounting to Rs. 45,88,089/- due to the appellant's failure to deduct TDS. The Tribunal, following its decision on the non-applicability of Section 194C, set aside the demand raised u/s 201(1) read with Section 201(1A).

3. Denial of Opportunity by Virtual Mode:
The appellant argued that the order passed u/s 250 by the CIT(A) was bad in law as they were not afforded an opportunity by virtual mode despite a specific request. However, the Tribunal's decision did not specifically address this procedural issue, focusing instead on the substantive grounds of appeal.

Conclusion:
The Tribunal allowed the appeal, ruling that the provisions of Section 194C were not applicable to the payments made to GAMADA, thereby setting aside the demand raised u/s 201(1) read with Section 201(1A). The decision was pronounced in the open court on 03/11/2023.