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TMI Blog2022 (12) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... passed without appreciating that underline payments of EDC/IDC to HUDA is a statutory obligation levied by the State Govt of Haryana under the HUDA Act and the payment of which is to be essentially made without any choice / option to the payer. 3. That on the facts and in the circumstances of the case and in law, Ld CIT-A grossly erred in not deleting the impugned penalty order was passed without appreciating that there exists no master servant or contractual relationship between the DTCP/HUDA and the assessee. 4. That on the facts and in the circumstances of the case and in law, Ld CIT-A grossly erred in not deleting the impugned penalty order was passed without appreciating that the provisions of Chapter XVII of the Act in as much as no tax was required to be withheld on EDC/IDC payments made to DTCP/HUDA and the assessee could not be treated as assessee in default. 5. That on the facts and in the circumstances of the case and in law, Ld CIT-A grossly erred in not deleting the impugned penalty order was passed without appreciating that the initiation of proceedings under Sec 201(1)/201(1A) of the Act is illegal, bad in law, prejudice to the interest of the assessee, void ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejudicial to the interest to the assessee." 3. Brief facts of the case are that, a survey u/s 135A was carried out at the business/office premises of the Haryana Urban Development Authority. (H0DA) by the DOT (TDS), Panchkula who forwarded the details and findings of the survey. On detailed examination of the survey report and verification of the facts of the ease of assesses, the AO noticed that TDS was not made on payment of External Development Charges (EDC) and accordingly penalty u/s 271C Act was initiated on 24/07/2017 In response, the assessee filed a reply dated 09.11. 2017 stating that provisions of section 194C of the Act were not applicable on payment, of EDC because the payment was made to the Government and not to the HUDA. The AO noticed that demand drafts for EDC payment were issued in the name Chief Administrator, HUDA and the amount paid by the assessee for the years under consideration i.e. A.Y 2013-14 & 2016-17 was Rs. 19,90,00,000/- Rs. 7,12,00,000/-, respectively. The AO further mentioned that HUDA Develops Urban Infrastructure for which it was receiving EDC charges from various parties and quantum of such charges received are under: - F.Y EDC (Rs.) 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd (supra) is reproduced; "5. We have heard the rival submissions and have also perused the material on record. It is seen that in Para 4.3.2, subparagraph (iv) of the order passed u/s 271C of the Act, the LD.AO has himself noted that the demand draft of the EDC amounts are drawn in favour of the Chief Administrator, HUDA though routed through the Director General, Town and Country Planning, Sector-18, Chandigarh. He has also referred to the notes to accounts to the financial statements of HUDA wherein it has been stated that "other liabilities also include external development charges received through DGTCP, Department of Haryana for execution of various EDC works. The expenditure against which have been booked in Development Work in Progress, Enhancement compensation and Land cost." Undisputedly, the payment of EDC was issued in the name of Chief Administrator, HUDA. It is also not in dispute that HUDA has shown EDC as current liability in the balance sheet, but in the 'Notes' to the Accounts Forming part of the Balance Sheet, it has been shown that EDC has been received for execution of various external development works and as and when the development works are carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either a local authority nor Government, thus, the payments made to it by the assessee on account of EDC charges were liable for TDS under section 194C of the Act. Since, assessee has failed to deduct the TDS; therefore, it is liable for penalty under section 271C of the Act. On the other hand, the case of the assessee is that obligation to pay EDC charges is arising out of the license granted by DTCP and these payments are to be made for obtaining the license and as per the direction of the DTCP, the same have been paid to HUDA. Further, these payments are not in the nature of payment or in pursuance of works contract. There is no privity of contract between the assessee and the HUDA. On the contrary, the agreement is between Assessee Company and the DTCP which admittedly is a Government Department as agreement has been signed by DTCP on behalf of Governor of Haryana. We are of the view that we need not go in all these issues. From the facts, it is evident that the payments have been made by the assessee to HUDA which is an authority of Haryana Government created by enactment of Legislature for carrying out developmental activities in the state of Haryana. Such Authorities admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teen India Ltd., we allow the assessee's appeal and cancel the penalty as levied u/s 271- C." 3. Being aggrieved, the Revenue took up the matter before the High Court of Delhi against the order of the Income Tax Appellate Tribunal. The High Court rejected the appeal only on the ground that no Substantial question of law arises in the matter. 4. On facts, we are convinced that there is no substantial question of law, the facts and law having properly and correctly been assessed and approached by the Commissioner of Income Tax (Appeals) as well as by the Income Tax Appellate Tribunal. Thus, we see no merits in the appeal and it is accordingly dismissed." 8. Further in case of TDI Infrastructure Ltd Versus Addl CIT, ITA no 6653/Del/2019, vide order dated 6/7/2022, the Bench, to which one of us was in quorum, had taken into consideration a clarification memo no DTCP/ACCFTS/AO(AQ) /CAO/2894/2018 dated 19.06.18 issued by the Directorate of Town and Country Planning, Haryana which made it very obvious that receipts on account of EDC are being deposited in the Consolidated Fund of the State, accordingly directions were issued to colonizer like present assessee, to not deduct T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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