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TMI Blog2023 (5) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... pers Pvt. Ltd [ 2022 (9) TMI 1450 - ITAT DELHI] as held levy of penalty u/s 271C of the Act cannot be sustained. Thus we delete the penalty levied u/s 271C of the Act. Grounds raised by the assessee are allowed. - I.T.A No.7436/Del/2019 - - - Dated:- 11-4-2023 - Shri G.S. Pannu, Hon ble President And Shri Challa Nagendra Prasad, Judicial Member For the Assessee : S/Shri Ved Jain, Adv., Aman Garg, CA, Ms. Supriya Mehta, CA For the Revenue : Shri M. Baranwal, CIT DR And Shri Sanjay Kumar, Sr. DR ORDER PER C.N. PRASAD, J.M. This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax(Appeals)-31, New Delhi dated 26.06.2019 for the AY 2014-15 in sustaining the penalty levied u/s 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ryana and, therefore, payment of EDC should be considered as payment to the State Government and accordingly, provisions of section 196 should not apply on payment of EDC. Assessee also contended that in the absence of any contract between HUDA and assessee the provision of section 194C of the Act shall not apply. It was contended that there is no contractor/contractee relationship between HUDA and assessee and existence of contractor/contractee relationship is necessary pre-requisite for the purpose of applicability of provision of section 194C of the Act. However, the Ld.CIT(Appeals) sustained the order of the Assessing Officer in levying penalty u/s 271C of the Act. Ld. Counsel submits that the identical issue has been decided by the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viable. The Tribunal while holding so observed as under:- 6. Giving thoughtful consideration to the matter on record, the clarification dated 19.06.2018 available on page no. 1 of the paper book makes 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 TDS. 7. The Co-ordinate Benches in M/s. Perfect Constech P. Ltd. case and ITA No. 5805, 5806, 5349/Del/2019 title of the case RPS Infrastructure Ltd. vs. ACIT have held that assessee was not required to deduct tax at source at the time of payment of EDC. 7.1 As for convenience the relevant findings at para no. 5 in M/s. Perfect Constech Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r remains that payment has been made to HUDA through DTCP which is a Government Department and the same is not in pursuance to any contract between the assessee and HUDA. Thus, the payment of EDC is not for carrying out any specific work to be done by HUDA for and on behalf of the assessee but rather DTCP which is a Government Department which levies these charges for carrying out external development and engages the services of HUDA for execution of the work. Therefore, it is our considered view that the assessee was not required to deduct tax at source at the time of payment of EDC as the same was not out of any statutory or contractual liability towards HUDA and, therefore, the impugned penalty was not leviable. We note that similar view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, 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 evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court in the case of Commissioner of income tax vs. Bank of Nova Scotia, 380 ITR 550, wherein the Hon ble Court has held as under : 2. The matter was pursued by the Revenue before the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal vide order dated 31.03.2006 entered the following findings: 11. We have carefully considered the rival submissions. In the instant case we are not dealing with collection of tax u/s 201(1) or compensatory interest u/s 201(1A). The case of the assessee is that these amounts have already been paid so as to end dispute with Revenue. In the present appeals we are concerned with levy of penalty u/s 271-C for which it is necessary to establish that there was contumacious conduc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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