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TMI Blog2025 (1) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... fter careful consideration, we are of the view that the slab at which the AO calculated liability u/s 201/201(1A) is at 10% considering the same as rental payment. However, ld. PCIT has cancelled the relevant assessment order following the provisions of section 194C for which slab of 2% is applicable. It is not against the interest of Revenue. We observed that the order passed by the AO is not erroneous when the same was passed and also this is a debatable issue not settled considering the fact that the issue was pending before CIT (A) and also PCIT should not have proceeded to initiate proceedings u/s 263 when the same was pending before the ld. CIT (A). Let alone the fact that there is no prejudicial to the interest of Revenue in this case. Therefore, we are inclined to set aside the order passed u/s 263. Assessee appeal allowed. - Shri S. Rifaur Rahman, Accountant Member And Shri Yogesh Kumar U.S., Judicial Member For the Assessee : Shri Ruchesh Sinha, Advocate For the Revenue : Shri Dayainder Singh Sidhu, CIT DR ORDER PER S. RIFAUR RAHMAN, AM : 1. The assessees have filed appeals against the separate orders of ld. Commissioner of Income-tax (TDS), New Delhi (hereinafter refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above order, assessee preferred an appeal before the ld. CIT (A) and as per the information, it is still pending before the ld. CIT (A). 6. Ld. CIT (TDS), Delhi-1 on examination of records of the present case for the assessment Year 2014-15 relating to EDC payment made to HUDA observed that the AO has initiated the proceedings u/s 201/201(1A) determining the penal interest u/s 194I of the Act. However, the decision of the Hon ble Delhi High Court in the case of Puri Construction (P.) Ltd. vs. Addl.CIT (2024) 159 taxmann.com 444 (Delhi) has settled the current issue that the payment of EDC to HUDA falls u/s 194C of the Act not under section 194I of the Act as followed by the AO in the assessment order passed u/s 201/201(1A) of the Act. Based on the settled position of law that EDC falls under payment to contractors, therefore, the provisions of section 194C are attracted. Therefore, he held that the order passed u/s 201/201(1A) of the Act by the AO is considered as erroneous and prejudicial to the interest of Revenue. Since the issue was settled by Hon ble Delhi High Court on the date of initiating the revision proceedings, ld. PCIT issued notice u/s 263 of the Act to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Delhi High Court, the department contended that on the payment to HUDA of EDC charges, the provision of section 194-I shall be applicable. This was the order, which hold the field when the TDS order in the present cases was passed. 2. 26.03.2022 After detailed enquiry order u/s 201/201(1A) was passed Specific notices were issued and reply were given, and the assessment order was passed after due application of mind. 3. 13.02.2024 Date of passing of the order by Delhi High Court in the case of Puri Construction (supra). (Kindly refer S.No.6, of the case law paper book). Delhi High Court held that the provisions of section 194C shall be applicable on EDC payment. 4. 20.08.2024 Date of the interim order of the Supreme Court staying the operation of the Delhi High Court order in case of Puri Construction (supra) and other batch matter (Kindly refer S.No.12, of the case law paper book.) The Hon'ble Supreme Court has stayed the operations of the Delhi High Court in a number of batch matters filed taking the case of Natureville Promoters Private as the lead case, which was also part of the batch of Puri Construction group of cases. Its writ number i.e. 11232/2019 is also mentioned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 5.7 There is no loss to the revenue as, the HUDA is a taxable entity and the entire amount paid by the appellant shall be depicted in its return of income. The Ld. AO also para no. 6 of the order has observed that HUDA is a taxable entity. Therefore, there is no loss to the revenue. 10. On the other hand, ld. DR for the Revenue brought to our notice para 2.1 of the 263 order and submitted that the AO has not followed the law and he proceeded to pass the order based on the submissions made before the Hon ble High Court in the case of BPTP Ltd. (supra) and determined the liability on the basis that transaction under consideration is attracted u/s 194I of the Act. He relied on the findings of ld. PCIT at para 5.7 of the order. 11. Considered the rival submissions and material placed on record. We observed that the issue under consideration is payment of EDC to HUDA. The core issue under consideration is payment made to HUDA relating to payment of EDC whether this payment falls under TDS provision or not, however the AO no doubt proceeded to treat the payment made to HUDA as chargeable under the provisions of section 194I as rental payment and determined the liability u/s 201/201(1A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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