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Judgment
Per Renu Jauhri, Accountant Member:
This appeal by the Revenue is directed against the order dated 27.02.2025 of the Ld. Commissioner of Income Tax (Appeals), Mumbai, [hereinafter referred to as the ‘Ld. CIT(A)] arising out of the order dated 24.03.2021 passed under section 201(1A) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) pertaining to Assessment Year (A.Y.) 2014-15.
The Revenue has raised the following grounds of appeal:-
“1.On the facts and in the circumstances of the case, the Addl/JCIT (A)-9, Mumbai has failed to consider the judgment of the Hon'ble Delhi High Court in the case of M/s Puri Construction Private Limited Vs. Addl. CIT & Ors., 159 taxmann.com 444 (Delhi) [2024] 462 ITR326 (Delhi) in which the Hon'ble Court has held that EDC payments by a Developer to HUDA would be subject to TDS u/s 194C of the Act
2.On the facts and in the circumstances of the case, and in view of the CBDT Circular No. 9/2024 dated 17.09.2024 r/w the Para 3(1)(i) of CBDT Circular No. 05/2024 dated 15.03.2024, the case falls under exceptions given therein and thus appeal is being preferred in this case.
3.That, the appellant craves to add, amend, modify and delete any of the grounds of appeal before or at the time of hearing.
4.On the facts and in the circumstances of the case, the Addi/JCIT (A)-9, Mumbai has erred in not holding the assessee to be assessee in default u/s.201(1)/201(14) of the Act on account of non-deduction of TDS u/s 194C of the Act by the Deductor Company on EDC payments made to HUDA
5.On the facts and in the circumstances of the case, the Addl./JCIT (A)-9, Mumbai has failed to appreciate that External Development Charges (EDC) paid by assessee to HUDA are liable for deduction of TDS u/s 194C of the Income Tax Act, 1961.”
Brief facts are that the assessee is a private limited company engaged in acquiring, constructing, developing and leasing residential and commercial properties. During the course of a survey conducted on Haryana Urban Development Authority (HUDA) by the department, it was noted that the assessee had paid External Development Changes (EDC) amounting to Rs. 5,20,50,000/-during F.Y. 2013-14 to HUDA on which no TDS was deducted.
Accordingly, notice u/s 201/201(1A) was issued for requisite verification. Vide show cause notice dated 26.02.2021, the assessee was required to explain why it should not be treated as assessee in default for non-deduction of TDS from payment made to HUDA. After considering the assessee’s submissions, in the light of relevant provisions of the Act, the AO held that the assessee was liable to deduct TDS u/s 194C of the Act @ 2% and therefore, held it to be an assessee-in-default and raised tax liability of Rs. 19,51,555/- vide order u/s 201(1)/201(1A) dated 24.03.2021.
Aggrieved, the assessee preferred an appeal before the CIT(A). Vide order dated 27.02.2025, the appeal of the assessee was allowed by the CIT(A).
Aggrieved by the appellate order, the Revenue has filed present appeal before the Tribunal.
Before us, the Ld. DR has argued that the issue is squarely covered in favour of the Revenue by the decision of the Hon’ble jurisdictional High Court in the case of the M/s Puri Construction Pvt. Ltd. vs. Addl. CIT 159 taxmann.com 444 (Del.), wherein it was held that the EDC payments by a Developer to HUDA are subject to TDS u/s 194C of the Act.
Ld. AR, though could not controvert the argument of the Ld. DR, but submitted that the assessee ought to be given an opportunity to prove that conditions as prescribed in the proviso to section 201(1) have been satisfied.
We have heard the rival submissions and perused the material available on record. Admittedly, the assessee was liable to deduct TDS u/s 194C on EDC charges paid by it to HUDA.
However, proviso to Section 201(1) lays down the conditions under which the assessee, who fails to deduct TDS shall not be treated as an assessee -in- default. For the sake of convenience, the relevant proviso is reproduced below: -
Section 201(1):
……
“………. Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a payee or on the sum credited to the account of a payee shall not be deemed to be an assessee in default in respect of such tax if such payee—
(i)has furnished his return of income under section 139;
(ii)has taken into account such sum for computing income in such return of income; and
(iii)has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed”
Accordingly, we deem it appropriate to restore the matter to the AO for fresh consideration after allowing the assessee an opportunity to prove that the requisite conditions are satisfied in its case, for it to be treated as not in default u/s 201 of the Act.
In the result, appeal of the Revenue is allowed for statistical purposes.