BPTP Parklands Pride Ltd., New Delhi V. Addl.CIT, Range- 5, New Delhi

ITA 2949/DEL/2018

AI Insights

The case involves BPTP Parklands Pride Ltd, the appellant, contesting the disallowance of payments made for External Development Charges (EDC) and Internal Development Charges (IDC) under section 43B of the Income Tax Act by the Assessing Officer (AO). The AO had categorized these payments as 'Fee', which attracted the provisions of section 43B requiring payments to be made within a specific time frame to be allowable as deductions. The appellant argued, supported by a previous tribunal decision in Vipul Ltd, that these payments were for specific services and not fees in the conventional sense, thus not subject to section 43B. The Revenue, represented by the CIT DR, relied on a Supreme Court judgment which was found not applicable to the facts of this case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131727 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-02-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 25-04-2018
• Other Referred Cases: CIT, Kerala Vs. M/s. Travancore Sugars & Chemicals Ltd, Vipul Ltd in ITA No. 4866/Del/2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY BHAGWANI
• Keywords: TDS
• Section: 43B; 139(1)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘A’, NEW DELHI Before Sh. C. M. Garg, Judicial Member Dr. B. R. R. Kumar, Accountant Member ITA No. 2949/Del/2018 : Asstt. Year : 2014-15 BPTP Parklands Pride Ltd, M-11, Middle Circle, Connaught Circus, New Delhi Vs Addl. CIT, Range-5, New Delhi (APPELLANT) (RESPONDENT) PAN No. AACCD4540P Assessee by : Sh. Ajay Bhagwani, CA Revenue by : Sh. P. Praveen Sidharth, CIT DR Date of Hearing: 06.02.2023 Date of Pronouncement: 07.02.2023 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against the order of ld. CIT(A)-2, New Delhi dated 07.12.2017. 2. The only issue involved in the appeal before us pertains to payment of External Development Charges (EDC) and Internal Development Charges (IDC) and disallowance u/s 43B by the AO treating them charges paid under the category “Fee”. Ld AR relied on the order of the Tribunal in case of Vipul Ltd in ITA No. 4866/Del/2019 for the AY 2013-14, wherein one of the members of the Bench is the signatory, whereas, the ld CIT DR relied upon the judgment of Hon’ble Supreme Court of India in case of CIT, Kerala Vs. M/s. Travancore Sugars & Chemicals Ltd dated 07.05.2015. ITA No. 2949/Del/2018 BPTP Parklands Pride Ltd. 2 3. Heard the arguments of both the parties and perused the material available on record. 4. On perusal we find that the judgment of CIT, Kerala Vs. M/s. Travancore Sugars & Chemicals Ltd (supra) in not applicable to the facts of the case as the judgment dealt with vend fee in case of foreign liquor sell involved in the issue of Karnataka Excise Act 1965 read with section 43B of the Income Tax Act. 5. For the sake of ready reference the relevant part of the order in the case of Vipul Ltd (supra) is reproduced as under:- “11. In the present case, from the Rules under which payments have been made by the assessee and the order of the AO, TDS, it is amply clear that it is a charge paid by the developer and builder for obtaining the services from the HUDA authority like sewage, roads, lighting, etc. and in case the assessee does not avail such facility, he is entitled for refund or adjustment of payment. The AO himself noted that the payment of EDC to HUDA is subject to TDS @ 2% u/s 194C of the Act which clearly characterize the payment as made against the facilities availed by the developer/builder/colonizer which cannot be put in the basket of mandatory or compulsory payment of duty, tax, cess or fee, therefore, section 43B of the Act does not stand attracted in the present case to the payment of EDC by the assessee. 12. In view of the foregoing, once we come to the conclusion that section 43B of the Act does not apply to the payment of EDC, the question of applying the rigor of payment within the time schedule viz., before filing the return of income u/s 139(1) of the Act will not decide the allowability or otherwise of such payment u/s 143B of the Act. It is pertinent to note that the allowability of such payment would then depend upon the method of accounting followed by the assessee and if the assessee has made provision for its payment in its books of account and has claimed it as accrued liability in the relevant financial period, then, he is entitled to get the deduction in ITA No. 2949/Del/2018 BPTP Parklands Pride Ltd. 3 the relevant assessment year itself without any bar or application of section 43B of the Act.” 6. Since the facts in the case akin to the issue adjudicated as above, we hereby hold that the payment of EDC and EDC do not attract the provisions of section 43B of the Act. 7. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 07/02/2023. Sd/- Sd/- (C. M. Garg) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 07/02/2023 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR