Spaze Tower Pvt. Ltd., New Delhi V. JCIT, Range 77, New Delhi

ITA 5842/DEL/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 1050 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 04-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 2; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G” DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.5842/DEL/2019 Assessment Year 2014-15 Spaze Tower Pvt. Ltd., A-307 Ansal Chambers-I, 3, Bhikaji Cama Place, New Delhi. v. JCIT, Range-77, New Delhi. TAN/PAN: AACCK8088R (Appellant) (Respondent) Appellant by: Shri Sidharth Arora, CA. Respondent by: Shri Abhishek Kumar, Sr.DR Date of hearing: 24 05 2022 Date of pronouncement: 26 05 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The c apt io ne d ap p eal ha s be en f i le d at th e i ns ta nc e o f the ass es se e a ga in st t he or der of t he Co mmi s si on er of Inc o me Ta x (Ap pe al s) -X XX I, N ew D el hi (‘CIT(A)’ in sh o rt) d ated 07 .0 5 .2 019 p assed u n d er Secti o n 2 71 C o f th e In c o me Tax Act, 1 96 1 (th e Act) co n cern in g AY 201 4 -15 . 2 . Th e g ro u nd s o f ap p eal ra ised b y th e assesse e read s as u n d er: “ T h e L d . CI T (A ) h a s e r r e d i n l a w a n d f a c t s o f t h e ca se i n c o n f i rm i n g p e n a l t y l e v i e d u n d e r s e c t i o n 2 7 1 C b y t h e L d . CI T (A ) b r u sh i n g a s i d e t h e su b m i s s i o n a n d e x p l a n a t i o n o f a sse s se e f o r n o n - d e d u c t i o n o f T D S u n d e r s e c t i o n 1 9 4 C o f t h e A c t o n p a y m e n t o f E D C t o H U D A wh i c h i s h i g h l y u n j u s t i f i e d , u n c a l l ed f o r a n d b a d i n l a w . I.T.A. No.5842/Del/2019 2 2 . T h e L d . CI T (A ) h a s e rr e d i n l a w a n d f a c t s o f t he c a s e i n c o n f i rm i n g p e n a l t y l e v i e d u n d e r s e c t i o n 2 7 1 C b y t h e L d . CI T (A ) a n d a l l e g i n g t h a t t h e a p p e l l a t e w a s a w a re o f t h e o bl i g a t i o n u n d e r se c t i o n 1 9 4 C o f t h e A c t wh i c h i s h i g h l y a rb i tra ry , u n c a l l e d f o r a n d b a d i n l a w. 3 . T h e L d . CI T (A ) h a s e rr e d i n l a w a n d f a c t s o f t he c a s e i n c o n f i rm i n g p e n a l t y l e v i e d u n d e r s e c t i o n 2 7 1 C b y t h e L d . CI T (A ) o n m a t t e r wh i c h i s u n d e r l i t i g a t i o n w h i c h i s h i g h l y u n j u st i f i e d , u n c a l l e d f o r a n d b a d i n l a w . ” 3 . Brie fly s ta ted , th e assesse e-co mp an y is ass essed to TDS v id e TAN: DELK08 1 44D an d clai med to h av e fi led i ts q u ar terly TDS retu rn s fo r th e y ear u nd er referen ce. A su rv ey u nd er sectio n 1 3 3 A o f th e In co me T ax Act, 1 9 6 1 ("th e Act") was car ried at th e p remise s o f Hary an a Urb an Dev elo p men t Au th o rity (HUDA). Du rin g th e su rv ey p ro ceed in g s, it was o b serv ed by the Rev en u e Au th o rities th at H UDA receiv es p ay men t fro m v ar io u s p arties o n acco u n t o f Ex tern al Dev elo p men t C h arg es ("EDC"). Durin g th e y ear u n d er co n siderat io n , th e assess ee i s a lso fo u nd to h av e p aid su ch amo u n t o f R s.3 ,0 7 ,2 3 ,0 0 0 /- as EDC to HUDA. Co nseq u ent u p on th e su rv ey pro ceed in g s u nd ertak en on HUDA, a no tice u n d er sect io n 2 0 1 /20 1 (1A) o f th e Act d ate d 1 9 .05 .2 0 17 was issu ed u po n th e assesse e b y Assessin g Officer alo n g with a quest io n n aire req u irin g ex p lan atio n fo r n on -d edu cti o n o f TDS on EDC p ay men ts mad e to HUDA. Th e Assessee su b mit ted i ts d e ta iled su b missio n d ated 0 1 .0 6 .2 0 17 sta tin g th a t th e p ro v isio n s o f TDS were n o t ap p licab l e o n p aymen ts mad e to HUDA. Th ereafter, a sh o w-cau se n o tice d ated 1 8 .0 1.2 0 1 8 was issu ed b y th e Jo in t Co mmi ssio n er o f In co me Tax , o n th e b asis o f referen ce mad e b y th e ACIT/Assessin g Offic er fo r in i t iat io n o f p en alty u nder sect io n I.T.A. No.5842/Del/2019 3 2 7 1 C o f th e Ac t all eg in g th at th e assesse e h as d e fau lted in th e p ro v isio n s o f Act b y n o t d ed u ctin g TDS o n EDC p aid to HUDA fo r th e F.Y. 2 0 1 3 -1 4 . In resp on se to th e sa id sh o w cau se n o tice , th e assess ee su b mi tted its rep ly ju st ify in g th e n o n-ap p licab il ity o f TDS pro v isio n s o n p ay men ts mad e to HUDA ag ain st EDC. It was co n ten d ed th at n o work o r serv ice was p erfo rmed b y HUDA in p u rsu an ce to any co n tract an d th ere was co mp let e abs en ce o f th e Co n tracto r - Co n tracte e rela tio n sh ip . Howev er, th e Ld . JCIT d id n o t fin d meri t in th e ass essee’s c o n ten tio n an d levied p en al ty u n d er Sectio n 2 7 1C o f th e Act a mo u n tin g to Rs.6 ,1 4 ,4 6 0 /- v id e imp u g n ed o rd er d ated 2 9 .0 1 .2 0 1 8 . 4 . Ag g riev ed by th e imp u g n ed o rd er passed b y th e JCIT , th e assesse e p referre d ap p eal b efo re th e CIT(A). Ho wev er the assesse e d id n o t g e t an y re lie f fro m th e CIT(A). 5 . Fu rth er ag griev ed , th e assessee p referred ap p eal b efo re th e Trib u n al. 6 . We h av e carefu ll y co n sid ered th e riv al su b miss ion s. The Assessin g Officer /JCIT lev ied p en alty o f Rs .6 ,1 4 ,4 60 /- un d er Sect io n 2 7 1 C fo r sh o rt d ed u ctio n /n on d ed u ctio n o f tax at so u rce all eg in g d efau l t co mmi tt ed b y th e ass essee u n d er Sect io n 1 9 4 C on p ay men t o f Ex ter n al Dev elo p men t Ch arg es (EDC) to Hary an a Urb an Dev elo p ment Au th o rity (HUDA). With th e ass istan ce o f th e ld . co u n sel, we fi n d th at th e Direct o rate o f To wn and Co un try Plan n in g , Hary an a (Hary an a Gov ernmen t) h as issu ed clari fica tio n o n TDS d ed u ctio n o n EDC p ay men ts v id e le tt er d ated 1 9 .0 6 .20 18 wh ich is sel f ex p l an ato ry an d th u s rep ro du ced h erein fo r read y referen ce : I.T.A. No.5842/Del/2019 4 “ T o T h e C h i e f A d m i n i s t r a t o r , H a r y a n a S h a h a r i V i k a s P r a d h i k a r a n , P a n c h k u l a , M e m o N o . D T C P / A C C T T S / A s s e s s i n g O f f i c e r ( H Q ) / C A O / 2 8 9 4 /2 0 1 8 D a t e : 1 9 . 6 . 2 0 1 8 S u b j e c t : C l a r i f i c a t i o n o n T D S D e d u c t i o n s o n E D C P a ym e n t s . P l e a s e r e f e r t o t h e m a t t e r c i t e d a s s u bj e c t a b o v e . 1 . S e c t i o n 2 ( g ) o f t h e H a r y a n a D e v e l o p m e n t a n d R e g u l a ti o n o f U r b a n A r e a s A c t , 1 9 7 5 d e f i n e s t h a t e x t e r n a l d e v e l o pm e n t w o r k s ( h e r e i n a f t e r r e f e r r e d a s E D W ) s h a l l i n c l u d e s a n y o r a l l i n f r a s t r u c t u r e d e v e l o p m e n t w o r k s l i k e w a t e r s u p p l y , s e w e r a g e , d r a in s , p r o v i s i o n s o f t r e a t m e n t a n d d i s p o s a l o f s e w a g e , s u l l a g e a n d s t o r m w a t e r , r o a d s , e l e c t r i c a l w o r k s , s o l i d w a s t e m a n a g e m e n t a n d d i s p o sa l , s l a u g h t e r h o u s e s , c o l l e g e s , h o s p i t a l s , s t a d i u m / s p o r t s c o m p l e x, f i r e s t a t i o n s , g r i d s u b - s t a t i o n s e t c . a n d / o r a n y o t h e r w o r k w h i c h t h e D i r e c t o r m a y s p e c i f y t o b e e x e c u t e d i n t h e p e r i p h e r y o f o r o u t s id e c o l o n y / a r e a f o r t h e b e n e f i t o f t h e c o l o n y / a r e a . 2 - A s p e r S e c t i o n 3 ( 3 ) ( i i ) , l i c e n s e h o l d e r h a s t o pa y p r o p o r t i o n a t e d e v e l o p m e n t c h a r g e s i f t h e e x t e r n a l d e v e l o p m e n t w o rk s a s d e f i n e d i n c l a u s e ( g ) o f s e c t i o n 2 a r e t o b e c a r r i e d o u t b y t he G o v e r n m e n t o r a n y o t h e r l o c a l a u t h o r i t y . T h e p r o p o r t i o n i n w h i c h a n d t h e t i m e w i t h i n w h i c h , s u c h p a y m e n t i s t o b e m a d e , s h a l l b e d e t e r m i n e d b y t h e D i r e c t o r . 3 . P r e s e n t l y , e x t e r n a l d e v e l o p m e n t w o r k s i n t h e p e ri p h e r y o f o r o u t s i d e c o l o n y / a r e a f o r t h e b e n e f i t o f t h e c o l o n y / ar e a a r e b e i n g e x e c u t e d b y H a r y a n a S h a h a r i V i k a s P r a d h i k a r a n t h e r ea f t e r H S V P ) w h i c h i s t h e D e v e l o p m e n t A u t h o r i t y o r s t a t e G o v t . Ea r l i e r u p t o 3 1 . 0 3 . 2 0 1 7 , D e p a r t m e n t o f T o w n 8 t C o u n t r y P l a n n i n g u s e d t o c o l l e c t t h e e x t e r n a l d e v e l o p m e n t c h a r g e s f r o m t h e c o l o n i z e r t o w h o m l i c e n c e s h a v e b e e n g r a n t e d u n d e r A c t N o . 8 o f 1 9 7 5 a n d t h e p e r s o n s t o w h o m p e r m i s s i o n f o r c h a n g e o f l a n d u s e h a v e b e e n g r a n t e d u n d e r A c t N o . 4 1 o f 1 9 6 3 , i n t h e s h a p e o f b a n k d r a f t d r a wn i n f a v o u r o f C A , H S V P a n d s e n d t h e s a m e t o C A , H S V P . I.T.A. No.5842/Del/2019 5 4 . A s t h e r e c e i p t o n a c c o u n t o f E D C w a s n o t s u f f i c ie n t t o c a r r y o u t t h e a l l d e v e l o p m e n t w o r k s u n d e r E D C f o r t h e u r ba n e s t a t e a s p e r a p p r o v e d d e v e l o p m e n t p l a n s , t h e r e f o r e t o m e e t o u t th e s h o r t f a l l , a n e w s c h e m e S w a r a n J a y a n t i H a r y a n a U r b a n I n f r a s t r u c tu r e D e v e l o p m e n t S c h e m e ( r e n a m e d a s M a n g a l N a g a r V i k a s Yo j a n a w a s a p p r o v e d b y t h e S t a t e G o v t . a n d a p p r o p r i a t e b u d g e t p r o v i s i o n f o r e x e c u t i o n o f d e v e l o p m e n t w o r k s h a s b e e n m a d e i n t h e s a i d s c h e m e . F r o m F i n a n c i a l Y e a r 2 0 1 7 - 1 8 , t h e r e c e i p t s o n a c c o u nt o f E D C i s b e i n g d e p o s i t e d i n t h e c o n s o l i d a t e d f u n d o f t h e S t at e u n d e r M a j o r R e c e i p t H e a d - 0 2 1 7 r e c e i p t s a n d a l l l i c e n s e / C L U h o l de r s h a v e a l s o b e e n d i r e c t e d v i d e o r d e r d a t e d 1 2 . 0 5 , 2 0 1 7 t h a t p a y me n t o f E D C i n r e s p e c t o f l i c e n s e / C L U g r a n t e d b y T C P D e p t t . m a y b e m a d e o n l i n e t h r o u g h e - p a y m e n t g a t e w a y o r i n s h a p e o f d e m a n d d r af t s f a v o u r i n g D i r e c t o r , T o w n 6 C o u n t r y P l a n n i n g , H a r y a n a . R e q u i r ed f u n d s f o r e x e c u t i o n o f d e v e l o p m e n t w o r k s a r e r e l e a s e d t o H S V P a f t e r g r a n t i n g t h e s a n c t i o n f r o m t h e F i n a n c e D e p a r t m e n t . I t i s , t h e r e f o r e , c l a r i f i e d t h a t H S V P i s o n l y a n e xe c u t i n g a g e n c y f o r a n d o n b e h a l f o f S t a t e G o v t . f o r c a r r y i ng o u t E D W f o r w h i c h f u n d s a r e g i v e n t o H S V P b y t h e G o v t . t h r o u g h T C P D e p t t . S i n c e , p a y m e n t f o r E D C h a s b e e n m a d e t o T C P D e p t t . o f S t a t e G o v t . , n o T D S w a s / i s t o b e d e d u c t e d o u t o f p a y m e n t m a d e t o G o v t . f o r E D W. A c c o u n t s o f f i c e r ( H O ) F o r : D i r e c t o r T o w n & C o u n t r y P l a n n i n g H a r y a n a , C h a n d i g a r h 7 . On th e b asis o f th e a fo resaid c lar ific at io n , th e as s essee co n ten d s th at th e p ay men t to HUDA is, in e ffec t, p ay me n t to Sta te Go v ern men t an d th ere fo re su ch p ay men t is ex emp t from o b lig atio n s to d ed u ct TDS in v iew o f Sect io n 1 9 6 o f th e Act. 8 . We also n o tice th a t id en t ica l issu e h a s b een ex amin ed b y th e Co -o rd in ate Ben ch in th e cas e o f Pe rfec t Co n ste ch Pvt . Ltd . vs . I.T.A. No.5842/Del/2019 6 Ad d itio n a l Co mmissio n er o f In co me Ta x in ITA No .6 9 07/Del /2 0 1 9 o rd er da ted 2 9 .12 .2 0 20 wh erein Co -ord in ate Ben ch fo u n d th at th e p ro v isio n s o f Sectio n 1 9 4 C are n o t ap p licab le o n p ay men ts to ag en cies l ik e HUDA on b eh alf o f th e Stat e Go v ern ment. Th e imp o si t io n o f p en alty u n d er Sectio n 2 7 1 C was con sequen tly fo u n d to b e u n su stain ab l e in th e ab sen ce of d efau lt o f Sec tio n 19 4 C o f th e Act . 9 . Th e fa cts an d i ss u e b ein g id en t ica l, in th e lig ht o f th e clar ifica t io n n o ted ab o v e cou p led with v iew tak en by th e Co - o rd in ate Ben ch in t h e id en ti cal fac ts s itu a tio n , we s ee n o reaso n to d ep art th ere fro m. Co n seq u en tly , we fin d mer it in the p lea ra ised o n b eh alf o f th e assesse e fo r can c ell at io n o f p en alt y imp o sed u n d er Sectio n 2 7 1C o f th e Act . 1 0 . In th e resu l t, th e a p p eal o f th e asses s ee is a llo wed . Order pronounced in the open Court on 26/05/2022. Sd/- Sd/- [KUL BHARAT] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /05/2022 Prabhat