The Tax Publishers2021 TaxPub(DT) 0099 (Del-Trib)

INCOME TAX ACT, 1961

Section 271C

The payment of EDC was not for carrying out any specific work to be done by HUDA for and on behalf of the assessee,. Therefore, there was no requirement 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.

Penalty under section 271C - Failure to deduct tax at source - Reasonable cause -

Assessee made a payment of External Development Charges (EDC) to HUDA. AO held that the assessee had failed to deduct/deposit tax at source under section 194C with respect to said EDC paid to HUDA. Therefore, penalty proceedings under section 271C of the Act were initiated.Held: The payment had been made to HUDA through DTCP which is a Government Department and the same was not in pursuance to any contract between the assessee and HUDA. Thus, the payment of EDC was 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, 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.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15



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