Case Number: ITA 5871/DEL/2019
Appellant: TDI Infrastructure Ltd., New Delhi
Respondent: Addl. CIT Range-76, New Delhi
Assessment Year: 2016-17
Case Filed On: 2019-07-05
Order Type: Final Tribunal Order
Date of Order: 2022-09-05
Pronounced On: 2022-09-05
Summary:
The case of TDI Infrastructure Ltd. vs Addl. CIT, New Delhi centers around the penalty imposed for non-deduction of tax on payments made for External Development Charges (EDC) to HUDA. The appellant, TDI Infrastructure Ltd., filed an appeal against the order of the CIT(A)-31, New Delhi dated 16.05.2019 for the assessment year 2016-17. The key issue was whether the appellant was liable to deduct tax at source on the EDC payments and consequently liable for a penalty under Section 271C of the Income Tax Act, 1961.
Background:
The appellant had made payments to HUDA for EDC and did not deduct tax at source, believing that such payments to a government entity were not subject to TDS. The Assessing Officer (AO) imposed a penalty under Section 271C for failure to deduct TDS, which was upheld by the CIT(A). The appellant contended that EDC payments were to the State Government and not subject to TDS, citing various case laws and the clarification from DTCP that TDS was not required on these payments.
Grounds of Appeal:
Tribunal Findings:
The tribunal reviewed the facts and the order of the CIT(A) and noted that the issue of penalty under Section 271C for non-deduction of tax on EDC payments had been decided in favor of the appellant in its own case for the assessment year 2014-15. The tribunal observed that the payments were made to HUDA, an authority created by the Haryana government for development activities, and were not subject to TDS. The tribunal also referred to the CBDT’s clarification that no TDS was required on EDC payments, supporting the appellant’s position.
The tribunal held that the appellant had a bona fide belief that no TDS was required on EDC payments, and there was no contumacious conduct warranting the penalty under Section 271C. The tribunal relied on various case laws, including the Supreme Court’s judgment in Commissioner of Income Tax vs. Bank of Nova Scotia, which emphasized that penalty under Section 271C requires contumacious conduct by the assessee.
Conclusion:
In conclusion, the tribunal allowed the appeal of TDI Infrastructure Ltd., deleting the penalty imposed under Section 271C for non-deduction of tax on EDC payments. The tribunal’s decision underscored the importance of following procedural requirements and the bona fide belief of the assessee in such matters.
Order Pronouncement:
Order was pronounced in the open court on 05.09.2022.
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(B.R.R. KUMAR)
ACCOUNTANT MEMBER
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(C. N. PRASAD)
JUDICIAL MEMBER
TDI Infrastructure vs Addl. CIT, New Delhi – Case Filed Due to Penalty for Non-Deduction of Tax
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