This document provides a detailed analysis of the Income Tax Appellate Tribunal’s final decision on the case between Gopal Global Developers Private Limited and ITO, TDS Ward 74(3), concerning the assessment year 2014-15. The case number is ITA 2664/DEL/2022, presided over by Judicial Member Shri Chandra Mohan Garg and Accountant Member Shri Pradip Kumar Kedia.
The appeal filed by the assessee, Gopal Global Developers Private Limited, was directed against the order dated 06.09.2022 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, pertaining to the assessment year 2014-15. The primary issue in this case was the liability to deduct TDS on payments made as External Development Charges (EDC) to the Directorate of Town and Country Planning, Haryana (Haryana Government) through the Haryana Urban Development Authority (HUDA).
During the hearing on 24.07.2023, the appellant was represented by Shri M.R. Sahu, CA, while the Revenue was represented by Shri Vivek Kumar Upadhyay, Sr. DR. The Tribunal proceeded to adjudicate the appeal based on the materials on record and submissions made by both parties.
The grounds raised by the assessee were as follows:
The assessee is a private limited company engaged in the development of group housing. The company made a payment of Rs.40 lakh as EDC to HUDA for land development in Ballabhgarh. The AO treated the assessee as in default for not deducting TDS on this payment, leading to a demand of Rs.80,000 under Section 201(1) of the Income Tax Act, 1961, and an interest of Rs.75,200 under Section 201(1A), totaling Rs.1,55,200.
The assessee argued that the payment of EDC was made to the Government of Haryana through HUDA, which is a statutory body, and therefore, no TDS was required to be deducted. The assessee relied on a clarification issued by the Directorate of Town and Country Planning, Haryana, which stated that HUDA is only an executing agency for the government and that payments made to the government are not subject to TDS.
The Tribunal noted that the issue of TDS on EDC payments to HUDA had been adjudicated in previous cases, including the case of Spaze Tower Pvt. Ltd. vs. JCIT, New Delhi (ITA No.5842/Del/2019), where it was held that payments made to HUDA on behalf of the government are not subject to TDS. The Tribunal also referred to a clarification letter from the Directorate of Town and Country Planning, Haryana, which supported the assessee’s claim.
The Tribunal concluded that the payment of EDC to HUDA by the assessee was not subject to TDS, as it was a payment made to the government. The Tribunal allowed the appeal, setting aside the demand of Rs.80,000 and the interest of Rs.75,200.
Order pronounced in the open Court on 24/07/2023.
(CHANDRA MOHAN GARG)
JUDICIAL MEMBER
(PRADIP KUMAR KEDIA)
ACCOUNTANT MEMBER
This case underscores the importance of understanding the nature of payments and the applicability of TDS provisions. The Tribunal’s decision clarifies that payments made to statutory bodies on behalf of the government are not subject to TDS, providing relief to entities making such payments.
The appellant, Gopal Global Developers Private Limited, challenged the AO’s decision to treat it as an ‘assessee in default’ for not deducting TDS on EDC payments made to HUDA.
The appellant contended that the payment of EDC was made to the Government of Haryana through HUDA, a statutory body, and therefore, no TDS was required. The Revenue maintained that the assessee was liable to deduct TDS on such payments.
The Tribunal referred to previous judgments and a clarification from the Directorate of Town and Country Planning, Haryana, to conclude that payments made to HUDA on behalf of the government are not subject to TDS. The Tribunal found that the AO’s decision was not justified.
The Tribunal’s decision in the case of Gopal Global Developers Private Limited vs. ITO, TDS Ward 74(3), reaffirms the principle that payments made to statutory bodies on behalf of the government are not subject to TDS. This decision provides clarity on the applicability of TDS provisions to similar payments, ensuring that entities are not unjustly penalized for non-deduction of TDS.
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