| The Tax Publishers2019 TaxPub(DT) 8439 (Del-Trib) INCOME TAX ACT, 1961
Section 271C
Assessee was not required to deduct TDS on payment of EDC to HUDA with whom it had no privity of contract as said payment was not made out of any statutory and contractual liability. Further, due to continuous clarifications by the CBDT and DTCP, the issue became debatable, thus provided reasonable cause to the assessee for non deduction of tax at source. Hence, penalty levied by the AO under section 271C was not sustainable in the eyes of law.
|
Penalty under section 271C - Leviability - Non deduction of TDS on payment of External Development Charges (EDC) -
AO noticed that assessee had not deducted tax at source on payment of External Development Charges (EDC) to Haryana Urban Development Authority (HUDA) on behalf of Director, Town & Country Planning (DTCP), Haryana. Further, as assessee failed to bring any evidence to prove that there exist reasonable cause within the meaning of section 273B for non-deduction of tax at source. AO levied the penalty @ 2% of the EDC amount under section 271C. Held: Firstly, the assessee was not required to deduct TDS on payment of EDC to HUDA with whom it had no privity of contract as said payment was not made out of any statutory and contractual liability; secondly, the assessee had reasonable cause for non-deduction of tax at source; thirdly it was not the case of the Revenue that the assessee had intentionally avoided the deduction of TDS by bringing on record contumacious conduct of the assessee; and fourthly, with continuous clarifications by the CBDT and DTCP, the issue became debatable if the TDS was to be deducted or not on the EDC providing reasonable cause to the assessee not to deduct the TDS. Consequently, penalty levied by the AO under section 271C was not sustainable in the eyes of law, hence ordered to be deleted.
REFERRED : CIT-XVIII v. Bank of Nova Scotia (2016) 380 ITR 550 (SC) : 2016 TaxPub(DT) 0811 (SC),CIT v. Itochu Corporation. (2004) 268 ITR 172 (Del) : 2004 TaxPub(DT) 1656 (Del-HC),CIT v. Mitsui & Co. Ltd. & Anr. (2005) 272 ITR 545 (AP) : 2005 TaxPub(DT) 0876 (AP-HC),RPS Infrastructure Ltd. v. ACIT [ITA Nos. 5805, 5806, 5349/Del/2019 Order, dated 23-7-2019] : 2019 TaxPub(DT) 5904 (Del-Trib), and DCIT v. Joint Secretary Organizing Committee for Winter Games (2018) 196 TTJ 0975 (Del) : 2018 TaxPub(DT) 7655 (Del-Trib)
FAVOUR : In assessee's favour
A.Y. : 2015-16
 SUBSCRIBE FOR FULL CONTENT
|