IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘B’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER Assessment Year: 2016-17 Herman Properties (P) Ltd., Vs. Income Tax Officer, WZ-48, Shadikhampur, TDS, Ward-74(2), West Patel Nagar, Delhi New Delhi PAN: AAACH2542M (Appellant) (Respondent)

Assessee by Sh. Ankit Kumar, Adv.

Department by Sh. Rajesh Kumar Dhanesta, Sr. DR Date of hearing 23.04.2025 Date of pronouncement 23.04.2025 ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2016-17, arises against the Commissioner of Income Tax (Appeals)/Addl./JCIT(A)- 5, Mumbai’s DIN and order no. ITBA/APL/S/250/2023- 24/1062938159(1), dated 19.03.2024 involving proceedings under section 201 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

2. Heard both the parties. Case file perused.

3. This assessee’s appeal raises the following substantive grounds:

1. That the learned Commissioner of Income Tax (Appeals), Addl./JCIT (A)-5, Mumbai has erred both in law and facts in upholding the order concluding that the appellant company be assessee-in-default for a sum of Rs. 6,62,884/ u/s 201(1) of the Act and Rs. 5,76,709/- u/s 201(1A) of the Act.

2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in concluding that the appellant company was obliged to deduct tax at source under section 194C of the Act on External Development Charges paid of Rs. 3,31,44,200/- on behalf of Director General, Town & Country Planning, Haryana (a State Government Undertaking) to Haryana Urban Development Authority (HUDA)

2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the External Development Charges is compensatory fees and is integral part of terms of license granted by Director General, Town & Country Planning, Haryana under section 3(3)(a) of Haryana Development and Regulation of Urban Areas Act, 1975 and those External Development Charges are payable by virtue of section 3(3)(a)(ii) of the said Act read with section (2)(g) of the said Act and therefore, there was no quid pro qua element involved and was not a payment for contract for services rendered and as such section 194C of the Act had no application on the payments made on account of External Development Charges to HUDA.

2.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that a payment in the nature of statutory charges cannot be said to be a sum paid to HUDA for carrying out any work in pursuance to a contract between appellant company and HUDA and as such invocation of section 194C of the Act to impose penalty under section 201(1)/201(1A) of the Act is based on fundamental misconception of facts and law and therefore, wholly unsustainable

2.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that HUDA is acting only on behalf of Town & Country Planning, Haryana, a State Government in terms of section 196 of the Act and is a statutory body of the Government and therefore any payment made to HUDA is otherwise exempt under section 196 of the and as such, penalty uphold in terms of under section 201(1)/201(1A) of the Act of the Act is purely based on misconception and therefore, unsustainable.

2.4 That the learned Commissioner of Income Tax (Appeals) has overlooked relevant evidence placed on record and, drawn factually incorrect and legally unsustainable inferences based on irrelevant and extraneous consideration and thus, order affirming is wholly unwarranted and not in accordance with law.

2.5 That various adverse findings recorded by the learned Commissioner of Income Tax (Appeals) are factually incorrect, legally misconceived and wholly untenable.

Prayer: It is therefore prayed that the order dated 27.3.2023 u/s 201(1)/201(1A) of the Act is contrary to law and therefore be held to be untenable and, hence the demand so created as a result of the order u/s 201(1)/201(1A) of the A