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YASHWANT VARMA, J.

1. This batch of writ petitions assail the action initiated by the respondents predicated upon a purported failure on the part of the writ petitioners to deduct tax on payments made to the Haryana Shahari Vikas Pradhikaran1 (earlier known as the Haryana Urban Development Authority, for short ―HUDA‖) under Section 194C of the Income Tax Act, 19612. The respondents assert that the External Development Charges3 which were paid by the writ petitioners to HSVP albeit on the directions of the Director General, Department of Town and Country Planning4, Haryana, a department functioning under the Government of Haryana, would clearly fall within the ambit of Section 194C of the Act and as a consequence of default, the petitioners are liable to be proceeded under Section 201 as also to answer why penalty be not levied in terms of Section 271C of the Act.

Kindly refer to your letter dated 21st November, 2017 addressed to the Finance Secretary, along with the enclosures on the captioned subject.

2. In this regard it is submitted that provisions of non-deduction of tax under Section 196 of the Income-tax Act, 1961, is applicable to the Government and to the other authorities as mentioned under the Section. Accordingly, External Development Charges (EDC) if paid to Government of Haryana would be exempt from TDS provisions. However, in the instant case, it appears that the developer has made the payment in the nature of External Development Charges (EDC) not to the Government but to HUDA [Haryana Urban Development Authority) which is a development authority of State Government of Haryana and is a taxable entity under the income-tax Act, 1961. Hence, TDS provisions would be applicable on EDC payable by the developer to HUDA

―4.1. HUDA was constituted under Haryana Urban Development Authority Act, 1977. The functions of HUDA are:

a. To promote and secure development of urban areas with the power to acquire. sell and dispose off property, both movable and immovable.

b To acquire develop and dispose off land for residential. Industrial. commercial and institutional purposes. c To make available developed land to Haryana Housing board and other bodies for providing houses to Economically Weaker Sections of the society, and d To undertake building works and other engineering works.

2019 SCC OnLine ITAT 24457

6. When we examine the question ―as to whether TDS on payment of EDC to HUDA was not to be deducted by assessee because levy is made by DTCP having control over the EDC and not HUDA as contended by the ld. AR for the assessee‖ in the light of the aforesaid undisputed facts, we are of the considered view that the assessee has no liability to deduct TDS in respect of the payment made to a Government Department, DTCP in this case, u/s 196 of the Act as the payment was made to HUDA on behalf of DTCP only xxxx xxxx xxxx