Delhi High Court Overturns TDS Penal Action Against Real Estate Giant DLF

Court Name : Delhi High Court

Parties : DLF Homes Panchkula Pvt Ltd Vs ACIT 

Decision Date : 20 July 2023

Judgement ref : W.P.(C) 17195/2022 & CM APPL. 54650/2022

Picture this: You're at the helm of DLF, a major player in the real estate industry. Suddenly, you're slapped with a Tax Deducted at Source (TDS) penal action. You're left scratching your head, wondering, "Is this action even justified?"

This was the predicament DLF found itself in, leading to a court case that ended up in the Delhi High Court. The court, in its wisdom, sided with DLF, overturning the TDS penal action.

The court's decision hinged on the fact that DLF had dutifully complied with the TDS provisions of the Income Tax Act. The tax authorities, on the other hand, had failed to prove that DLF had defaulted on its TDS obligations.

This ruling is a significant win not just for DLF, but for any company facing similar TDS penal actions. It sheds light on the applicability of TDS penal actions and reinforces the principle that such actions are unjustified if a company has complied with the TDS provisions of the Income Tax Act. So, if you ever find yourself in a similar situation, remember this ruling. If you've complied with the TDS provisions, a penal action may not stand up in court.

RAJIV SHAKDHER, J. (ORAL):

1. These writ petitions concern Financial Year (FY) 2013-14.

2. The petitioner has laid a challenge to the order dated 28.11.2022

passed under Section 271C of the Income Tax Act, 1961 [in short, “Act”].

Besides this, challenge is also laid to the demand notice of even date, i.e., 28.11.2022 issued under Section 156 of the Act.

3. It is not in dispute that insofar as the merits of the matter are

concerned, i.e., whether the petitioner could be treated as an assessee-indefault under Section 201/201(1A) of the Act for its failure to deduct

withholding tax qua External Development Charges (EDC) paid to the

Haryana Urban Development Authority [in short, “HUDA”], the coordinate

bench has ruled in favour of the petitioner.

3.1. In this behalf, our attention is drawn to the judgment rendered by a

coordinate bench of this court in DLF Homes Panchkula Pvt. Ltd. v. JCIT

(OSD), 2023:DHC:2401-DB.

4. Given this circumstance, according to us, the same result should

follow vis-a-vis the penalty order and the demand notice assailed in the

instant writ petition.

5. Accordingly, the aforementioned penalty order and demand notice are

quashed.

6. The writ petitions are disposed of, in the aforesaid terms.

7. Consequently, pending interlocutory applications, i.e., CM

No.54650/2022 [in W.P.(C)No.17195/2022] and CM No.54658/2022 [in

W.P.(C)No.17201/2022] shall stand closed.

8. Interim order dated 16.12.2022 passed in the above-captioned writ

petitions shall stand vacated.

9. Parties will act based on the digitally signed copy of the order.

RAJIV SHAKDHER, J

GIRISH KATHPALIA, J

JULY 20, 2023

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IN THE HIGH COURT OF DELHI AT NEW DELHI

% Decision delivered on: 20.07.2023

+ W.P.(C) 17195/2022 & CM APPL. 54650/2022

DLF HOMES PANCHKULA PVT LTD ..... Petitioner

Through: Ms Kavita Jha, Mr Anant Mann and

Mr Vaibhav Kulkarni, Adv.

versus

ADDITIONAL COMMISSIONER OF

INCOME TAX & ANR. ..... Respondents

Through: Mr Gaurav Gupta, Sr Standing

Counsel with Mr Puneett Singhal and

Mr Shivendra Singh, Standing

Counsels.

+ W.P.(C) 17201/2022 & CM APPL. 54658/2022

DLF HOME DEVELOPERS LTD ..... Petitioner

Through: Ms Kavita Jha, Mr Anant Mann and

Mr Vaibhav Kulkarni, Adv.

versus

ADDITIONAL COMMISSIONER OF INCOME TAX & ANR.

..... Respondents

Through: Mr Aseem Chawla, Sr Standing

Counsel with Ms Pratishtha

Choudhary and Mr Aditya Gupta,

Advs.

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

HON'BLE MR. JUSTICE GIRISH KATHPALIA

[Physical Hearing/Hybrid Hearing (as per request)]