Sh. Raj Kumar Jindal, Fatehabad V. ITO, Fatehabad

ITA 1067/DEL/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1766 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 13-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-1 NEW DELHI BEFORE SHRI P.K. BANSAL : ACCOUNTANT MEMBER ITA NO. 1067/DEL/2014 ASSTT. YRS: 2006-07 RAJ KUMAR JINDAL, VS. INCOME-TAX OFFICER, PROP. JINDAL INDUSTRIES, WARD-1, FATEHABAD. SIRSA ROAD, FATEHABAD. PAN: AFWPJ 9255 K ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI GAUTAM JAIN ADV. RESPONDENT BY : SHRI P. DAM KANUNJNA SR. DR DATE OF HEARING : 13/11/2015. DATE OF ORDER : 30/11/2015. O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 03/01/2014, PASSED BY THE CIT(A), ROHTAK, IN APPEA L NO. 22/RTK/2012-13 FOR A.Y. 2006-07. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES T O DISALLOWANCE MADE U/S 40A(IA) BY APPLYING THE PROVISIONS OF SECTION 154. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT U/S 143(3) WAS COMPLETED AT AN INCOME OF RS. 2,76,690/- PLUS RS. 1,00,000/- AGRICU LTURAL INCOME. LATER ON, IT WAS NOTICED THAT THE ASSESSEE HAD PAID LEASE RENT ON AC COUNT OF FACTORY BUILDING @ 5,000/- PER MONTH AND RS. 10,000/- PER MONTH ON ACC OUNT OF PLANT & MACHINERY, WHICH THE ASSESSEE HAS PAID TO M/S JINDAL STUFF BOA RD PVT. LTD., FATEHABAD. 2 4. ACCORDING TO THE AO, THE ASSESSEE WAS UNDER STAT UTORY OBLIGATION TO DEDUCT THE TAX AT SOURCE U/S 194I. OUT OF THESE PAYMENTS A S THE AMOUNT OF THE RENT WAS RS. 1,80,000/-, THEREFORE, THE SAID SUM HAS TO BE DISAL LOWED U/S 40A(IA). WHEN THE SHOW CAUSE NOTICE ISSUED, THE ASSESSEE SUBMITTED TH AT THE ASSESSEE HAD ENTERED INTO TWO AGREEMENTS WITH M/S JINDAL STUFF BOARD PVT. LTD ., FATEHABAD. UNDER ONE AGREEMENT THE ASSESSEE HAD TAKEN BUILDING M/S JINDA L STUFF BOARD PVT. LTD., ON LEASE AT A CONSIDERATION OF RS. 5,000/- PER MONTH. UNDER THE OTHER AGREEMENT THE ASSESSEE HAD TAKEN ON LEASE PLANT AND MACHINERY AT A CONSIDERATION OF RS. 10,000/- PER MONTH. BOTH THE AGREEMENTS WERE SEPARATE AND TH E RENT PAID FOR BUILDING, FURNITURE AND FITTINGS AND LAND APPURTENANT THERETO , DID NOT EXCEED RS. 1,20,000/- AS PER THE PROVISIONS EXISTING DURING THE IMPUGNED ASS ESSMENT YEAR. THE AO DID NOT AGREE BUT RECTIFIED THE ASSESSMENT ORDER. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DISMISSED THE APPEAL. 5. I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONS IDERED THE SAME, ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. I NOTED THA T THE PROVISION OF SECTION 194I WAS INSERTED BY THE FINANCE ACT, 1994 W.E.F. 1-6-1994. THUS, SECTION, WHICH WAS IN EXISTENCE DURING THE IMPUGNED ASSESSMENT YEAR REQU IRED ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO IS RESP ONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF RENT, SHALL AT THE TIME OF CRE DIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN C ASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, D EDUCT INCOME-TAX THEREON AT THE RATE OF (A) FIFTEEN PER CENT IF THE PAYEE IS AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY; AND (B) TWENTY PER CENT IN OTHER CASES. 3 6. FIRST PROVISO FURTHER STATES THAT NO DEDUCTION S HALL BE MADE UNDER THIS SECTION WHERE THE AMOUNT OF SUCH INCOME OR, AS THE CASE MAY BE, THE AGGREGATE OF THE AMOUNTS OF SUCH INCOME CREDITED OR PAID OR LIKELY T O BE CREDITED OR PAID DURING THE FINANCIAL YEAR BY THE AFORESAID PERSON TO THE ACCOU NT OF, OR TO, THE PAYEE, DOES NOT EXCEED ONE HUNDRED AND TWENTY THOUSAND RUPEES. 7. THE RENT HAS BEEN DEFINED UNDER EXPLANATION (I) AS UNDER: (I) RENT MEANS ANY PAYMENT, BY WHATEVER NAME CAL LED, UNDER ANY LEASE, SUB-LEASE, TENANCY OR ANY OTHER AG REEMENT OR ARRANGEMENT FOR THE USE OF ANY LAND OR ANY BUILDING (INCLUDING FACTORY BUILDING), TOGETHER WITH FURNITURE, FITTING S AND THE LAND APPURTENANT THERETO, WHETHER OR NOT SUCH BUILDING I S OWNED BY THE PAYEE; 8. FROM EXPLANATION (I) IT IS APPARENT THAT THE RAT E FOR THE PURPOSE OF SECTION 194I DOES NOT INCLUDE WITHIN THE AMBIT OF PAYMENT M ADE FOR THE USE OF MACHINERY OR PLANT OR EQUIPMENT. IN THE CASE OF THE ASSESSEE I NOTED, THERE WERE TWO DIFFERENT AGREEMENTS ONE AGREEMENT RELATING FOR THE USE OF THE BUILDING @ RS. 5,000/- PER MONTH AND THE OTHER AGREEMENT RELATED FOR THE LEASE OF PLANT AND MACHINERY @ RS. 10,000/- PER MONTH. PAYMENT TOWARDS THE RENT ON PLA NT AND MACHINERY WAS NOT SUBJECT TO TDS U/S 194I. THIS HAS BEEN INCLUDED WIT HIN THE DEFINITION OF RENT W.E.F. 13-7-2006 I.E. AFTER THE ASSESSMENT YEAR 2006-07. T HE RENT PAID BY THE ASSESSEE IN RESPECT OF THE BUILDING IN THE IMPUGNED CASE COMES TO RS. 60,000/-. IN VIEW OF THIS FACT, I AM OF THE VIEW, SINCE THE RENT, AS DEFINED U/S 194I, INTHE CASE OF THE ASSESSEE DURING THE IMPUGNED YEAR DOES NOT EXCEED RS. 1,20,0 00/- AND, THEREFORE, IT IS NOT A CASE WHERE IT CAN BE SAID THAT THERE WAS A MISTAKE APPARENT ON RECORD IN THE 4 ASSESSMENT ORDER PASSED ON 12-11-2008. I, ACCORDING LY, QUASH THE ORDER PASSED U/S 154. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30/11/2015. SD/- (P.K. BANSAL) ACCOUNTANT MEMBER DATED: 30/11/2015. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.