M/s Country Club (India) Limited, Hyderabad V. ACIT, Circle-14(1), Hyderabad, Hyderabad

ITA 1628/HYD/2014

• Counselvise Citation: 162822514 RSA 2014
• Duration Of Justice: 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 25-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 22-10-2014
• Court: TRIBUNAL
• Department Lawyers: B RAJARAM
• Assessee Lawyers: P MURALI MOHAN RAO
• Section: 143(3); 37(1); 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 1628/HYD/2014 ASSESSMENT YEAR: 2010-11 M/S. COUNTRY CLUB (INDIA) LTD., HYDERABAD [PAN: AAACC8276B] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-14(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : S HRI P. MURALI MOHAN RAO, A R FOR REVENUE : S HRI B. RAJARAM , DR DATE OF HEARING : 2 5 - 0 6 - 201 5 DATE OF PRONOUNCEMENT : 30 - 0 6 - 2 015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), VIJAYAWADA DA TED 30-07-2014 HAVING CONCURRENT JURISDICTION OVER THE CASE IN HYD ERABAD. ASSESSEE'S GRIEVANCE IS WITH REFERENCE TO UPHOLDING PARTIALLY DEMAND RAISED U/S. 201(1) AND 201(1A) R.W.S. 194-I OF THE INCOME TAX A CT [ACT] IN RESPECT OF RENTAL PAYMENTS. 2. BRIEFLY STATED, THERE WAS A TDS SURVEY CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE TO VERIFY THE COMPLIANCE O F TDS PROVISIONS. I.T.A. NO. 1628/HYD/2014 M/S. COUNTRY CLUB (INDIA) LTD., :- 2 -: ASSESSING OFFICER (AO) NOTICED THAT THERE IS SHORT DEDUCTION OF TDS TO THE TUNE OF RS. 1,71,71,273/- UNDER THE PROVISIONS OF S ECTION 194-I IN RESPECT OF PAYMENTS MADE TOWARDS RENT. THERE WERE OTHER VIOLATIONS ALSO LISTED BY THE AO ON WHICH CIT(A) GAVE RELIEF AND AR E NOT IN DISPUTE. AS FAR AS THE RENT IS CONCERNED, AO NOTICED THAT ASSES SEE PAID RENT OF RS. 18,13,19,412/- DURING THE PREVIOUS YEAR BUT DEDUCTE D TAX OF RS. 1,25,65,926/- ONLY. HE WAS OF THE OPINION THAT THE TOTAL TAX DEDUCTIBLE WORKS OUT TO RS. 2,97,37,199/- AS PER THE PROVISION S OF SECTION 194-I R.W.R. 30 OF THE ACT. THE BALANCE AMOUNT WHICH WAS NOT DEDUCTED WAS ARRIVED AT RS. 1,71,71,273/- AND CORRESPONDING INTE REST U/S. 201(1A) WAS ALSO LEVIED. BEFORE THE LD.CIT(A), IT WAS CLAR IFIED THAT THE ENTIRE RENT DEBITED TO P&L A/C INVOLVES PAYMENT IN VARIOUS PLAC ES HAVING DIFFERENT TAN NUMBERS. IT WAS SUBMITTED THAT TOTAL AMOUNT DE BITED WAS RS. 18,13,19,411/- TOWARDS RENT PAID TO VARIOUS PERSONS IN RESPECT OF ITS HEAD OFFICE AND OTHER BRANCHES. OUT OF THIS, AN AM OUNT OF RS. 14,51,77,845/- WAS SUBJECT MATTER OF TDS AND BALANC E OF RS. 3,61,41,566/- IS NOT SUBJECT TO TDS PROVISIONS OF T HE ACT. ASSESSEE ENCLOSED THE NECESSARY TDS STATEMENTS FILED TO SUBM IT THAT THE RENT WAS NOT SUBJECTED TO TDS AS THE PAYMENTS WERE LESS THAN RS. 1,20,000/- IN THE YEAR AND ENCLOSED A LIST OF PAYMENTS MADE. CIT (A) AFTER CONSIDERING THE SUBMISSIONS HELD AS UNDER: '6.1 THE FIRST ISSUE TO BE DEALT IN THIS APPEAL IS WITH REGARD TO SHORT DEDUCTION OF TAX ON PAYMENT OF RENT. THE APPELLAN T DURING THE COURSE OF REMAND PROCEEDINGS BEFORE THE AO HAS SUB MITTED A STATEMENT STATING THAT THE RENT DEBITED TO THE PRO FIT & LOSS ACCOUNT PERTAINED TO RENT PAID ON 5 DIFFERENT TANS. THE T OTAL RENT APPLICABLE FOR TDS WAS SHOWN AT RS. 14,66,10,405/- AND THE RE NT NOT APPLICABLE FOR TDS WAS SHOWN AT RS. 3,47,09,006/-. IN HYDERABAD REGION, THE RENT APPLICABLE FOR TDS WAS SHOWN AT R S. 8,60,08,509/- AND THE RENT NOT APPLICABLE FOR TDS WAS SHOWN AT R S. 14,00,70,243/- [1,40,70,243/-]. IT IS SUBMITTED T HAT THE TOTAL RENT PERTAINED TO 5 TANS AND HENCE TO TAKE ALL THE RENT AS ATTRIBUTABLE TO HYDERABAD TAN IS NOT CORRECT. IN RESPECT OF RENT PAID IN HYDERABAD I.T.A. NO. 1628/HYD/2014 M/S. COUNTRY CLUB (INDIA) LTD., :- 3 -: REGION, IT IS STATED THAT THE TAX WAS DEDUCTED ON RENT APPLICABLE FOR TDS CASES AND THE RENT PAID TO 185 PERSONS DID NOT ATTRACT TDS AS THE RENT PAID WAS BELOW THE THRESHOLD LIMIT TO DED UCT TAX. HOWEVER, THE APPELLANT FAILED TO PRODUCE EVIDENCE IN SUPPOR T OF PAYMENT OF RENT IN NON-TDS CASES. EVEN BEFORE THE UNDERSIGNE D, EXCEPT STATING THAT THE RENT PAYMENT DETAILS HAVE BEEN DULY PASSE D THROUGH THE LEDGER ACCOUNT, THE APPELLANT FAILED TO PRODUCE AN Y EVIDENCE TO SHOW THAT THE RENT PAID IN NON-TDS CASES WAS BELOW THE THRESHOLD LIMIT. IN SUCH A SITUATION, I AM IN AGREEMENT WIT H THE FINDINGS OF THE AO AND ACCORDINGLY, THE DEMAND RAISED TOWARDS SHOR T / NON- DEDUCTION OF TDS ON RENT IN HYDERABAD REGION IS SU STAINED. ACCORDINGLY, THE AO IS DIRECTED TO CALCULATE THE D EMAND SEPARATELY IN RESPECT OF PAYMENTS MADE IN HYDERABAD REGION. 6.1.2 IN RESPECT OF RENT PAID IN OTHER REGIONS OTH ER THAN HYDERABAD REGION, SINCE THE AO HAS NO JURISDICTION ON SUCH T ANS, THE DEMAND RAISED IS NOT SUSTAINABLE AND NEEDS TO BE DELETED. THE AO IS DIRECTED TO INTIMATE THE DEFAULT TO THE CONCERNED TDS ASSESSING OFFICER OF THOSE REGIONS TO TAKE NECESSARY ACTION' . 3. REVENUE IS NOT IN APPEAL AS IT ACCEPTED THE ORDE R OF THE CIT(A) ON THE EXCLUSION OF RENT AT OTHER PLACES WHEREAS, ASSE SSEE IS AGGRIEVED ON THE AMOUNT WHICH IT CLAIMS WAS NOT COVERED BY THE T DS PROVISIONS. 4. CONSIDERING THE RIVAL CONTENTIONS AND PERUSING T HE LIST OF PAYMENTS SUBMITTED STATING THAT SECTION 194-I WAS N OT APPLICABLE, WE NOTICE THAT THESE WERE PAYMENTS BELOW RS. 1,20,000/ - TO ABOUT 185 PARTIES. WHETHER THE LIST IS COMPLETE OR NOT, WHET HER ASSESSEE FURNISHED THE DETAILS OR NOT BEFORE TDS OFFICER IS NOT CRUCIA L IN DECIDING THE ISSUE. IT SEEMS AO WHO COMPLETED THE ASSESSMENT FOR THE IM PUGNED ASSESSMENT YEAR DID NOT MAKE ANY DISALLOWANCE EITHE R U/S. 37(1) OR U/S. 40(A)(IA). THIS INDICATES THAT THERE WERE NO VIOLA TIONS OF PROVISIONS OF SECTION 194-I NOR THE EXPENDITURE CLAIM MADE IN THE P&L A/C WAS HELD NON-GENUINE. THERE IS MERIT IN ASSESSEE CONTENTIO N THAT RENT PAID TO 185 PERSONS DID NOT ATTRACT TDS. SINCE IN THE ASSE SSMENT COMPLETED U/S 143(3) LATER, AO ACCEPTED THE SAID PAYMENTS WE ALLOW ASSESSEE'S I.T.A. NO. 1628/HYD/2014 M/S. COUNTRY CLUB (INDIA) LTD., :- 4 -: APPEAL AND DIRECT THE AO TO WITHDRAW THE DEMAND RAI SED U/S. 201(1) AND 201(1A). 5. IN THE RESULT, ASSESSEE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 30 TH JUNE, 2015 TNMM COPY TO : 1. M/S. COUNTRY CLUB (INDIA) LTD., C/O. P. MURALI & CO., CHARTERED ACCOUNTANT, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-14(1), HYDERABAD. 3. CIT(APPEALS)-VIJAYAWADA. 4. CIT-(TDS), HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.