Agama Services Private Limited, Hyderabad, Hyderabad V. ITO, Ward-1(1), Hyderabad, Hyderabad

ITA 62/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2478 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-08-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 09-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SREEKAR
• Assessee Lawyers: GVSS MURTHY
• Keywords: Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 62/HYD/2017 ASSESSMENT YEAR: 2006-07 M/S. AGAMA SERVICES PRIVATE LIMITED, HYDERABAD [PAN: AAECA6435E] VS INCOME TAX OFFICER, WARD-1(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI G.V.S.S. MURTHY, AR FOR REVENUE : SHRI V. SREEKAR, DR DATE OF HEARING : 16-10-2017 DATE OF PRONOUNCEMENT : 27-10-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-1, HYDERABAD, DATED 21-09-2016 FOR THE AY. 2006-07. THE GROUNDS RAISED B Y ASSESSEE ARE AS UNDER: 2. THE CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE D ISALLOWING RS.3,35,500 TOWARDS RENT FOR THE OFFICE PREMISES, F URNITURE AND FIXTURES AND MAINTENANCE EXPENSES AS MADE BY THE A.O. ON THE GROUND THAT ALL THESE EXPENSES ON SUCH PAYMENTS ATTRACT PROVISIONS OF SECTION 194-I OF THE INCOME-TAX ACT AS COMPOSITE PAYMENTS AND SINCE NO T AX WAS DEDUCTED AT SOURCE, THEY WERE LIABLE FOR DISALLOWANCE U/S. 40(A )(IA) OF THE INCOME-TAX ACT, 1961. 3. THE CIT(A) OUGHT TO HAVE NOTED THAT THE RENT WAS SEPARATELY PAID TO EACH OF THE TWO CO-OWNERS, AND IN EACH CASE, THE RENT PAID WAS BELOW THE THRESHOLD LIMIT, THE PROVISIONS OF SECTION 194- I WERE NOT APPLICABLE AND AS SUCH, SHE OUGHT TO HAVE HELD THAT THE DISALLOWAN CE WAS NOT CALLED FOR. 4. LIKE WISE, THE CIT(A) ALSO OUGHT TO HAVE HELD TH AT THE PAYMENT OF RS. 1,15,000 MADE TO B.G. SERVICES, A SEPARATE PROP RIETARY CONCERN OF ONE I.T.A. NO. 62/HYD/2017 :- 2 - : OF THE CO-OWNERS, TOWARDS SERVICES IS NOT HIT BY TH E PROVISIONS OF SECTION 194-I AND AS SUCH SHE OUGHT TO HAVE HELD THAT NO DI SALLOWANCE WAS CALLED FOR. GROUND NOS. 1 & 5 ARE GENERAL IN NATURE. 2. CONDONATION: THIS APPEAL WAS FILED WITH A DELAY OF FIVE DAYS. CONSIDERING THE EXPLANATION AND OBJECTIONS OF D R, THE DELAY IS CONDONED. 3. THE ISSUE AND DECISION OF THE CIT(A) AS PER PARA 5 IS AS UNDER: 5. GROUND-2: DISALLOWANCE OF RENT OF RS.3,35,500/-: THE APPLICANT HAS PAID A SUM OF RS.16,65,336/- TOWA RDS RENT OF PREMISES C-6/52A, SAFDARJUNG DEVELOPMENT AREA, DELHI AND ALS O FOR RENT OF FIXTURES & FITTINGS. THE ASSESSING OFFICER CONSIDERED THIS TO BE A COMPOSITE RENT AGREEMENT AND THE PAYMENTS MADE SEPARATELY TO HUSBA ND & WIFE, IS ONLY AN ARRANGEMENT TO AVOID APPLICABILITY OF TDS U/S 19 4-I. THE ASSESSEE WAS LIABLE TO DEDUCT TAX ON THE RENTAL PAYMENTS MADE TO WARDS THIS PREMISES AS THE TOTAL PAYMENT EXCEEDED THE THRESHOLD LIMIT O F RS. 1,20,000/-. FOR FAILURE TO DEDUCT TAX AT SOURCE, THE EXPENDITURE OF RS. 3,35,500/-WAS ADDED BACK TO THE INCOME RETURNED. THE DETAILS OF PAYMENTS ARE AS UNDER: A. RENT PAID TO MR. G.B.BRAR (CO-OWNER FOR THE PREMISES) : RS. 1,10,000 B. RENT PAID TO MS. B. MANJU (CO-OWNER FOR THE PREMISES) : RS. 1,10,000 C. MAINTENANCE EXPENSES PAID TO B.G. : RS. 1,15,5 00 SERVICES PROPRIETARY CONCERN OF ABOVE TOTAL : RS. 3,35,500 BEFORE ME IT IS SUBMITTED THAT THE PROPERTY AND THE BG SERVICES IS OWNED JOINTLY BY MR. G.B. BRAR AND MS. B. MANJU WHO ARE C O-OWNERS AND SINCE THE RENT PAID TO EACH WAS BELOW THE THRESHOLD LIMIT OF RS. 1,20,000/-, AND NO TDS WAS MADE IN ANY OF THE ABOVE PAYMENTS. AS, T HE SAME PERSONS ARE INVOLVED IN 3 TRANSACTION, TO BREAK IT UP, IS J UST A CAMOUFLAGE OF A TRANSACTION. I AGREE WITH THE ASSESSING OFFICER TH AT THE WHOLE AMOUNT HAS TO BE TAKEN AS A COMPOSITE RENT AND TDS SHOULD HAVE BEEN DEDUCTED. - GROUND DISMISSED I.T.A. NO. 62/HYD/2017 :- 3 - : 4. LD. COUNSEL REFERRING TO THE AGREEMENTS AND PAYMEN TS, SUBMITTED THAT THE PAYMENTS ARE SEPARATE AND OWNERSHIP OF THE PROPERTY IS JOINT. IN SUPPORT, HE REFERRED TO THE CHA LLAN OF NDMC TO SUBMIT THAT THE PROPERTY WAS OWNED JOINTLY AND THE PAY MENTS ARE ACCORDINGLY MADE SEPARATELY. SINCE THE ASSESSEE VAC ATED THE PREMISES, IT IS NOT POSSIBLE TO SUBMIT ANY FURTHER EVIDE NCE, LD. COUNSEL PLEADED. 5. LD.DR RELIED ON THE ORDERS OF THE AO/CIT(A). 6. I HAVE CONSIDERED THE ISSUE. AS POINTED OUT BY THE AUTHORITIES, THE AGREEMENTS OF LEASE WERE SIGNED BY M R. BRAR ONLY AS OWNER EVEN THOUGH THE PAYMENTS WERE MADE TO MR. BRAR AND MRS. BRAR. THE JOINT OWNERSHIP IS NOT ESTABLISHED BY A NY CONCLUSIVE EVIDENCE. THE SO CALLED NDMC CHALLAN IS UNSTAMPED AN D UNSIGNED, HENCE THE EVIDENTIARY VALUE OF THE SAME CANNOT BE ACCEP TED. IN VIEW OF THE SAME, SINCE NO FURTHER EVIDENCE IS FORTHCO MING, THERE IS MERIT IN AOS ACTION IN TREATING THE SAME AS A COMPOSITE AGREEMENT AND HENCE, COVERED BY THE PROVISIONS OF SECTION194-I. THE DISALLOWANCE U/S. 40(A)(IA) IS ACCORDINGLY CONFIRME D. 7. IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 27 TH OCTOBER, 2017 TNMM I.T.A. NO. 62/HYD/2017 :- 4 - : COPY TO : 1. M/S. AGAMA SERVICES PRIVATE LIMITED, 407, SAPTAG IRI TOWERS, BEGUMPET, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-1(1), HYDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-1, HYDERABAD . 4. THE PR. COMMISSIONER OF INCOME TAX-1, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.