M/S. VST MOTORS PVT. LTD.,CHENNAI V. DCIT, CORPORATE CIRCLE-3(2), CHENNAI

ITA 600/CHNY/2025

AI Insights

The case involves M/s. VST Motors Pvt. Ltd., which appealed against the disallowance of Rs. 57,83,700 by the Assessing Officer for non-deduction of TDS on the purchase of immovable property. The property was purchased for Rs.9,35,00,000, with TDS deducted at 1% under section 194IA of the Income-tax Act. However, the Assessing Officer contended that TDS should have been calculated on the stamp duty valuation of Rs.11,27,79,000, leading to a disallowance on the difference. The Tribunal agreed with the appellant's argument that the disallowance under section 40(a)(ia) was inappropriate as the property cost was not charged to the Profit and Loss account, and TDS under section 194IA should be based on the actual consideration paid, not the stamp duty value.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314116 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M.P. GURUPRASAD
• Assessee Lawyers: R. VIJAYARAGHAVAN
• Keywords: Sale consideration of property below Jantri Value; TDS
• Section: 143(3); 40(a)(ia)

Judgement Text

"आयकर अपीलीय अिधकरण, ‘डी’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI \u0019ी यस यस िव ने रिव, \u0011ा ियक सद एवं \u0019ी जगदीश, लेखा सद क े सम( BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.600/Chny/2025 िनधा 8रण वष8 /Assessment Year: 2016-17 M/s. VST Motors Pvt. Ltd., New No.199, Old No.143, Gove Building, Anna Road, Chennai – 600 002. [PAN: AABCV 6244R] Vs. The Dy. Commissioner of Income Tax, Corporate Circle-3(2), Chennai. (अपीलाथ\u0007/Appellant) (\b यथ\u0007/Respondent) अपीला थF की ओर से/ Appellant by : Shri R. Vijayaraghavan, Advocate HIथF की ओर से /Respondent by : Shri M.P.Guruprasad, Addl. CIT सुनवा ई की ता रीख/Date of Hearing : 23.04.2025 घोषणा की ता रीख /Date of Pronouncement : 08.05.2025 आदेश / O R D E R PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2016-17 arises out of the order of Learned Commissioner of Income Tax, Appeal, Addl/JCIT(A), Prayagraj [hereinafter “CIT(A)”] dated 05.12.2024 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Income-tax Act, 1961 (hereinafter “the Act”) dated 08.08.2019. ITA No.600/Chny/2025 :- 2 -: 2. The effective ground of appeal raised in this appeal of assessee is against confirming the disallowance of Rs. 57,83,700/- u/s. 40(a)(ia) of the Act for non deduction of TDS in respect of purchase of immovable property. 3. The assessee-company has purchased immovable property comprising land and building for a consideration of Rs.9,35,00,000/- and deducted TDS @ 1% u/s. 194IA of the Act. However, the Assessing Officer (AO) observing that the stamp duty valuation of the property was Rs.11,27,79,000/-., the assessee should have deducted TDS u/s 194IA on such value , made disallownces on the difference of Rs.1,92,79,000/- @ 30% of the amount u/s 40(a)(ia) of the Act, for short deduction of TDS. Aggrieved, the assessee preferred an appeal before the Ld. Addl. CIT(A). On appeal, the Ld. Addl. CIT(A) had confirmed the disallowance. 4. The Ld. Authorized Representative (A.R) of the assessee has contended that the provisions of Section 40(a)(ia) of the Act are not applicable in the present case as the immovable property has not been debited to the Profit and Loss account and claimed as expenditure. Therefore, there is no question of disallowance u/s.40(a)(ia) of the Act. The Ld. AR further argued that Section 194-IA of the Act applies only ITA No.600/Chny/2025 :- 3 -: on the actual consideration paid, and not on the stamp duty value of the property. It was also submitted that the Departmental Valuation Officer (DVO) had subsequently valued the property at Rs.9,42,77,300/-, thereby demonstrating that the stamp duty valuation used by the AO was arbitrary. 5. On the other hand, the Ld. Departmental Representative (DR), has relied on the orders of lower authorities. 6. We have heard the rival submissions, and perused the materials available on record. We find that the A.O has made disallowance of Rs.57,83,700/- u/s. 40(a)(ia) of the Act, being 30% of the difference between the stamp duty valuation and the actual purchase consideration. However, it is evident from the Profit and Loss account that the cost of the immovable property has not been debited to the P&L account. Therefore there is no occasion for disallowances of such cost u/s.40(a)(ia) of the Act. The A.O has completely misdirected himself on fastening TDS liability u/s 194IA on stamp valuation of the property rather than on actual payment made. We are in complete agreement with the submissions of the Ld. AR that disallowance u/s. 40(a)(ia) of the Act cannot be made in respect of balance sheet item not routed through the P&L account. In view of the above, we reverse ITA No.600/Chny/2025 :- 4 -: the order of the Ld. Addl. CIT(A) and delete the disallowance made by the AO. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced on 08th May, 2025. Sd/- Sd/- (यस यस िव ने रिव) (SS Viswanethra Ravi) \u0001याियक \u0001याियक \u0001याियक \u0001याियक सद\bय सद\bय सद\bय सद\bय / Judicial Member (जगदीश) (Jagadish) लेखा लेखा लेखा लेखा सद\u0011य सद\u0011य सद\u0011य सद\u0011य /Accountant Member चे\u0013नई/Chennai, \u0016दनांक/Dated: 08th May, 2025. EDN/- आदेश क\u0019 \bितिल प अ े षत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b थ\u0007/Respondent 3. आयकर आयु\u000f/CIT, Chennai 4. िवभागीय \bितिनिध/DR 5. गाड\u0018 फाईल/GF "